Urea price is low to maintain stability and the market is still waiting for favorable policies to be issued.

Low urea price to maintain stability

Since November, the urea market has continued its downward trend. Up to now, the price of urea in Shandong and other places has fallen to more than 1500 yuan / ton, the actual transaction price in some areas is only 1450 yuan / ton, and the price in Shanxi has dropped to 1400 yuan / ton. Although the price of urea decreased significantly, but the market transaction did not improve significantly, near the end of the month, affected by the start-up of local winter storage, urea price is low to maintain stability.

Yang Tongyu, assistant general manager of Henan Jinkai Group Yanhua Chemical Co., Ltd., said: "at present, the mainstream ex-factory price in Henan has fallen to 1450 yuan / ton. due to the lack of favorable stimulation in the market, the trading volume is not large. at present, in addition to joint sales by the Federal Reserve, enterprises are also carrying out bottom-guarantee sales, with a floor price of 1500 yuan per ton until February next year."

Different from the Henan market, after the price in Shandong fell below 1500 yuan / ton, the market showed signs of starting. The author learned from Liu Weichang, sales manager of Ruixing Group Co., Ltd.: "Urea prices are currently low and stable, with mainstream quotations of 1490,1500 yuan / ton." Although at present, most mainstream enterprises in Shandong are producing at full capacity, but the inventory pressure is not great. At present, in addition to local demand, goods mainly flow to the Northeast, Anhui, Jiangsu and other places. "

Overall, after the previous adjustment, the current urea price has been at a low level. In terms of both cost and policy expectations, there is no room for the current urea price to go down. Yang Tongyu said that at current prices, it can be said that 90% of enterprises are operating at a loss. "the recent introduction of the coal rescue policy has led to the rise of coal prices and supported the current stabilization of urea prices, but it has increased the production pressure on enterprises, and the loss area of the urea industry is still expanding. In addition, the market expectations of the policy is also a strong support for the urea market. "

The market needs to regain confidence.

It can be said that this round of urea price callback is that urea enterprises hope to exchange price for quantity, but it did not come true from the early stage, and even led to the intensification of market wait-and-see sentiment.

Affected by the rise in phosphate rock prices, phosphate fertilizer prices rose steadily, while the rise in coal prices did not bring obvious support to the urea market, mainly due to the serious lack of market confidence. Yang Tongyu said, "from a cost point of view, the current urea price has fallen below the production cost of enterprises, but the serious lack of market confidence has led to the intensification of market wait-and-see sentiment and the start of local markets. But the signs of the start of the national market are not obvious."

Liu Weichang also said that confidence is the key to affecting the urea market at present. "after the double dip in urea prices, the market did not recognize it. Although the overall operating rate of enterprises remains high at present, due to the early port demand, the inventory is small. With the gradual start of the winter storage market in Northeast China and other places, urea prices are expected to rebound at a low level. " At present, the local market has been launched, but only some grass-roots dealers are taking goods, while some large dealers are still in a wait-and-see state.

Wait for the favorable policy to come out.

For a long time, the market has been discussing the value-added tax and tariff policy of the urea industry, but as the policy has not yet been issued, the market is still looking forward to it.

Although there is overcapacity in the industry as a whole, due to the impact of the rise in natural gas prices, most of the gas enterprises are shutting down production, the new production capacity has not played a role, and the actual output and demand of urea are basically balanced. Once export tariffs are liberalized, it will be of great benefit to both enterprises and industries. The recovery of VAT will increase the cost of urea by 30,50 yuan / ton. for the enterprises on the edge of loss, the recovery of VAT will support the current stable and high urea price. Liu Weichang believes that the current urea price is already at the bottom, with the introduction of favorable policies, urea price is likely to stand above 1600 yuan / ton mark next spring.

At present, the favorable policy of the urea market has not landed, which is also the main reason for the current market wait-and-see. Once the policy is on the ground, it will lead the urea price to rise steadily. "whether it is the introduction of tariff policy or value-added tax, it is substantially positive for the urea market, which can not only effectively alleviate the pressure of overcapacity, but also support the rise of urea prices. Yang Tongyu predicted that with the gradual start of the winter storage market and the increase in demand from compound fertilizer enterprises, prices will gradually stabilize in the short term. With the gradual clarity of favorable policies in mid-December, urea prices are expected to rebound.