The price of urea has risen day after day, revitalizing the silent winter storage market
June 12, 2024, 9:21 AM
China agricultural communication
2728
Guide
Highlights at a glance
After a quiet October, China's domestic urea market surged in November, with ex-factory prices rising from 2,450 yuan/ton to 2,600 yuan/ton by mid-month—an increase of 150 yuan/ton. This upswing, unusual for the off-season, is driven by stabilized coal costs, low initial prices improving dealer confidence, and early winter storage demand. Unlike last year’s high-price environment, current lower levels reduce reserve risks, prompting national reserve enterprises and large traders to enter the market. Analysts note rational price adjustments and steady order inflows, with downstream sectors like compound fertilizer and agriculture gradually boosting demand. Supply remains stable, though gas-based producers may cut output post-November, supporting further upward pressure. The market is expected to maintain a stable, slightly bullish trend through winter, benefiting overall fertilizer circulation and industry sentiment.
After the "gap period" in October, the domestic urea market entered the "opening and hanging mode" in November, and the market price ushered in the "upward tide". On November 1st, the mainstream ex-factory price of domestic urea in Shandong and other regions was 2,450 yuan/ton. As of November 14th, the mainstream ex-factory price of domestic urea in Shandong and other regions was 2,600 yuan/ton. That is to say, in the past half month, the domestic urea market price has increased by 150 yuan per ton, which is undoubtedly a great benefit for the off-season urea market. So, why did this wave of market rise? How long can this rally last? What impact does it have on the winter storage market?
Prices continue to rise, traders bargain-hunting for goods
Yang Tongyu, deputy general manager of Henan Jinkai Group Yanhua Chemical Co., Ltd., analyzed the reasons for the current domestic urea market price increase:
First, because the coal price continues to be high, at present, the lump coal price is 2,400 yuan/ton, and the end coal price is 1,600 ~ 1,700 yuan/ton. However, the ex-factory price of 2,400 yuan/ton urea in the early stage has fallen below the cost line of the fixed-bed production process, which means that the ex-factory price of 2,450 yuan/ton urea in China has bottomed out in early November, and the downstream dealers can accept this price psychologically, thinking that the risk of later storage is small.
Second, the domestic urea market in the winter storage season this year is completely different from last year. During the winter storage period last year, the urea market price was "high" and kept rising. In the same period last year, the domestic urea market price was 2,600 ~ 2,700 yuan/ton; However, the domestic urea market price is at the bottom in the winter storage season this year, so the risk of fertilizer preparation by dealers is relatively small, and some large traders with the task of national storage have also started to enter the market to get goods, which has stimulated the current domestic urea market to some extent;
Third, the price increase in the domestic urea market is relatively rational. Although the price has been rising for nearly half a month, the price adjustment in factories is relatively small. Both factories and distributors are more rational and calm about the urea market. It is expected that the domestic urea market as a whole will remain stable and upward in the later period.
"Compared with the previous period, the domestic urea market rose relatively slowly this week, and the enthusiasm of getting goods downstream was more rational." Tang Feifei, a urea analyst at Zhuo Information, said that the domestic urea market as a whole showed a steady and slightly rising rhythm, and the new orders followed up relatively rationally. The advance orders of enterprises are acceptable, and the market transactions are flexibly adjusted. The load of industrial equipment is acceptable, and the high price slows down. Merchants' willingness to make up orders is slowing down, and most of them are determined by sales.
In terms of price, the ex-factory price of small and medium-sized granular urea in Shandong is 2,590 ~ 2,610 yuan/ton, the receiving price of small granular urea in Linyi is 2,600 ~ 2,610 yuan/ton, and the receiving price of small granular urea in Heze is 2,580 ~ 2,600 yuan/ton. The downstream follow-up is cautious, and the external arrival is increasing one after another. The ex-factory price of small and medium-sized granular urea in Hebei is 2,600 yuan/ton, and the merchants make up the order step by step; The mainstream ex-factory price of small and medium-sized particles in Henan is 2610~2630 yuan/ton, which is supplied from the spot to the surrounding areas. Shanxi's mainstream reference is 2520~2570 yuan/ton for large-particle automobile transportation, and 2520~2560 yuan/ton for medium-and small-particle automobile transportation. The load in the province is low, so the merchants can buy and sell it on the market.
