Balanced Supply Keeps Urea Prices Stable Globally Amidst Falling Fertilizer Demand

Global Urea market exhibited stable price trend during the inaugural week of June 2024 despite of moderately low demand from the downstream fertilizer market. The key factor behind price stagnation was the moderately low purchasing activity of ammonia on the global market and sufficient stocks, which accelerated the achievement of balance between demand and supply and thus supported price stability.

The Chinese Urea market had a stable market sentiment in the opening week of June 2024, mirroring the trend of the previous week. a key aspect of this trend is the lack of new offers or inquiries from international markets. Market participants appear to be taking a wait-and-see approach, expecting further price increases due to continued market inactivity. This sentiment helped keep prices low. The survey results show that the buying enthusiasm of the fertilizer market is weak, although the sowing is approaching. This is a critical period when demand usually increases, but current market dynamics have led to a muted response. In addition, reduced demand for several downstream derivatives, such as Urea-ammonium nitrate, increased pressure on Urea prices. The consumption of these derivatives, which play an important role in the agricultural and chemical sectors, has decreased, further affecting the Urea market. Additionally, according to the report of the National Bureau of Statistics (NBS), the stability in the non-manufacturing sector during May 2024 points to a broader economic balance. This stability suggests that the industry is not increasing demand for Urea, which will continue to maintain price pressure.

Similarly, in the opening week of June 2024, the European Urea market showed a phase of stagnation after a significant decline in the previous weeks. The main reason for the current stagnation of Urea prices has been the fluctuating demand for Urea and its main derivatives, including UAN, in the European region. Market participants report a significant decline in fertilizer sales across Europe. The decline in demand was exacerbated by adverse weather conditions such as severe storms and floods, which further disrupted agricultural activity and reduced the need for fertilizers. In Germany, Urea prices remained stable despite difficult market conditions. In addition, sufficient previously stored Urea was available on the German market. A reported smooth flow of goods without major disruptions in supply chains also helped keep prices stable. In addition, the increase in domestically produced Urea stocks, especially after BASF and International Process Plants (IPP) started operations with production plants capable of producing 380,000 tons of Urea per year, strengthened the stability of Urea prices in Germany. The combination of abundant Urea reserves, smooth operation of the supply chain and increased domestic production capacity created a favourable environment for stable prices in the German market. Despite the challenges facing the European Urea market as a whole, Germany has shown its resilience, benefiting from its strong supply infrastructure and increased domestic production capacity.