Current guests:

Shanxi Coal Economic Operation Department Director Gu Hongbin

Guest view:

Since mid-May, the domestic price of urea has experienced a rose. According to our previous analysis, this change in the basis of the price of urea is very stable, not short-term behavior. With summer approaching domestic fertilizer, under the full release of domestic demand and international demand, domestic urea prices in June - July remain strong.

Reporter: domestic urea market since early last year has remained tepid, frequently falling prices, the industry long-term bearish, mid-May overwhelmed by price increases far exceeding market expectations, to subvert the preliminary judgment urea analysts. From the business point of view, the current round of urea put up why "good and fast"?

Gu Hongbin: urea prices rebounded on the current round, I think we should know from three angles. First, the price movements; the second is the stock channel spot; Third, changes in the international market.

First, from the price point of view, after a protracted domestic urea market deserted, ex-factory price has been close to the cost line business, while some SMEs even while production losses, it can be said in the past year, the domestic urea prices bottoming completed It has been no drop down. In addition, huge living pressures lead to the contributing mood is very urgent, a good support, companies adjust prices rapidly, and the formation of the whole industry linkage.

Second, the domestic agricultural distribution channels, short-term out of the port are the basis of this price increase. Due to long-term domestic urea prices are low, dealers operating enthusiasm serious shortage of urea manufacturers and the main mode of cooperation for the Federal Reserve to jointly sell, or with the pin with the purchase, reserve channels at the lowest point in recent years. Meanwhile, pre-serious international bidding price is low, resulting in domestic urea collective conflict, set in Hong Kong cargo few. And into mid-May, the summer domestic fertilizer gradually start, India began a new round of bidding, domestic and international demand while the outbreak of urea in the short term supply and demand imbalance, the price put up provides a reasonable basis.

Finally, the cause of this change is a major cause of the price that the international market. Since the bid is too low, the volume is much lower than the pre-tender Indian demand. Status Indian domestic market, low inventories and sales stable determine its inevitable release a new round of bidding, the price is expected to increase. The recent tender in Pakistan have also let Chinese urea granules higher than $ 300 / ton FOB exports possible. Currently transported to the port of just over 10,000 tons of urea / day, no pressure port stocks, export situation is more optimistic.

Reporter: public information display, June 2, the leading domestic urea granules Shandong Luxi Chemical factory 1718 yuan / ton, the particles factory 1738 yuan / ton, rose after see also slipped. Major domestic urea companies have lowered after entering June ex-factory price, and maintain a low operating rate, does this mean that this put up the price of urea has come to an end?

Gu Hongbin: According to our previous analysis, this change in the basis of the price of urea is very stable, not short-term behavior. Price correction, partly because some domestic enterprises in the price haste, did not give the market enough time to reflect, on the other hand it is because the actual volume is limited at present, can not provide a stable support for prices.

Domestic urea prices have remained at low levels for a long time, the price of course make the industry put up a surprise, but also allow the market to such an abrupt change misgivings. At present, domestic enterprises currently operating rate of urea is generally not high, with year-ago levels similar business inventories low, turnover is limited in the short term, take the goods in general. Ex-factory price increase after the need to go through the dealer, in order to form Benefit primary market recognition. We believe that under the domestic fertilizer with summer approaching, the domestic demand and international demand full release, the domestic price of urea in June - July remain strong.

Reporter: put up on urea prices, the industry's distinct sound emerged. On the one hand is the company returning to the cheers, the other is the dealer dissatisfied sigh. It is said that in the Chinese market, "the stock market retail pit, pit urea downstream" historical norm, you have to see how?

Gu Hongbin: A Game of domestic fertilizer production enterprises and distribution business has always been to influence the market between the health sector instability undermine solidarity. Previously, the domestic urea price is relatively high, businesses, better flow of business profits, market price changes have some rules to follow, many domestic distribution channels in the off-season active hoarding goods gambling market, a large number of enterprise benefit. In the current market downturn, the Federal Reserve model of cooperation to jointly sell more common, distribution companies consider themselves in the new round of price increases in the "forgotten" so that we can understand the feelings, but it is also more description, manufacturer in cooperation with the distribution companies should be more long-term, more broad direction. "Close solidarity and concerted response" should be the new norm under the fertilizer market, production, distribution companies are required to keep in mind the key word, both in the major industry conference organized by the Association of nitrogen or the usual cooperation and communication, we have advocated business have a "heating, whom" consciousness, increase the exchange of information and strengthen risk management and control, so that the entire industry can common prosperity and good.