Amidst the bearish sentiment shift, urea's downward trend has arrived ahead of schedule
2023/9/12
Nissan's low level operation shows no signs of inventory accumulation
In the early days, we always believed that there was limited room for the market to rise. One reason was that we believed that new production capacity would be put into operation one after another, but the actual part was postponed until September October. The other reason was that Nissan would continue to operate at a relatively high level during the same period. But in terms of actual development, from the estimated daily production in mid August to the actual development in the first week of September, it is about ten thousand tons less than expected, and the daily production has been below the same level for nearly half a month. So, guided by some news, many people may feel that this week's inventory should be a trend of accumulation, but in reality, Nissan continues to operate at a low level, coupled with timely demand and exports, as well as possible poor shipping in some areas, so there have been no signs of accumulation in the short term. According to the latest data from Longzhong, the total inventory of enterprises this week was 22000-33000 tons, a decrease of 22500 tons compared to last week.
Industry just needs sustained agricultural progress, average
Although the price of urea has been consistently high, domestic demand has also shown an increasing trend over time. Especially for compound fertilizers, the rise in the market for nitrogen, phosphorus, and potassium has driven the sales of finished compound fertilizers, and the time has also reached the peak period of autumn fertilizer production for compound fertilizers. Therefore, the amount of urea used has significantly increased, which is higher than the same period. However, due to the unstable trend of urea prices and the risk of high prices, downstream factories often purchase with a cautious and on-demand mentality every week. Compared to previous years' production, this demand is expected to continue until around the end of the year. At the same time, the autumn fertilizer market in mainstream regional agriculture and the procurement of raw materials in the Northeast region will also have procurement behavior one after another. However, considering factors such as time and price, progress may slow down significantly from time to time. However, even so, demand has improved compared to August, and domestic trade is increasing.
Exports are still in full swing, and subsequent support is limited
According to the export shipping schedule marked on September 26th in the previous round, and considering the legal inspection cycle, the supply sources will gradually arrive at the port from September 10th to 15th. Due to the large volume of bidding in this round, nearby enterprises in mainstream regions will still face the demand for export replenishment. This was originally a positive support, but with the impact of export news, this support has decreased, and enterprises mainly ship previous orders. In the short term, exports are still being shipped and still occupy a portion of spot production, resulting in a short-term shortage of spot resources.
And the above points are also what we have repeatedly emphasized. Fundamentals are relatively strong in the short term, and the spot market has not reached the time of decline. Therefore, although the future expectations are poor under the news, the spot market is still treated with a strong trend. However, with the active or passive reduction of prices in mainstream regions, the timing of this decline has already arrived ahead of schedule. Next, the rapid increase in Nissan will continue to increase the trend of price decline. However, we can still see that in situations where inventory levels are low, there may be periodic buffer markets due to the overlapping demands of industry, agriculture, or reserves.
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