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The nationwide epidemic have a relapse rapidly, and the urea market was weak again. In October, the urea market swung slightly in the first half of the month, and restrained firstly and then increased in the second half of the month. In the first half of the month, the price fluctuated in a short "V". In the middle of the month, the urea price began to decline for about 10 days with the arrival of the domestic demand slack season. The regional decline ranged from 70-160 yuan/ton, and the price rebounded by 30-80 yuan/ton near the end of the month.
The urea market in October was "unsatisfactory". The average price of urea nationwide was 2503 yuan/ton, 31 yuan/ton higher than the average price of 2474 yuan/ton in September, and 1.25% higher month-on-month. In the month, the price of mainstream regions dropped from 2390-2500 yuan/ton to 2250-2420 yuan/ton, and rebounded to 2300-2460 yuan/ton at the end of the month. How will the urea market in November be interpreted?
1. Set aside the supply and look at the demand
At present, the daily output of urea in China is about 149200 tons. Recently, due to the epidemic situation, some urea plants in Xinjiang have been shut down and some plants in Henan have been shut down for conversion. In addition, the recovery of plants in Jincheng has been delayed. In addition, some plants in Shandong, Qinghai and Xinjiang have been recovered recently. In the short term, the domestic urea daily output will still fluctuate around 150000 tons, and the supply increase will slow down. However, the market is still dominated by the change of demand under the influence of mentality. In November, we put aside the supply and look at the demand.
2. Complex fertilizer pricing is difficult to settle and start late
The price of NPK raw materials fluctuates greatly and the market is still unclear, and the start of winter storage of compound fertilizer lags behind. With the postponement of the phosphorus and compound fertilizer meeting, the current situation of difficult pricing of winter storage of compound fertilizer will continue, and the purchase and industry commencement of some winter storage of compound fertilizer will be further postponed. However, the winter storage in the northeast region has been purchased for several rounds. At the end of October, the northeast sources of goods were concentrated at the station, and many platforms were suspended from loading and operation. Most of the sources of goods came from Inner Mongolia, Shandong, Hebei, Shanxi, etc. Some compound fertilizer plants in the northeast are already producing, and some urea stocks are available. It is concluded that the current urea price is within the psychological expectation of compound fertilizer, and that is acceptable. In order to maintain later production, batch purchase is required.
3. Urgency of purchasing of off-season reserves increased
According to the requirements for new off-season storage in 2022, the storage enterprises in Northeast China and Inner Mongolia will start warehousing in October at the latest, and other regions will start in November at the latest. Since the end of September, the off-season reserve has been following up on bargain hunting, but few have heard of large orders entering the market. At present, the epidemic situation is spreading across the country, and the production, shipment and downstream demand in Shandong, Shanxi, Henan, Inner Mongolia, Xinjiang and other major urea production areas and important regions with market trends are limited. In this time node, we can see that the urgency of storage procurement continues to increase, and we need to consider the uncertain factors brought by the epidemic.
To sum up, the pattern of oversupply of urea in China remains unchanged, but periodic oversupply often occurs. From the perspective of cost, urea enterprises of fixed process continue to lose money, while the profits of urea enterprises of coal water slurry and space furnace process are also continuously compressed. Under the support of cost, the willingness of enterprises to keep prices is generally strong. At present, the urea futures may fluctuate at the bottoming stage, so next we will focus on the purchase time nodes of off-season storage and winter storage. The market in October was not satisfactory, but due to the post-demand, the overall urea market in November was better than that in October. For the urea market, it would be unwise to expect too much , if the performance of October could be qualified, then it may be expectable in November.