Urea dipstick must be carefully faced

After the May Day holiday, the price of urea in some domestic provinces suddenly rebounded. Mainly concentrated in Shandong and the surrounding areas, the offer rose around 50 yuan. However, due to the fact that most of the previous manufacturers had sold their sales steadily, the actual transactions for this time were about 70-80 yuan. The low-end ex-factory price of Shandong's 1880 yuan/ton turned to 1940 yuan/ton, and the production companies made such rapid changes between passive and active in the short term. This is indeed a bit embarrassing. The market has followed this or that argument: For example, after seeing the loss of production in major enterprises such as Shandong Luxi and Yangmei Plain, it naturally comes to mind that the pressure of supply and demand has eased up the price of companies, or that they have learned from the channels. Agricultural customers take goods to pull demand, which in turn push up the ex-factory price; another part of the company is also speculating that large companies with insufficient stocks will stock up for summer fertilizers in advance. In short, the quick interpretation of these initial urea prices will give people a feeling of “afterthought.” In the first two periods of the market, I demonstrated that the price of urea was likely to rise steadily in May. It is expected that the ex-factory price in the north represented by Shandong enterprises is expected to remain at 1900-1950 yuan/ton. At the same time, it is also recommended that everyone be cautious in the face of bargain-hunting, the original reason is that although the bottom line of urea falling prices is easy to judge, but the price rebound time is difficult to predict. The example of keeping urea at low prices for a long period of time from March to August 2010 was cited. At the moment, the author still proposes to be cautious in the face of bargain-hunting. The reason is that opportunities and risks coexist.

Opportunity is naturally remarkable, first of all, the first half of the fertilizer industry is generally in a predicament, raw material fertilizer prices continue to decline, with urea is the most obvious. From the end of Spring Festival to the end of April, the tons of urea production in key urea production areas in Shandong and Hebei dropped by 220-260 yuan. During this period, circulation was full of countless upside-down goods and miscalculations. As of the beginning of May, the vast majority of urea stocks of agricultural companies had bottomed out. Even if the industry leader in chemical fertilizers such as Sinofert only has about 200,000 tons of urea, compared with many inventories, the middle peasants have no intention of selling or collecting goods for the port. At this point if you consider the market demand from the perspective of fertilizer use in the summer, with the ex-factory price of around 1900 yuan, it is still reasonable. In addition, analysis can also be started from the international market. Earlier this month, the FOB price of urea at the Chinese port was US$340, and it may fall to the US$330 previously forecast at the fmb meeting. The ex-factory price of domestic enterprises under the situation of postponing exports in the future can still be estimated at 1900 yuan/ton. Imagine that June-July is not only a low-urea urea season, but also a season for domestic agricultural summer fertilizer, plus the purchase of industrial fertilizers. In short, the three channels of agriculture, industry, and exports will provide demand support for the later urea market.

Risks also exist, and in the case of the domestic urea market in May alone, there has been a lack of clear positives. The forecast ex-factory price is basically consolidated between 1900-1950 yuan/ton. That is to say, the dealers have little profit when the small batch operation is not priced at 1900 yuan. However, if there are group behaviors that focus on bottoming out, it will be very difficult to see opportunities for liquidation within a month. There may be friends who say that buying at the bottom will also pull up the ex-factory price, creating better sales opportunities. But I would like to say that from the current stage of domestic urea companies operating rate and downstream mentality considerations, dealers concentrated or chase upwards and bargain-hunting methods is undoubtedly only for the manufacturers to reduce the pressure Bale, itself is a fall "losing money and earning," the end.

After simply illustrating the coexistence of opportunities and risks, the author is not suggesting that we continue to wait and see, otherwise the above text will become "nonsense", but we must do our best. And it is necessary to timely adjust the amount of summer fertilizer according to the current good market. For example, in the case of a urea company operating rate does not fall, it needs to think of the situation of excess supply and demand; port urea inventory is too large, we must consider the impact of export price competition on the domestic market. Of course, in addition to human factors, we must also pay attention to the climate factors, and recall that the majority of dealers have made mistakes in the spring plowing market, such as the cold in the north, the spring in Northeast China, and the drought in southwest China. In short, one sentence: "At the end of the figure, urea makes more money, and it loses less with caution."