BEIJING, June 21 /PRNewswire-Asia/ -- Frbiz.com, one of China's leading B2B search platforms, reports on the grim situation in China's domestic urea market.
Demand in the international fertilizer market continues to decline with trade protectionism beginning to gain ground. China will undoubtedly become the biggest victim of this action, where fertilizer exports are facing great difficulties. Profit margins have completely eroded, with the factory price of 1,500 yuan / ton barely protecting overhead costs.
Since Spring 2010, significant reduction in domestic demand for urea has been recorded, with enterprises turning their attention to exporting, mainly to India. In the buyers market, India has been an extremely active place. More seriously though, Middle Eastern and North African countries which have energy and resource advantages, are currently building large fertilizer plants. This registers as a grave threat for China's traditional export markets. With this, China's urea export situation can be said to be very grim.
In the off-season fertilizer prices can get even worse, and storing reserves can raise overhead prices due to storage space used.
When demand is also weak, price wars may occur. During 2008-2009's market torment the mentality of fertilizer operators was very fragile, and any sign of trouble lead to huge price changes, and in today's environment this outcome may be difficult to avoid.
In summary, the urea market situation is very serious, and in the near future, no big changes are expected.
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