Sufficient Supply and Weak Demand Drives Down Global Urea Prices
- 20-Dec-2022 2:34 PM
- Journalist: Bob Duffler
Urea prices are declining worldwide due to a rising supply projection leading into 2023. The supply has resumed following the crisis resolution between Russia and Ukraine, and a sharp decline in global Urea prices is observed. Manufacturers of nitrogen-based fertilizers are responding to Europe's increasing natural gas prices by importing Urea wherever possible. Urea prices are still higher year-on-year due to high agricultural costs. However, production margins continue to fluctuate.
The price of Urea may continue to drop even though natural gas prices in Europe are still high and unstable. Since prices are falling in major trading nations, the worldwide market situation is similar to that of the European region. FOB prices are assessed to be declining by 7% in the Middle East at the moment. Compared to the U.S. market, where Urea prices fell by around 6% weekly, Chinese Urea prices fell by about 2%.
According to the Ministry of Chemicals and Fertilizers, Urea sales in India have climbed by 3.7% this year. Agricultural demand has been subdued since existing procurement is sufficient to meet downstream consumer demand. According to the downstream market, the Chinese melamine industry's average operational load rate last week was 64.13%, a 2.12% reduction from the previous week. According to statistics, global compound fertilizer firms operated at a 43.74% capacity utilization rate, up 1.18% from the last week. Although there is some support for industrial demand, it is insignificant.
ChemAnalyst predicts that the current price reduction will continue because of the expected decline in global agricultural demand. It is also anticipated that the Chinese export policy will ease out in the following weeks. The market of Urea is expected to experience stagflation since the fundamentals of the current market are related to supply dynamics and upstream price volatility. However, there is some room for the production of Urea to fall.