On the whole, the domestic urea market has been running strongly recently, the market price has been rising for several days, the market transactions are active, the downstream dealers are actively taking goods, and some factories have controlled or stopped taking orders. On the demand side, the factory compound fertilizer has started plans one after another, and the market is gradually improving; On the supply side, the coal price remained firm, the cost side was strongly supported, the supply remained stable, the factory received sufficient orders, and the ex-factory price went up continuously.
Confidence in the industry benefits the winter storage market.
After entering November, the focus of the industry turned more to the winter storage market. At present, this rising trend in the domestic urea market makes everyone confident in the market, and undoubtedly accelerates the circulation of the winter storage market. Especially during the winter storage period this year, the domestic urea market price was at a low level, which reduced the risk of traders' reserves to a certain extent, and everyone actively entered the market.
According to the reporter of "China Agricultural Materials", recently, most enterprises with the task of national reserve have entered the market to replenish the stock, which has boosted the current domestic urea market to some extent. It is reported that this year's "Measures for the Administration of Commercial Fertilizer Reserves" stipulates that the inventory at the end of the third month in the annual reserve time shall not be less than 50% of the storage task, and the inventory at the end of the fourth to sixth months shall not be less than 100% of the storage task. That is to say, the storage enterprises that started to reserve in September will complete half of the storage task by the end of November.
Zhang Xuenong, deputy general manager of United Huinong Agricultural Materials (Beijing) Co., Ltd. said that at present, the domestic urea market price is at a low level, which is beneficial to the winter storage market to a certain extent, and large traders are relatively active in getting goods recently; In addition, the northeast compound fertilizer factory started purchasing recently, and this wave of purchasing is also very beneficial to the winter storage market, resulting in an improved atmosphere in the domestic urea market, active market transactions and full confidence in the industry.
When it comes to the market outlook, Yang Tongyu said that the domestic urea market is relatively stable in the near future. If the transaction continues to be active in the later period, the market price may still go up, but the increase will not be too great, and the overall rhythm is relatively stable. The industry hopes that the urea market will keep stable and fluctuate slightly, and the price will not fluctuate greatly.
Tang Feifei also believes that at present, the domestic urea market is temporarily stabilized, and merchants are cautious in following up. In the early stage, affected by the COVID-19 epidemic, the logistics capacity in some areas was blocked, and it will gradually ease in the near future, and the goods are arriving in different provinces. On the supply side, the industrial start-up load is acceptable, and the small single bargain is being followed up. It is expected that the domestic urea market will continue to organize and run in the near future, with little market fluctuation.
On the whole, the domestic urea market is running strongly at present, and the downstream receiving sentiment is acceptable. The pending orders held by urea factories are very sufficient, and the price attitude is firm. The market is expected to continue to rise. With the demand of winter storage of chemical fertilizers in the market, fertilizer preparation in northeast compound fertilizer factory, winter wax fertilizer for wheat in the north and topdressing for rice in the south, the demand will continue to advance; At the same time, gas-head enterprises will stop for maintenance one after another after the end of November. Probably, the urea market will rise steadily in the multi-party game, and the steady upward trend will become the main rhythm.
Prices continue to rise, traders bargain-hunting for goods
Yang Tongyu, deputy general manager of Henan Jinkai Group Yanhua Chemical Co., Ltd., analyzed the reasons for the current domestic urea market price increase:
First, because the coal price continues to be high, at present, the lump coal price is 2,400 yuan/ton, and the end coal price is 1,600 ~ 1,700 yuan/ton. However, the ex-factory price of 2,400 yuan/ton urea in the early stage has fallen below the cost line of the fixed-bed production process, which means that the ex-factory price of 2,450 yuan/ton urea in China has bottomed out in early November, and the downstream dealers can accept this price psychologically, thinking that the risk of later storage is small.
Second, the domestic urea market in the winter storage season this year is completely different from last year. During the winter storage period last year, the urea market price was "high" and kept rising. In the same period last year, the domestic urea market price was 2,600 ~ 2,700 yuan/ton; However, the domestic urea market price is at the bottom in the winter storage season this year, so the risk of fertilizer preparation by dealers is relatively small, and some large traders with the task of national storage have also started to enter the market to get goods, which has stimulated the current domestic urea market to some extent;
Third, the price increase in the domestic urea market is relatively rational. Although the price has been rising for nearly half a month, the price adjustment in factories is relatively small. Both factories and distributors are more rational and calm about the urea market. It is expected that the domestic urea market as a whole will remain stable and upward in the later period.
