As is well known, at the end of December 2023, urea experienced a sharp decline and then a slight increase. In the first week of January, we had not yet finished waiting for urea prices to weaken again, with only a partial decrease of about 100 yuan/ton. Fortunately, in mid January, urea prices in Shandong and other places remained stagnant and stable, with only a few urea manufacturers gradually reducing their orders or receiving low-priced payments, which is equivalent to both stages giving urea industry insiders the opportunity to sell their urea inventory. In late January, with the resumption of production of gas urea enterprises and downstream customers taking the Spring Festival holiday one after another, what kind of price is considered the bottom price?

On the one hand, the previous domestic urea price stalemate and stabilization were mainly due to the moderate rebound in international prices before and after the signing of the contract from December 21st to present. Although this signing of the contract is equivalent to a slightly higher level of 2000 yuan/ton produced by urea manufacturers in Shandong, there are few other exportable situations in China except for export orders agreed upon by the government. China did not participate in this signing of the contract, and it seems unnecessary to forcefully lower the price to the Indian price level in January; Let's talk about the rebound in international prices again. The main reason is that India only purchased 647000 tons, which roughly implies that our international urea suppliers, considering China's limited export volume and geopolitical relations, have no need to compromise with prices like 316.8-329.4 US dollars per ton from India in the short term. This indirectly supports the rebound in international urea prices, with Egypt experiencing the largest increase, with a cumulative increase of over 50 US dollars per ton.

Of course, without intervention from exports, buyers have reason to lower prices, and manufacturers have reason to stabilize prices appropriately. The most reasonable situation is to stabilize and weaken in the front. Good news leads to bad news. In late January, there were already seven or eight new export orders waiting to be executed, and the impact on domestic urea was minimal. In December, the export volume was 340000 tons, which will be even lower in January. Exports are in tears, and it is natural for domestic prices to cool down.

On the other hand, in the extremely bearish domestic market, the real performance is not particularly bearish. There have been some news about industrial customers taking early holidays for the Spring Festival since December, but it wasn't until late January that it was truly revealed. What happened during this slightly longer period of time? Some industrial customers are holding down prices while taking urea, while some speculators are holding down prices to moderately accept new urea products while disposing of their relatively high priced urea inventory. Agricultural distributors take urea for two days when they see rain, and gradually stop taking urea when they see snow affecting transportation.

Today is different from before, and the Spring Festival is approaching. In the early stage, some urea manufacturers have appropriately increased their payment volume to celebrate the Spring Festival. It is in late January, and more urea manufacturers have to consider orders for the 8-day Spring Festival holiday. Considering that train orders during the Spring Festival holiday should receive more payment, such as the low price of large particle fire transportation last weekend, which has now become the norm. The low-end production of small particle urea in places such as Lianghe in Shandong has already reached 2100 yuan/ton or is approaching this price, There should be some room for price reduction in the future.

Considering that the winter maintenance of gas head urea enterprises has basically ended, production will resume in late January, and a few gas head manufacturers have even made early bids for payment. The market atmosphere is not good, and market confidence is insufficient. There is not a lot of spot goods in the market (today's daily production is 164000 tons), especially some light storage storage enterprises and a few urea manufacturers are gradually welcoming the light storage inspection, and the first wave of light storage fertilizer will be released in February, This has further undermined the mentality of industry insiders.

In summary, it is still too early to discuss what price is the bottom for the time being. The rumored drop to 1800 yuan/ton at the beginning of 2023 is still a bit early, and it is necessary to digest the current bearish sentiment while lowering the price. Once the waiting volume of some urea manufacturers is moderate, the price can be slightly stable, such as 2050 yuan/ton and 2000 yuan/ton in Shandong, which may be stuck for a period of time and will soon fall again.