In mid-July, the downward trend of urea has formed. From the perspective of Jinlianchuang Urea Price Index, as of July 16, at 1878, it was 55 points down from the beginning of July. According to statistics, since the beginning of the month, the decline rate of the domestic urea market has reached 50-100 yuan / ton. It can be said that the current decline in the market has become a reality.

 

Insufficient demand

 

The decline in the market is mainly due to insufficient demand. The first is the lack of agricultural demand. At the beginning of the month, there was a certain amount of agricultural topdressing, but it was relatively sporadic. The market support was insufficient, and the terminal was replaced with other fertilizers. For urea, it has always been "not cold", and the overall transaction has been stalemate, so there is no market formation. How much support, in the middle of the year, the topdressing of agriculture in various regions basically ended, the reason for market speculation was lost, and the market lacked support instantly, so it fell. In terms of industrial demand, in terms of compound fertilizers, the start of construction shows an upward trend, which is currently close to 50%. However, for the purchase of urea raw materials, due to the fact that they do not accept the current prices, they mainly purchase on demand, and there is no centralized stocking. The urea market has insufficient support; the board plant has been under pressure from environmental protection, and the starting cost is insufficient. However, the amount of urea is still stable. However, after the urea price fell last week, the board plant this week is more bearish on the market and receiving goods. The speed weakened, but forced the market to decline. In general, the main factor causing the decline in the market is that the market exceeds supply and the market is pessimistic.

 

Entering the off-season and starting construction will be an important factor affecting the market

 

From July to August, the domestic urea market can be said to have entered the low season of agricultural demand. In the past years, exports often supported the market during the low season of agriculture. However, this year, China's export position has fallen sharply. Market support is limited. Then, in the case of poor exports, the domestic urea industry can only control the construction to achieve a certain level of production and sales balance. At present, the market of liquid ammonia and methanol is acceptable, and the profit is relatively large compared to urea. Fertilizer production enterprises all have co-production facilities, so it is highly likely that various urea enterprises will reduce urea production by converting to chemical industry in the later period. At the same time, if the environmental protection can be tightened, it will once again give the urea enterprises the opportunity to stop production limits, as long as the construction starts to decline, the market will be given a certain degree of support.

 

Endless when will it bottom out

 

The current demand has entered the off-season, a new round of price reduction mode has been opened, in the short term, there is still some room for decline, so when will it bottom out? Judging from the price points of compound fertilizer companies, major compound fertilizer companies saw an increase in the ex-factory price of urea in the main production areas of about 1,850 yuan / ton, and some more pessimistic companies believed that 1800 would be a low point; in terms of the overall cost of the urea industry For non-coal urea enterprises, according to incomplete statistics, the complete cost of the fixed bed process will exceed 1850 yuan / ton, and the cost of the new coal chemical industry is 100-150 yuan / ton lower than the cost of the fixed bed unit. Look, urea companies may strengthen the ex-factory price of 1800-1850 yuan / ton. In summary, it is expected that the price of low-end urea in some major urea production areas in China may remain at 1800-1850 yuan / ton. When prices continue to fall, the domestic urea industry tends to have production quotations. It is believed that when the urea price slips to the bottom line of the company, the domestic urea market will definitely decline to a certain extent, and it will help companies stabilize market prices.