The smooth transition of the market makes urea reproduce gains

With the cooling of the northeast concentrated purchase of urea heat in the spring, many domestic distributors are already waiting for the opportunity to look forward to a new round of price cuts to “copy” the bottom. The reason for the judgement is simple: since late February, due to too little urea in the market, the supply and demand in the three provinces in East China has become increasingly tight. Demand has been released quickly in a short period of time, which has not only contributed to the increase in local urea prices, but has also effectively pushed up North China and East China price. During this period, orders from all parties followed, especially in urea companies in Hebei and Shandong, and even some were overwhelmed. As a result, a large increase in demand caused the mainstream tonnage in the north to soar to 2,150 yuan in less than two weeks.

However, we can see from the flow of urea shipments, we can find two problems: First of all, a large number of orders in the northeast need the company to digest for some time, and the arrival of other provinces will also soon fill the gap in the Northeast market. Therefore, the ability to support prices is relatively limited. The conservative estimate is about ten days. On the other hand, although the ex-factory prices in North China and East China are rising, they have never been purchased by local dealers. This also proves that everyone predicts that in the short term, it will be a process of rising and falling, and it is not in a hurry to make up the position. However, after entering March, urea prices did not appear to have fallen sharply as the merchants had expected, but only showed slight fluctuations and stabilized.

I remember that in the last week's market, I also predicted that the market would first fall and then rise, and that the decline in early March can reach 50 yuan, that is, the northern ex-factory price is expected to return to 2100 yuan / ton. After that, it will be pulled back by the rigid demand of returning green fertilizer. From an objective point of view, the reason why the northern market is difficult to start is not only due to the high price of urea; on the one hand, it is due to a slightly arid climate compared with the normal year, which makes terminal farmers unable to delay the fertilization period. Therefore, the author did not make any speculations such as returning green fertilizer to centralized procurement in mid-March and the company’s price reduction and promotion in the first half of the month. However, I did not anticipate that since the middle of last week, continuous rainfall in most parts of the northern part of the country has occurred. Although the rainfall is not large, it is very effective for the northern markets that will enter the green period. Not only did the company restore its confidence, but dealers also gradually had the intention of replenishing inventory in advance.

At present, urea companies have a clearer picture of market demand, while downstream distributors do not have sufficient inventory and manufacturers to conduct price games. Moreover, companies at this time have preexisting orders to execute, and there is basically no sales pressure. Dealers are likely to lose their bargaining power. Of course, whether the price is hard to find a turning point depends on the operation of the company. Judging from the 71% operating rate of domestic urea companies, the supply and demand in the market is not tense. It is only when there is a downstream centralized procurement situation that there will be feelings of out of stock. Therefore, at the same time, the price of urea will rise at the same time with certain risks. I suggest that businesses should focus on the purchase and sales of the pre- and mid-term after seeing the cycle of returning to Qingfei. Once it reaches the end of the market, it is necessary to withdraw funds as much as possible to avoid risks.