U.S. enthusiasm for production continues to show a downward trend

The operating rate of production enterprises has remained high since August. Although the price of urea has continued to adjust, the operating rate of various production enterprises has remained high. Except for a few companies that have undergone short-term maintenance, most of the companies are almost at full capacity. Why does the company's production enthusiasm continue to rise as urea prices fall? The main reason is that urea companies can still maintain profitable operations according to the current market prices.

Yan Hongtao, deputy general manager of Shandong Yantai Zhongde Group Co., Ltd., believes that at present, the market is not good for both potassium fertilizer and phosphate fertilizer, and the company is at the edge of losses. Although the price of urea has dropped by a certain extent, the company can still maintain profitability. He said: “As the price of coal falls, the current production cost of urea companies has also been reduced accordingly. Even if the current price of urea has fallen below 2,100 yuan/ton, companies can still maintain profitable operations and face such a profit situation. No company will stop production and maintenance, and most of them will maintain a high operating rate or start production at full capacity."

It is understood that due to the slowdown in domestic economic growth, coal prices have been declining since last winter and are affected by the substantial increase in imported coal. There is still a possibility of further decline. This will cause the manufacturing cost of urea enterprises to remain high. May be further reduced. The continuous decline in coal prices has given urea companies a chance to breathe, and it has also made some urea companies dare to continue to build up their production at a time when the market is weakening.

Traders export transactions without profit With the end of domestic fertilizer, both the agricultural demand and the demand for compound fertilizer industry are not large, but the company's production start-up rate has not dropped significantly, so it should be said that for urea companies should have a certain Inventory pressure, but from the reporter's investigation, at present, some domestic production companies have indicated that the pressure of inventory is not great.

Xu Peng, head of the sales department of Jiangsu Linggu Chemical Co., Ltd. believes that although the current production of the company is basically normal, the pressure on stocks is not great. The main reason is that due to the current inventory of dealers is relatively small, so some long-term cooperation of customers will also take goods properly. He told reporters: “Although the fertilizer season has passed, there is still a small amount of demand in the market, mainly due to the demand for rice fertilizer and compound fertilizer in parts of the south.”

In fact, whether it is the demand of compound fertilizer companies or agricultural demand, the current consumption is very small, which is not enough to ease the pressure on domestic production. Exports are still highly anticipated. Xu Peng believes that the key to export is to see prices. Since the current domestic prices are still higher than the international market prices, export transactions are more difficult. In addition, with the large amount of goods collected in the previous period, the ports have basically been suspended, so in the short term, if domestic prices do not fall, exports will be very high. difficult.

Yan Hongtao also believes that if the current price, according to the current urea exports are unlikely, but the reason why the recent port transactions have continued, mainly due to traders to reduce their own export losses. He said: "After some traders got their goods at high prices in the early stages, international prices would rise during the gambling export period. However, international prices have dropped sharply. Some traders have reduced their prices in ports, which will facilitate transactions. In essence, it is a loss export."

At present, Chinese traders bid for India's urea bid at 380-385 US dollars. Although the latest transaction's FOB price is between 383-388 US dollars, there are very few buyers willing to pay this price, that is to say the price still exists. The possibility of further decline, so the current situation of China's urea exports is not optimistic.

Price still maintains downward trend Xu Peng believes that although the current urea price has fallen sharply from the previous high, the demand for industrial compound fertilizer is not concentrated due to weak demand in the domestic agricultural market. If the export still maintains the current situation, the urea market Will keep the downturn. If domestic prices fall properly, the promotion of export transactions and effective relief of domestic oversupply pressures will be conducive to the healthy operation of the urea market.

Yan Hongtao believes that at present, there is no favorable factor in the urea market, and prices will continue to maintain the downward trend. It is expected that the market will decline steadily or slightly in August. If the market demand does not improve, the price will fall below RMB 2,000 per ton in September and October. Great. He said: "Although the industry is currently not optimistic about the urea market, but still expect the price to live steadily. After all, many fertilizer companies have already started collecting money, and there are no pricing measures for dealers, and dealers are not currently There is an urgency to get the goods, so if the price of urea falls sharply, the risk of the compound fertilizer company will increase."

In the reporter’s investigation, it was found that neither the urea production companies nor the compound fertilizer production companies, nor even the wait-and-see circulators, expect the urea price to drop sharply. Once the price drops sharply, the interests of all the links will be damaged, and even the A substantial loss occurred. Under the current background of a sluggish economic environment at home and abroad, it is hoped that while urea companies keep profitable operations, they will moderately reduce prices to meet market demand and maintain proper operating rates to maintain the sustainable and stable development of the company.