Urea Prices Continue a Bearish Trend Amidst Falling Downstream Demand

January 2023 saw another continuation of the price fall for Urea in Germany as demand from domestic and international markets remained sluggish. Urea prices are progressively lowering because of lower production costs as the upstream industry slows. The price of natural gas is falling, and there is a surplus of commodities in the German market. The marginal cost of generating natural gas fell to USD 16 per million British thermal units last week, weakening key markets and sharply reducing production expenses.

The high rate of inflation and the ongoing recession in the USA and Germany continue to put a strain on the fertilizer market. However, the effect of inflation and economic uncertainty on consumer buying sentiments has kept demand from the downstream industries muted. The manufacturers have lowered their quotations to maintain the supply-demand equilibrium due to the accumulation of stocks and the contractual new orders. Additionally, the surplus of Urea resulted in a considerable decline in various international pricing indices.

In addition, most of the regions have very low agricultural demand. Since the inventory is consistent and there is a minimal prospect of a price hike, importers often wait to act until these circumstances alter. Analysts observed that exports of Urea at favorable pricing are still progressing steadily. Providers kept their positions by reducing production rates despite declining demand. Even though a rise in the contract price for the raw material Ammonia was predicted last month, suppliers have chosen to waive some profit due to the significant imports of Urea.

According to ChemAnalyst, the Urea markets in Europe and the USA are weak since there is a plentiful supply, and most companies are making a sufficient profit. This implies that there is still a possibility for additional dips in the Urea market before demand rises and consumer confidence is restored during February 2023.