As around the urea mainstream offer of 2000 yuan (t price, the same below) in the second half of the urea business is bound to experience a "to the inventory process.

The financial crisis of 2008 to allow entrepreneurs to come into contact with the concept of "to the inventory. It refers to the large number of stocks: the pre-mass production, resulting in serious exceed demand, only the digestion of these stocks, companies can resume normal production process. The production of the inventory will need the following several conditions: production capacity surplus, the price is higher than the cost, the total demand is relatively stable. Urea industry's current situation: First, the situation of excess domestic urea production capacity is an indisputable fact; Second, the urea production of the raw coal prices drop, and now the industry completely average cost should be less than 1950 yuan, production companies an average more than 100 yuan of profits, decline in the price of urea is much to can inhibit the production can release the point so as to ensure the industry enough high the start rate; its three, Southwest natural gas supply is more sufficient, southwest of production can release to provide the conditions; Fourth , urea, total domestic demand is relatively fixed. After years of development, the financial strength of the urea enterprises began to become strong, need to be realized as soon as requirements have become weak to the strong financial strength and corporate price-fixing cartel between the same market game, the price of slow decline, short-term caused in the illusion of a market price of firm, the consequences of this illusion enterprises start rate remains high, the oversupply problems continue to accumulate, the development of the last, may evolve into the very serious to the inventory process . This time, the commercialization of currency require the realization of the production cost of enterprises bottom line will be completely breakdown, just as we see the steel industry, a loss of the entire industry.

But the strength of the industry, does not mean that can fundamentally change the laws of economics!

The total urea demand is relatively stable and unstable supply. Total capacity large enough, when the price is higher than the costs, will result in the upgrading of enterprises operating rate, the increase in the supply of goods; when prices are below cost, the operating rate will drop, the supply of goods will be reduced. Funded enterprises, mass production, a large number of self-storage prop up the market; bullish expectations, commercial hoarding cases, the price is higher than the cost of production enterprise products, enterprise mass production, total demand is relatively fixed will cause serious oversupply, resulting in the inventory of needs. Will be commercialized currency monetization, this time, the enterprise at all costs to sell, the operating rate will be greatly decreased, thus restoring the relationship between supply and demand balance.