"Compared with the previous period, the domestic urea market rose relatively slowly this week, and the enthusiasm of getting goods downstream was more rational." Tang Feifei, a urea analyst at Zhuo Information, said that the domestic urea market as a whole showed a steady and slightly rising rhythm, and the new orders followed up relatively rationally. The advance orders of enterprises are acceptable, and the market transactions are flexibly adjusted. The load of industrial equipment is acceptable, and the high price slows down. Merchants' willingness to make up orders is slowing down, and most of them are determined by sales.
In terms of price, the ex-factory price of small and medium-sized granular urea in Shandong is 2,590 ~ 2,610 yuan/ton, the receiving price of small granular urea in Linyi is 2,600 ~ 2,610 yuan/ton, and the receiving price of small granular urea in Heze is 2,580 ~ 2,600 yuan/ton. The downstream follow-up is cautious, and the external arrival is increasing one after another. The ex-factory price of small and medium-sized granular urea in Hebei is 2,600 yuan/ton, and the merchants make up the order step by step; The mainstream ex-factory price of small and medium-sized particles in Henan is 2610~2630 yuan/ton, which is supplied from the spot to the surrounding areas. Shanxi's mainstream reference is 2520~2570 yuan/ton for large-particle automobile transportation, and 2520~2560 yuan/ton for medium-and small-particle automobile transportation. The load in the province is low, so the merchants can buy and sell it on the market.
On the whole, the domestic urea market has been running strongly recently, the market price has been rising for several days, the market transactions are active, the downstream dealers are actively taking goods, and some factories have controlled or stopped taking orders. On the demand side, the factory compound fertilizer has started plans one after another, and the market is gradually improving; On the supply side, the coal price remained firm, the cost side was strongly supported, the supply remained stable, the factory received sufficient orders, and the ex-factory price went up continuously.
Confidence in the industry benefits the winter storage market.
After entering November, the focus of the industry turned more to the winter storage market. At present, this rising trend in the domestic urea market makes everyone confident in the market, and undoubtedly accelerates the circulation of the winter storage market. Especially during the winter storage period this year, the domestic urea market price was at a low level, which reduced the risk of traders' reserves to a certain extent, and everyone actively entered the market.
According to the reporter of "China Agricultural Materials", recently, most enterprises with the task of national reserve have entered the market to replenish the stock, which has boosted the current domestic urea market to some extent. It is reported that this year's "Measures for the Administration of Commercial Fertilizer Reserves" stipulates that the inventory at the end of the third month in the annual reserve time shall not be less than 50% of the storage task, and the inventory at the end of the fourth to sixth months shall not be less than 100% of the storage task. That is to say, the storage enterprises that started to reserve in September will complete half of the storage task by the end of November.
Zhang Xuenong, deputy general manager of United Huinong Agricultural Materials (Beijing) Co., Ltd. said that at present, the domestic urea market price is at a low level, which is beneficial to the winter storage market to a certain extent, and large traders are relatively active in getting goods recently; In addition, the northeast compound fertilizer factory started purchasing recently, and this wave of purchasing is also very beneficial to the winter storage market, resulting in an improved atmosphere in the domestic urea market, active market transactions and full confidence in the industry.
When it comes to the market outlook, Yang Tongyu said that the domestic urea market is relatively stable in the near future. If the transaction continues to be active in the later period, the market price may still go up, but the increase will not be too great, and the overall rhythm is relatively stable. The industry hopes that the urea market will keep stable and fluctuate slightly, and the price will not fluctuate greatly.
Tang Feifei also believes that at present, the domestic urea market is temporarily stabilized, and merchants are cautious in following up. In the early stage, affected by the COVID-19 epidemic, the logistics capacity in some areas was blocked, and it will gradually ease in the near future, and the goods are arriving in different provinces. On the supply side, the industrial start-up load is acceptable, and the small single bargain is being followed up. It is expected that the domestic urea market will continue to organize and run in the near future, with little market fluctuation.
On the whole, the domestic urea market is running strongly at present, and the downstream receiving sentiment is acceptable. The pending orders held by urea factories are very sufficient, and the price attitude is firm. The market is expected to continue to rise. With the demand of winter storage of chemical fertilizers in the market, fertilizer preparation in northeast compound fertilizer factory, winter wax fertilizer for wheat in the north and topdressing for rice in the south, the demand will continue to advance; At the same time, gas-head enterprises will stop for maintenance one after another after the end of November. Probably, the urea market will rise steadily in the multi-party game, and the steady upward trend will become the main rhythm.
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June 12, 2024, 9:21 AM
June 12, 2024, 9:21 AM
