Global urea prices plunge as Chinese exports surgePosted On: 29-07-2014 By: Jon Raeside
Global urea prices continue to weaken going into the second half of 2014, with oversupply from Chinese exporters dominating the market. The dramatic growth in Chinese urea exports has been facilitated by a combination of a substantial Chinese supply overhang, reduced export tariffs, and weak Chinese coal prices.
A newly published Focus Report: The Chinese urea industry from Integer Research, analyses the Chinese urea business in-depth and suggests the effect of this surplus capacity is likely to continue to depress international prices in the coming years and will effectively determine the market floor price.
Investment in Chinese urea capacity has resulted in a serious oversupply, exceeding domestic apparent consumption by about 30%, and new investments continue. As a result, more than 20 million tpy of Chinese urea capacity is faced with either export shipment or staying idle.
Exports have been a key outlet for the surplus volumes and the Chinese government has sought to limit export volumes with punitive export tariffs for most of each year. However, these tariffs have been significantly reduced in 2014, and export volumes are quickly rising. Urea exports reached 3.82 million tonnes in January-May 2014, over three times higher than the same period in 2013.