News from the Financial Associated Press, February 25 (Reporter Jia Xiaoning) Urea futures rebounded nearly 200 points in the past half month. As of the close on February 24, the main contract of urea was quoted at 2,550 yuan/ton. In the spot market, the domestic urea price this week is 2,775 yuan/ton, up 2.4% from last week, and it is rising strongly. The increase in fertilizer use for spring plowing is superimposed with the policy of guaranteeing supply, which has driven the demand for urea to some extent.
Relevant business people told reporters from the Financial Associated Press that since 2023, under the dual effects of policies and profits, most urea manufacturers have maintained high-load operations, and their daily output has steadily increased and remained above 160,000 tons, which is a historically high level. Under the premise of large supply, urea enterprises have relatively good profits in the near future, and the profit of the new coal gasification process remains at around 700-800 yuan/ton. Enterprises are highly motivated to produce and still have confidence in the future market and prices.
Huarong Rongda Futures believes that since mid-February, urea futures and spot prices have rebounded together, which is supported by fundamentals.
In terms of demand, the annual demand for urea is concentrated in March-October, especially the spring fertilizer used in March-May, which is a major positive driver for the urea market. In terms of time, the topdressing of wheat in North China usually begins in the middle and late February. With the recent gradual rise in temperature, agricultural demand has also begun to enter the market. Judging from the actual situation of the urea agricultural demand market, the supply guarantee policy has been quite effective, driving the demand for urea.
Secondly, the load of compound fertilizer has increased month-on-month, and the current operating rate has remained at 48.4%. The load of melamine has also increased, and the plywood factory has been able to operate to its full capacity. Based on the recent performance of the downstream, it has improved to a certain extent compared with the previous period. The weekly apparent demand for urea has recently reached a maximum of about 1.22 million tons, which is at a historically high level.
From the perspective of the supply side, the utilization rate of domestic urea capacity this week was 77.07%, +0.02% from the previous cycle, and the average daily output was 161,100 tons, which was at a relatively high level in the same period in history.
Guo Shuhua, an industry analyst at Longzhong Information, told reporters from the Financial Associated Press that the domestic urea industry is still expected to release new production capacity this year, and the capacity utilization rate will increase significantly compared with last year. Since February, the daily output of the domestic urea industry has gradually picked up, and spring plowing is expected to guarantee a good supply. Although the price center of gravity is expected to decline in the long term, there is still a market to be expected before May in the peak demand season. The current price fluctuations are mainly affected by the relationship between supply and demand. The same period last year or appropriately narrowed.
In the past two years, domestic urea enterprises have undergone industrial upgrading. In 2023, 4.46 million tons/year of new urea production capacity will be put into production. Among them, Hualu Hengsheng (600426.SH) Jingzhou plant, which is expected to be put into operation in June this year, will reach 1 million tons/year.
From the perspective of raw materials, the market price in Jincheng, Shanxi this week is 1,840 yuan/ton for washed small pieces, and 1,210 yuan/ton for anthracite coal, which has a certain decline compared with last year’s high level, which has stimulated the production enthusiasm of urea enterprises to a certain extent. .
The biggest factor affecting the price of urea in the future will come from the demand side. The downstream panel industry of industrial urea is currently in a downturn in the real estate industry, and there has been no demand reversal. In terms of export, urea export is currently affected by the national legal inspection policy, and the export volume is limited. Demand is currently sluggish.
Recently, India launched a tender for 1 million tons of urea to international sellers. Before this tender, good news stimulated the rise in international urea prices. However, after India announced the tender, it extended the shipment window from the usual 30-40 days to 3 In 2019, the sentiment of the international market was greatly affected, and the price of urea generally fell, which to a certain extent also affected the enthusiasm of my country’s urea traders for export.
(Editor: Cao Jingchen)