Urea market: hope Fed

Into the middle of May, the domestic urea prices remained low consolidation trend. Although the agricultural market has a fertilizer market in summer, there are delays and slow transactions. This fertilizer rhythm has very limited support for urea, and distributors generally lack confidence, and most of them operate in the same way as purchasing and selling. This brought greater sales pressure to manufacturers, and the price war never stopped. As of this week, the factory quotations for the main urea production areas in North China, East China and Central China were maintained at 1400 to 1,450 yuan (t price, the same below), and the low-end transaction price was less than 1,380 yuan. Even so, urea failed to escape. In fact, the low price is not only a result of unsalable sales, but also caused everyone's doubts about the market: In previous years, the price of speculation? What is the export support for domestic sales? All kinds of questions add a lot of uncertainty to the summer fertilizer market. The author believes that the oversupply and future uncertain export prospects have created a current turbulent urea market environment. Even if dealers are interested in preparing fertilizers, they should reduce the risk by appropriate or joint sales with manufacturers.

The lack of speculation conditions in the country is not enough to look at summer agricultural fertilizer for less than a whole month, but urea procurement can only be described with slow start-up. According to previous years' experience, there will be a wave of speculation after May 1, because neither manufacturers nor distributors are willing to let go of this traditional sales season. However, there are some exceptions this year. Nowadays, either the factory shutdown and overhaul or the price competition between large plants is seen. Even if urea prices broke the record for the past ten years, they failed to fuel the enthusiasm of downstream businesses. From an objective point of view, whether it is speculation that prices have bottomed out, or speculation on urea exports, or speculation on the domestic demand for summer fertilizers, it seems that it is difficult to find “stuff.”

First, whether prices can bottom out. Only from the bottom line of the price, industry operating rates and raw coal analysis of three aspects, the conclusion is undoubtedly touched the bottom easy to rebound. Second, whether or not speculation is feasible. It is an indisputable fact that the FOB price of the port is too low. In fact, the factory price is even lower than the domestic sales price. Besides, a large amount of urea is stored in Hong Kong, and it is difficult for dealers to see the favorable support of foreign trade to the domestic urea market. Finally, Imagine the demand for hype. The national urea company maintains a 65% operating rate, making the forecast for excess supply and demand in the summer market obvious. The resulting operational risks, especially when there is a serious imbalance between profit taking and risk taking, have long been deterred by those who have summer intentions of preparing fertilizer.

The export situation is still grim. Compared with domestic sales, the situation of urea exports in the later period is equally not optimistic. First look at the price. Due to the intensified competition in the international market, the game attitude of buyers has not changed. The lower FOB price is not attractive to domestic suppliers, leading to the recent contraction of urea concentration in Hong Kong. In fact, the domestic half-month urea fob price has been consolidating at 283 to 287 US dollars, which means that the set price will not exceed 1,470 yuan. For major urea producing areas in Shandong, Hebei and Shanxi, the ex-factory price is only equivalent to 1350 to 1380 yuan. Export orders that are not as good as domestic sales prices are also bleak. Second, look at the demand. From the analysis of the situation reflected by foreign media last week, the international market at this time is also in a state of oversupply, and foreign investors are not in a hurry to purchase. For the weak demand period in June, with the exception of individual supply countries that are willing to cut prices for sales, most of them maintain a wait-and-see attitude and the total transaction volume has been significantly reduced. In fact, more and more foreign investors have begun to snoop on the export trend of China's urea in the low-tariff period. "I am not afraid that a thief will not be afraid to steal a thief." Some industry insiders predict that China's urea FOB prices in July will be maintained at between 254 and 260 U.S. dollars under the tax cuts and foreign gaming environment.

In summary, the lack of domestic urea market is good, and the industry's usual market speculation is difficult to display. The price of urea has reached the bottom of the rebound and resistance is relatively high. Although downstream demand for fertilizers can be seen in the summer, the slow start of the market and the overall operating rate of the industry only maintains a dynamic balance. It is not a substantial reduction. It can be predicted that there will be excess supply in the market during the late period. risk. At the same time, as the low-tariff period approaches, foreign investors intend to postpone urea procurement until June. As a result, domestic export orders are bound to decrease further this month, and it will be unknown if Hong Kong’s high-priced goods will continue to decline in the face of FOB prices, whether it is continuing to choose exports or retreat to domestic sales. However, it is certain that urea exports have no good news for the domestic urea market.