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Entering the winter maintenance period one after another, the probability of urea rising again after falling is relatively high
2023/10/27
As is well known, the daily production of urea has once again climbed to a high level, with a total daily production of nearly 180000 tons. The price has also ended another round of increase, and the factory quotation of urea in Shandong and other places has increased by 80-100 yuan/ton since last Friday. Soon, the prices of goods received in Linyi fell twice this Tuesday, and wholesale prices in Guangdong also began to decline. On Wednesday and Thursday of this week, factory prices from Hebei manufacturers continued to decline slightly. The most obvious data in recent days is that after two years, the export volume of urea has exceeded 1 million tons for the first time, but this urea price is about to start a new round of deep decline?
Given the rapid pace of urea price adjustment and the possibility of a deep price drop, it seems certain that urea will cool down for a period of time.
Firstly, although the quantity and price of exports are considerable, the timing of legal inspections and other related situations are unclear, and the future export quantity, especially the quantity exported to India, is not clear. In September, China exported 1.187 million tons of urea, and in the previous two years, the monthly export volume of urea was basically 300000 tons or less. This quantity is too large. Considering factors such as ensuring supply and stable prices and average expectations of grain prices, relevant departments may strictly control the time for legal inspections. It has been heard that some large export traders have been talked about, and there was also a very small amount of urea reflux at the port earlier this week. But soon there were rumors that more urea could not be exported to India, but could be exported to other countries, meeting legal inspection requirements. In view of this, although the price of urea has fallen, it has not yet formed a large-scale deep decline situation.
Speaking of the India mark, for the September 26th shipping schedule, China's urea accounted for more than 1.2 million tons (including port transfer urea), and a few shipping schedules were delayed. India also agrees with this approach. The majority of the export destinations for the 1.19 million tons of urea in September were India, accounting for more than 800000 tons. For the November 14th and December 10th shipping schedules, our domestic manufacturers naturally cannot have much expectations. For example, since last Friday, the factory price in Shandong and Hebei has increased to around 2450-2500 yuan/ton, However, it did not reach 2560-2640 yuan/ton as it did in mid September. After all, on the day of the bid opening (last Friday), there were rumors that China may not be able to export too much urea to India, and there were also reports of port urea reflux on Monday.
Secondly, buyers such as composite fertilizer plants that have already or are about to produce light storage fertilizers, traders and urea manufacturers who have won the bidding for light storage in the winning country, and distributors who independently carry out light storage according to convention will take urea at their discretion. They need to consider the purchase price, reserve costs, capital interest, and when they can be sold, which is the reserve risk. Furthermore, customers such as plywood factories and power plants may avoid the sharp edge of the aforementioned customers taking goods and take them as needed, When the price drops to a certain extent, you can take the goods. These aspects provide support for the subsequent urea price, but everyone can also work together to appropriately pressure the price before taking the goods. Firstly, it tests everyone's mentality, and secondly, it pays attention to supply and demand fundamentals, policy changes, especially export progress.
Once again, the daily production of urea has approached 180000 tons, which is a rare high level this year. At this time, it is more suitable to press down on prices before purchasing goods. However, in the near future, in the second half of November or later, some coal head urea manufacturers in Shanxi region, as well as most gas head urea manufacturers in southwestern Xinjiang and Inner Mongolia, should gradually enter the winter maintenance period. At that time, production will be low, and domestic demand will be approaching. Coupled with occasional large exports, the probability of urea falling and rising again is very high.
In short, there may be a deep decline in urea prices, at least in the short term, it is reasonable to lower prices first, but there are variables in exports.
Given the rapid pace of urea price adjustment and the possibility of a deep price drop, it seems certain that urea will cool down for a period of time.
Firstly, although the quantity and price of exports are considerable, the timing of legal inspections and other related situations are unclear, and the future export quantity, especially the quantity exported to India, is not clear. In September, China exported 1.187 million tons of urea, and in the previous two years, the monthly export volume of urea was basically 300000 tons or less. This quantity is too large. Considering factors such as ensuring supply and stable prices and average expectations of grain prices, relevant departments may strictly control the time for legal inspections. It has been heard that some large export traders have been talked about, and there was also a very small amount of urea reflux at the port earlier this week. But soon there were rumors that more urea could not be exported to India, but could be exported to other countries, meeting legal inspection requirements. In view of this, although the price of urea has fallen, it has not yet formed a large-scale deep decline situation.
Speaking of the India mark, for the September 26th shipping schedule, China's urea accounted for more than 1.2 million tons (including port transfer urea), and a few shipping schedules were delayed. India also agrees with this approach. The majority of the export destinations for the 1.19 million tons of urea in September were India, accounting for more than 800000 tons. For the November 14th and December 10th shipping schedules, our domestic manufacturers naturally cannot have much expectations. For example, since last Friday, the factory price in Shandong and Hebei has increased to around 2450-2500 yuan/ton, However, it did not reach 2560-2640 yuan/ton as it did in mid September. After all, on the day of the bid opening (last Friday), there were rumors that China may not be able to export too much urea to India, and there were also reports of port urea reflux on Monday.
Secondly, buyers such as composite fertilizer plants that have already or are about to produce light storage fertilizers, traders and urea manufacturers who have won the bidding for light storage in the winning country, and distributors who independently carry out light storage according to convention will take urea at their discretion. They need to consider the purchase price, reserve costs, capital interest, and when they can be sold, which is the reserve risk. Furthermore, customers such as plywood factories and power plants may avoid the sharp edge of the aforementioned customers taking goods and take them as needed, When the price drops to a certain extent, you can take the goods. These aspects provide support for the subsequent urea price, but everyone can also work together to appropriately pressure the price before taking the goods. Firstly, it tests everyone's mentality, and secondly, it pays attention to supply and demand fundamentals, policy changes, especially export progress.
Once again, the daily production of urea has approached 180000 tons, which is a rare high level this year. At this time, it is more suitable to press down on prices before purchasing goods. However, in the near future, in the second half of November or later, some coal head urea manufacturers in Shanxi region, as well as most gas head urea manufacturers in southwestern Xinjiang and Inner Mongolia, should gradually enter the winter maintenance period. At that time, production will be low, and domestic demand will be approaching. Coupled with occasional large exports, the probability of urea falling and rising again is very high.
In short, there may be a deep decline in urea prices, at least in the short term, it is reasonable to lower prices first, but there are variables in exports.
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