Urea prices rose in November and December as the production plummeted. The daily urea production fell to 112,000 tons because of the production cuts in Jincheng, Shanxi province and shutdown of operations in Southwest and Northwest China for limited natural gas supply. Some analysts believe that the prices of urea may continue to rise due to the relatively good demand and exports. However, some doubt that the prices will continue to go up, mainly for the following reasons.

First, the market supply of urea is estimated to increase. It is said that the granular urea units in Jincheng will resume production in early January, which will lead to a daily production increase of 6,000-8,000 tons. Meanwhile, some new urea plants in Shandong and Hubei will be put into operation soon, so the overall daily production in China will rebound to 130,000 tons. In addition, some natural gas-based urea plants in Southwest China are expected to resume production after mid-January, therefore the supply of urea will increase significantly in the future, which will restrain urea prices from rising further.

Second, demand for urea is not very strong. Demand for urea from agricultural sector has been quite low since October, while demand from industrial sector was also sluggish because some enterprises had to halt production frequently due to environmental inspections. Moreover, India stopped inviting for bids temporarily. The prices of urea picked up in December mainly because the enterprises that undertake the task of off-season commercial reserves were buying urea.