Urea production or cited businesses choose to buy the bottom

It is now the end of the spring fertilizer season and the summer preparation fertilizer stage. Although it can be understood as a period of domestic demand, objectively speaking, urea will not fall below 1,400 yuan/ton. Through comparison of price trends over the years, it can be seen that the nationwide urea price has created a new low in the past 10 years. This has to be said to be a "milestone" of an industry, but its mark is not a great achievement but a reminder. The "Warning Alarm" with serious overcapacity. Indeed, a urea excess capacity is not a problem that can be solved overnight, and this pessimism on the industry can only add to the annoyance of people, there is no minimum guidance on the operation of the market. In fact, the author does not deny that business opportunities exist at any time. At this time, the urea market is no exception. The face of the domestic urea industry has now dropped to 64% of the operating rate of the status quo, some dealers have been thinking about bargain-hunting, but also caused more downstream businesses to pay attention to the trend of urea prices. If you follow this development, the urea market may be able to create a short-term operation opportunities.

The most important point in reducing the risk of hunters is to look at the bottom line price as much as possible. For urea, it is not only necessary to understand the mainstream costs of key production areas, but also to see how the manufacturers can withstand the price upside down. Everyone knows that the cost of opening and stopping a urea company is high, and the cost of personnel during parking is added. In this way, there is a balance between parking and upside down. According to the author's understanding, due to the current low price of raw coal, the production costs of the mainstream urea enterprises in Hebei and Shandong have dropped to around 1,450 yuan/ton, and the ex-factory price of 1,400-14,420 yuan/ton can still be accepted by enterprises. There is still a small gap between the urea cost line and the bottom-up opportunity.

Of course, this is just a judgment for individual companies. If you focus on the whole industry, the operating rate of the industry is undoubtedly the best reference. For the current domestic urea enterprises operating rate fell to 64% of the current situation, can be compared with the second half of 2009 and 2010 the urea market, the original operating rate of the industry fell to about 55% before making the price stop falling at 1480-1500 yuan / ton. A few years later, the domestic urea production capacity has increased by more than 20 million tons, and the operating rate can still be maintained at more than 60%. I do not think that the price of 1,400-14,420 yuan/ton is a real bottom, but it does not rule out summer. Reserve fertilizer demand support for market expectations.

With the further increase in the number of urea companies shutting down maintenance this month, it has played a certain role in relieving the market decline. The mainstream factory prices in East China, North China, and Central China were not only maintained at 1450-1500 yuan/ton, but there were also some gains of around 20 yuan. This can be seen as a tentative pull-up of some companies.

Although there is still a risk of excess supply and demand in the country as a whole, the willingness of manufacturers to increase prices is more obvious. Considering that companies that have already stopped should not resume production because of the tens of yuan in urea, the cost of parking is high. Therefore, a slight increase in the price of urea will not cause a significant recovery in the operating rate of the industry, and this may be a chance to save money. I believe that after a long period of dullness, the rising space of tens of dollars is also unwilling to give up. However, the current domestic demand and export expectations are still not optimistic. The urea market is still subject to greater negative pressure. Even in the face of a bottoming rally, the short-term operation may be kept in mind. Once the increase in urea exceeds RMB 100/ton, it is necessary to take precautionary measures. The risks brought about by the company's resumption of production.

In summary, there are many domestic parking and inspection companies around the middle of this month, so the price of urea has been supported. At the same time, some companies have tentatively raised their prices and the market has shown signs of a slight rebound. Downstream businesses or choose the bargain hunter for the summer fertilizer demand, but recommended short-term operation, and it is recommended that when the urea price is lower than 1500 yuan / ton, after all, high prices will make the previous stop of the company to resume production. By then, the increased operating rate will intensify the contradiction between supply and demand, and the urea market will once again weaken.