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The main reasons for the continued high price of urea in the first half of this year are:
The first is the impact of production costs. Since the beginning of this year, the price of coal has continued to rise, and coal prices in some regions have reached record highs in recent years. The continuous high price of coal has promoted the increase of urea production costs.
Followed by increased demand. Although due to the higher fertilizer prices this year, farmers in some areas have reduced the amount of chemical fertilizers, but from the overall situation, the demand for chemical fertilizers is still relatively strong, mainly due to the increase in planting area. In addition, industrial urea has maintained a growth rate of over 10% due to strong demand from downstream melamine and wood-based panels.
Once again, the international urea price is running high. Due to the sharp rise in international oil prices, international urea prices continued to rise sharply. After entering the month of June, although the international urea price has dropped, it still occupies a relatively high position. Although China's urea exports this year took more stringent restrictions, resulting in a significant decline in China's urea exports in the first half of this year, but due to the international urea prices in the high position, the urea exports to China still produced a certain stimulating effect. In addition, the high price of international urea has also formed a certain psychological support for the high price of domestic urea.
The last is the lack of winter reserves, tight supply. Due to the high price of urea during the winter storage period last year, coupled with the country's continued introduction of price-limiting policies, dealers are generally cautious about urea storage. However, when it began to enter the peak season for fertilizer use in March, it appeared to be in short supply. In some places, queued fertilizers that had not been seen for many years were even “fighting for fatâ€.
In the second half of this year, the domestic urea market will be under greater pressure. The pressure will come mainly from three aspects:
The first is policy pressure. In order to protect the interests of farmers and curb the excessive growth of fertilizer prices, the country has consistently maintained a high pressure on the fertilizer market in recent years. Since May this year, the country has successively issued several policy measures aimed at the fertilizer market, especially the urea market, including two The policy will have a relatively large impact on the urea market in the second half of the year. First, starting from July 1, the ex-factory price limit for domestic urea production enterprises will be expanded from an annual production capacity of 300,000 tons of synthetic ammonia to 150,000 tons (including 150,000 tons); the second is from June 1. , China's urea ceased to implement a tentative tax rate of 260 yuan for exports. From June 1 to October 31, urea exports will be taxed at a seasonal rate of 30%, from November 1 to December. At the end of the 31st, the temporary export tax rate was calculated at the 15% tax rate. From January to May of this year, China’s urea export was implemented with an export tariff policy of 260 yuan, and the export volume of urea has dropped significantly. According to the new policy, urea exports should be subject to 30% tax rate, which translates into at least 500 yuan per ton of export tariff, which is much higher than the standard of 260 yuan, so urea exports will be greatly inhibited. Even in November and December, the urea export tariff rate was reduced to 15%, but the export tariff is still not low. Whether the urea export volume will increase significantly depends on the price trend of the international urea market. In short, the domestic urea export volume will be significantly reduced in the second half of the year, and a large amount of urea will be left in the domestic market. The supply pressure in the domestic market will increase.
The second is demand pressure. Compared with the first half of the year, the demand for the peak season in the second half of the year was significantly reduced. After entering August, the national urea market began to gradually enter the season of using fertilizer. Therefore, the demand for urea will be significantly reduced in the second half of the year compared to the first half. In addition, fertilizer prices such as urea have continued to rise since the beginning of this year, and the prices of most chemical fertilizers have risen by about 20% compared with the same period of last year, reaching a high of 40%. However, the price of agricultural products not only did not rise, but fell instead. Therefore, the income from grain cultivation of farmers this year will certainly not be as good as last year. This will affect the enthusiasm of farmers for grain production and will also have a certain impact on the use of chemical fertilizers.
The third is the pressure caused by falling prices of other fertilizer varieties. At present, the price of urea is still quite strong, ranking high, but fertilizer varieties such as DAP and monoammonium phosphate are in a trend of correction since May, and even long-term strong compound fertilizers have shown signs of falling recently. Because the prices of various varieties in the fertilizer market are mutually influencing each other, the decline in the prices of other fertilizer varieties will certainly exert a certain pressure on urea prices.
Affected by the above three pressures, it is expected that the domestic urea price will have a turbulent decline in the second half of the year. However, due to the high coal price, the price of urea will not drop too much, and the falling limit will be around 200 yuan. It will be a slow-down process.
Looking forward to the middle of the year: Pressure on urea prices falling in the second half of the year
In the first half of this year, the domestic urea market showed a distinctly strong feature: strong demand, increased production and sales, and high prices. Except that large nitrogen fertilizer companies always enforce the national price limit of 1,650 yuan (t price, the same below), the ex-factory price of most urea products is above 1,700 yuan, and the ex-factory price of some companies even exceeds 1,900 yuan; the market in most regions The wholesale price is more than 1,720 yuan and the retail price is more than 1,750 yuan. In many areas, the wholesale market price has exceeded the 2,000 yuan mark, and the highest retail price is even as high as 2,300 yuan in individual areas. Whether it is ex-factory prices, market wholesale prices, or retail prices, have hit new highs in recent years.