Urea is now safe in Hong Kong

Last week, the results of the bidding in India announced that the procurement volume reached 1.765 million tons of urea, and the price ranged from CFR302 to 308 (t price, the same below), of which nearly 1.5 million tons were from China. This undoubtedly has three major advantages for China's urea market: First, it has a huge purchase volume and can basically empty all sources of the port (according to the statistics of the website, on September 25, the port inventory will be around 1.9 million tons); second, the price is appropriate. Basically, the current domestic price can be docked (equivalent to the Hong Kong price above 1650 yuan); the third is the bottom of the short-term international urea price. From the market outlook, export prices are expected to continue to maintain a rising trend, companies can boldly set Hong Kong.

From historical data, the fact that the international urea market prices remained below the FOB of US$300 in the past five years only occurred in the first half of 2009 and the first half of 2010, and basically exceeded US$300 afterwards. This has a lot to do with energy prices. Sex: When the financial crisis broke out in 2008, the international oil price dropped to 34 US dollars per barrel. Today, the price of oil has risen to more than 90 US dollars/barrel, and the price of natural gas is not the same. Take Russia's supply of Ukrainian natural gas as an example. Its supply price is US$385 per thousand cubic meters. This alone, the raw material cost equivalent to urea has reached US$231 (equivalent to more than 1,400 yuan), and the same problem is inevitable. Occurs in other countries such as Europe. When prices fall below the cost, these companies will choose to stop production. That is, urea prices below $300 are unacceptable prices for countries that do not have natural gas resources. This is the opposite of production. Barrel principle." The high production costs among the enterprises determine the lowest price in the market.

Some people have concluded that the price of urea will continue to decline because the price of international agricultural products hit a new low in recent years. The author believes that this view is untenable. If the price of urea is high, then we have no doubt about this kind of judgment, but the fact is that the price of urea is also a new low in recent years, basically matching the price of agricultural products.

The closure of China's export window period has entered a countdown, which means that China's supply of goods to the international market is gradually shrinking. In the case of a large number of domestic sources of previous shocks, the international market has maintained a price of more than 300 US dollars, then we have reason to believe that even after the closure of China's export window period, if the international market can not continue to improve, but it has never been a plunge. Reason, the FOB price of 300 US dollars after the window period, the author's judgment is unbreakable.

Look at the demand again. According to reports from foreign media, India will also purchase 1.5 million tons of tenders in late October, and Pakistan will also have a 600,000-ton procurement plan. With only these two items, it will reach a demand of 2.1 million tons. If these two tenders can be held in this way, then with the competitiveness of China's urea exports, there is no problem in winning over 1.6 million tons. From the historical data, India's procurement is only less than 40% of the country's export sales, not more than 50% in a single month (only reached 70% in April this year). There is only one month before the end of the export window period. In the current situation that the port is basically emptied, even if the number of catchment ports in October reached 2 million tons, the author believes that it cannot satisfy the export demand in the latter period and the export price will inevitably rise.

The biggest variable comes from the question of whether it will continue to collect ports and enjoy window policy after the window period. We do not expect this to happen this year. If this happens, then the early-stage bonded person is the victim of the greatest interest. Even if the Commission for Discipline Inspection does not take the initiative to investigate, it may be reported by the injured party, so the illegal operation will encounter even greater risks. , thereby further depressing the resources available for export later.