During the two weeks leading up to the Spring Festival holiday, urea prices in Shandong, Hebei, and other regions increased from 1530-1570 yuan/ton at the low-end to 1650-1700 yuan/ton at the factory. At that time, I left a topic for discussion: how can prices skyrocket after the Chinese New Year, despite the fierce price surge before the year? Or is it a crazy decline? Given that the holiday has passed, winter wheat fertilization in the Central Plains region has entered a relatively concentrated period. Can urea production in Shandong, Hebei and other places reach 1800 yuan/ton after the New Year?

Firstly, there will be a slight release in industrial and agricultural demand: although most agricultural customers have already signed up for a portion of urea in mid to late January, a small number of customers are overly bearish on the future market. Based on this, agricultural customers should have some replenishment; However, the situation of grain production is average, and there is a lack of confidence in the sales of compound fertilizers in the later stage, especially the price of one of the raw materials, ammonium phosphate, seems unclear, or it seems that some people have not been successful in trying to lower the price. The slightly concentrated replenishment of compound fertilizer enterprises and other industrial customers usually takes until the fifteenth day of the first lunar month (February 12th) or even later. In recent years, there have been more cases of using urea, diammonium, and potassium chloride as substitutes for compound fertilizers/mixed fertilizers in Northeast China and other places. The supply of compound fertilizers for urea and other raw materials continues to decrease slightly, but it is not so urgent.

It can only be said that there is a slight expectation that customers in Northeast China and other regions who have not yet truly sold fertilizer and have taken urea in advance in the second half of 2024 will become more cautious, leaving some space for replenishment in the market after the Spring Festival. The industry has some confidence that the price will moderately rise by several tens of yuan or even occasionally briefly increase to a total of 100 yuan/ton after the New Year, that is, urea may briefly surge to 1800 yuan/ton. Here, we are only exploring one possibility.

Secondly, from manufacturers and traders to wholesalers, distributors, retailers, and so on, there is a tendency for urea prices to rise sooner rather than later. After the holiday, the mentality of trying to raise prices will prevail, even if everyone has a lot of inventory before the Spring Festival and cannot rise, or quickly turns down. However, the mentality and approach of trying to raise prices once, twice, or even three times will still exist.

Just because the price increase was too large before the year, if a small number of traders quickly sell their goods at prices lower than the factory quotation, some urea manufacturers may not be able to hold on to lowering prices and buying orders. There will be a rise in urea prices, and there will also be a situation where urea quickly turns to decline. The large supply volume (daily output exceeding 200000 tons) and social inventory will present a clear game with the situation of spring demand replenishment. After the Spring Festival, urea can only be expected to surge to 1800 yuan/ton in some areas due to the delayed arrival of new urea sources. In most regions, the demand for industrial and agricultural products will be very scattered under the cold weather in late spring, and even individual customers who agree with a price as high as 1800 yuan/ton are unwilling to take too much quantity.

Once again, even if export speculation is becoming increasingly useless, those with intentions will still leverage it. With occasional boosts in futures sentiment, urea spot prices may temporarily surge to 1800 yuan/ton. During the peak season of spring plowing, the probability of an increase in urea exports is very small. Even a small package of 10 kilograms of urea is expected to be exported slightly, and the impact is estimated to be minimal. It is not recommended to consider relaxing exports in the later stage and gamble too early on the long-term urea market.

In short, urea manufacturers frequently adjust prices, and a small number of manufacturers have raised prices two or three times or even more within a day, reaching 1800 yuan/ton, which is possible. The author personally believes that after the Spring Festival, urea is more likely to experience a tentative downward trend with occasional brief price increases, causing those who hold high priced urea to sell their products. It is recommended that everyone continue to hold urea with caution.