Urea | Export news suddenly comes whether domestic urea can be reversed

The recent domestic urea market shock to promote, compound fertilizer operating rate decline after a few weeks, ushered in stable operation. Due to the long time from fertilizer use, there was no large-scale centralized replenishment. While domestic urea daily production has maintained a high level for a long time, although there are short-term device failures and planned maintenance, market sentiment is still cautious and frequent short-term market conditions. However, today's sudden loosening of export policy has improved market sentiment, and then we will look for trend support from the data.

Recent urea market focus:

 

1, agricultural fertilizer promotion, pursue high emotional caution;

 

2, export news retransmission, market sentiment reversed;

 

3, short-term daily high, a few enterprises maintenance;

 

4, international price trends, other factors.

 

·The print quantity halved, impacting the domestic market sentiment

In this cycle, the domestic urea market first rose and then fell, the urea factory in the main production and sales area at the beginning of the week, under the support of orders, intends to continue to increase the offer, but the halving of the urea bidding volume in India, so that the domestic market sentiment is low, and urea prices continue to rise. After the purchase of fertilizer in the southern rice region, it is also affected by market sentiment and reduces the cover position. Industrial demand is tepid, limited support for the market. However, this cycle of domestic urea equipment failure frequently, urea enterprise inventory to the appropriate warehouse, so that urea prices in the main production and sales area to maintain stability, but local outgoing urea prices in the main region has shown a downward trend. As of this Thursday, small and medium-sized particles in Shandong mainstream factory 2030-2070 yuan/ton, the average price rose 20 yuan/ton from the beginning of the week. Recent downstream demand sustainability is not strong, industrial and agricultural more on the low cover, urea daily production is still at a high level of operation, supply and demand side is still loose, is expected next week domestic urea trading center again down.

From the performance of both sides of supply and demand, China's urea production of 1,285,200 tons, 16,200 tons less than last week, down 1.24% from the previous month. This week urea due to more device failures, production has declined, the agricultural rice area is appropriate to fill the warehouse, but the northern agriculture is in a gap period, industrial demand has declined, urea this week between supply and demand has increased.

 

·The enterprise device failure increased, Nissan showed a decline, and gradually recover next week.

Short-term export volume is limited, urea supply is concentrated in domestic：

 

As of April 11, 2024, China's urea port sample inventory: 195,000 tons, a month-on-month decrease of 5,000 tons, a month-on-month decrease of 2.50%. This cycle is mainly Yantai port, Qinhuangdao part of the cargo source left the port, the rest of the port overall number has no significant change, the port stock narrow decline.

 

Next week, the total inventory of domestic urea sample ports is expected to be about 200,000 tons, which is a narrow fluctuation compared with the current period. The impact of the marking is lower than the industry's expectations, and the export side has not seen obvious signs of relaxation, the industry is more limited port enthusiasm, and the port inventory is expected to remain at the current level of volatility in the short term.

 

（China urea port inventory chart）

 

·The supply and demand side is loose, but the export news temporarily ushered in good news.

1. The fluctuation range of Nissan next week is 178-183,000 tons. Although individual devices have been repaired, Nissan still rose year-on-year.

 

2, the demand side: the operating rate of compound fertilizer shows a stable expectation, and the cover is mostly phased procurement according to production and price; Due to the long period of fertilizer preparation, the short-term replenishment demand is not concentrated. There is no good news for exports, and international prices are in a downward trend, which is negative for the domestic market. 3, inventory: although the inventory of urea enterprises has not risen significantly this week, but due to downstream demand to follow up the slowdown is expected, there is a small accumulation in the short term.

 

4, raw materials: coal prices are mainly stable, natural gas prices fell slightly, in addition to the fixed bed process urea enterprises have cost pressure, the cost of new coal gasification and gas head enterprises has no obvious pressure.

 

Overall logic:

 

Conclusion (short term) : On April 12, the loosening of urea export policy made the originally more pessimistic market sentiment pick up, and urea prices will stop falling and rebound temporarily because of the support of the news.

 

Conclusion (medium and long term) : Domestic urea daily supply increased year-on-year for a long time, and there are still some new production capacity plans in the second and third quarters, urea supply side is in loose expectations, but the market or due to the impact of local maintenance, export concentration and other factors, the shock market is frequent, but the center of gravity of adult prices or gradually moved down.

 

(Forecast chart of Shandong medium granular urea factory price)