[American Bull Fertilizers Group Reprinted] - The domestic fertilizer market is sluggish and exports of urea to the city will not work.

Since July, the fertilizer market has experienced a continuous decline in prices. Typically, during the peak usage season in July and August, urea prices should reach their annual high. However, this year has been different. The surge in new production capacity, the government's initiative to stockpile fertilizers for seasonal use, and the strict enforcement of export control policies have significantly altered the domestic supply-demand balance. As a result, instead of rising, fertilizer prices fell by an average of 200 to 300 yuan per ton during the peak season. As autumn approached, urea prices saw a slight increase, but they still dropped sharply compared to the same period last year, dragging down other fertilizer types as well. Prices for diammonium phosphate and compound fertilizers used for winter wheat planting remained low. Due to the downturn, manufacturers have been forced to lower their ex-factory prices repeatedly, with many companies now operating at a loss or barely breaking even. Faced with rising raw material costs and a weak domestic market, some companies are turning their attention to the international market and are calling on the government to reduce the provisional tax rate on urea exports. However, the author believes that, for several key reasons, the country is unlikely to make significant changes to its fertilizer export policy in the near future. First, maintaining the stability of existing policies is crucial. Second, the temporary export tariff on urea has been one of the most effective measures in managing the domestic fertilizer market over the past two years, helping to ensure adequate supply. Third, exporting high-energy, high-resource, and high-pollution fertilizers comes at the expense of domestic resources and environmental quality, which is not economically justifiable—especially given China’s growing trade surplus. According to the author’s understanding, relevant government departments have repeatedly emphasized that the seasonal temporary tariff on urea exports will remain unchanged. Another analysis suggests that the current trend in the international fertilizer market is also unfavorable for Chinese urea exports. Demand and prices in traditional importing countries around China have all declined to varying degrees. For example, the FMB (Fertilizer Markets Guide) reported that offshore Chinese bagged urea was offered at $220–$225 per ton in October. After deducting 15% tariffs and other expenses, the profit margin for companies would be extremely slim. It seems that relying on urea exports to boost the industry is not a viable solution. To reverse the current downturn in the domestic fertilizer market, companies must look inward and address internal issues. Wang Wenshan, vice chairman of the China Nitrogen Fertilizer Industry Association, pointed out that many companies have invested heavily in expanding production in response to recent market improvements. This low-level, redundant construction has increased the nation’s new urea production capacity by over 40% of total domestic supply. With more capacity coming online, urea producers will soon face the consequences of overproduction and oversupply.

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