SunSirs: Urea Market Center May shift Downwards in 2024

How will the urea market develop in 2024?

From the perspective of production capacity and output: According to data statistics, urea production in China entered a concentrated period in 2023, with a domestic urea production capacity of about 73.81 million tons, an increase of 2.16 million tons compared to 2022. In 2023, the domestic urea production was around 60.16 million tons, an increase of 6.44% compared to 2022. In 2024, there are still plans to increase production capacity in the northwest, central, and eastern regions. It is expected that the production capacity increment of the urea industry will be 4.25 million tons in 2024. However, the production progress of downstream compound fertilizers is slower than that of urea, and the board industry is mainly focused on regional transfer with limited new production capacity. The supply and demand relationship in the domestic urea market will shift from a basic balance of supply and demand to an oversupply, or may shift the price center of the domestic urea market downwards

From the perspective of imports and exports: In terms of urea exports in the past five years, the export volume had been fluctuating. The annual urea export volume in 2023 was 4.25 million tons, an increase of 50.18% compared to 2022. Among them, September had the highest exports, with a monthly export of 1.18 million tons. The country with the highest annual export volume was still India, with an export volume of 1.93 million tons, accounting for 45.49% of the total export volume. The export volume of urea in China may decrease in 2024. Firstly, global urea production capacity continues to expand, and the international urea price center may shift downwards. Secondly, India will have one 1.27 million ton unit put into operation in 2024, which may reduce the import demand for urea in China. The third is the impact of the policy of ensuring supply and stabilizing prices. The "legal inspection" policy is becoming stricter, and the export volume of urea will decrease.

From the perspective of market demand, the estimated total demand for urea in 2024 is around 58 million tons. Agricultural demand has always been the main flow of urea in China. As of the end of 2023, the national grain sowing area was 118,969 thousand hectares (1,784.53 million mu), an increase of 636 thousand hectares (9.55 million mu) or 0.5% compared to 2022. The cultivated land area was steadily increasing, and the agricultural demand for urea was constantly increasing. Industrial demand may increase slightly. In 2024, the urea demand for melamine, urea formaldehyde resin, and automotive urea show a stable state, with little or no change. In terms of thermal power shortage, due to policy guidance, urea will be used as a reducing agent to further replace synthetic ammonia in 2024, and it is expected that the demand for urea will further increase.

Comprehensive prediction:

In 2024, urea supply will increase, demand will be weaker, and exports will be tighter. It is expected that the price center of the domestic urea market may fluctuate downward in 2024.

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