Urea market has reached a crossroads

After a sharp rise for two consecutive months in August and September, the current ex-factory price of urea has generally risen to a high of 1,750 to 1,850 yuan (t price, the same below), not only setting a new price high this year in the off-season, but also last year's price hikes. Compared with the same period, it was a substantial increase of 200 to 300 yuan, basically the highest price in the same period in history. At present, the urea market has reached a crossroads, and how the latter trend depends on three major factors.

The first is energy conservation and emission reduction. In order to complete the “Eleventh Five-Year” energy consumption index, since August many provinces have imposed limited power production for high-energy-consuming enterprises such as steel and chemical industries, and there are numerous companies that have stopped producing urea-producing provinces such as Shanxi and Hebei, resulting in the supply of urea market. The amount suddenly dropped. At present, there are signs of loosening of electricity restriction for high-energy-consuming enterprises in some regions. Market rumors that urea companies in Hebei and Shanxi will resume production in late October. What exactly is the situation? It is worth paying close attention. In addition, due to the low price of urea in the first half of the year and serious losses, some urea companies were forced to stop production. With the rapid rise in the price of urea, most of these companies will resume production. If the production recovers faster, it will have a pull-down effect on the price of urea.

The second is tariffs. At present, a large number of urea exports have aroused widespread concern in the society. It is rumored that the country may adjust the urea export tariffs in accordance with changes in the international market in the next year. The implementation period of tariffs is divided into the off-season fertilizer season, the spring ploughing fertilizer season, and the fertilizer season for the peak season. Compared with the current urea export policy, a spring cultivating and preparatory period is added, and the overall policy is tight. Since the second half of the year is just the season for fertilizer use in the international market, low tariffs have led to a large amount of domestic urea exports, which has pushed up domestic prices and has had a strong impact on domestic urea stockpiling and spring plough preparation. We must take measures to reverse this. Whether or not the urea export tariff policy will be adjusted, how it will be adjusted, and when the new policy will be introduced and when it will be implemented will have an important impact on the urea market.

The third is light storage. The highlight of the urea market after October is light storage. In 2010/2011, the state-level chemical fertilizer light storage contract was signed in late September. A total of 72 companies won the bid, mainly the distribution companies won the bid and accounted for about two-thirds of the total light reserve. The light storage of chemical fertilizers has officially started, but in the face of such a high price, whether it is a successful bidder or a non-winning bidder, the attitude toward urea storage is generally very cautious this year, pushing the banker into the mainstream. In terms of light storage, the best way is to let urea prices drop to a certain low, attracting dealers to lightly store, and then as more and more dealers join light reserves, increasing reserves, natural prices Will continue to be pulled up, and only the early light savings companies profit, in order to mobilize the dealer's enthusiasm. The dealers are always putting the risk in the first place. If the price is high, they are very willing to pay for the high price. From August to September of last year, the price of urea was relatively low, and the ex-factory price was generally between 1,500 and 1,580 yuan. At that time, the enthusiasm of dealers for light storage was relatively high. Faced with such a high price this year, dealers are generally watching and the process of lighter reserves has been pushed back. If prices continue to be high, I do not rule out that dealers will give up light reserves, instead of buying cash in the peak season, anyway, now the urea market is oversupply, not afraid to buy urea.