The short-term prices continued to show a decline
Into 2016, the urea market continued to decline. Whether dealers or manufacturers currently on the market still maintain a bearish attitude. Due to falling prices, dealers early hunters has been a loss, and no hunters dealers remained on the sidelines; production enterprises face increasing pressure on the stock, repeatedly lowered prices, but market clinch a deal did not improve.
Sundeliang, general manager of Shandong Union Chemical Group Co., Ltd. sales told reporters: "at present Shandong mainstream factory quotation has 1300-1360 yuan / tons, due to demand not flourishing, prices continued to decline, downstream market did not dare to purchase large quantities, although most of the enterprises have a loss, but the industry as a whole operating rate is still maintained at more than 70%, supply and demand contradictions exist determines the short-term price of urea is difficult to stabilize."
Henan Jin Kai Group Chemical Co., Ltd., general manager of Chemical Co., Ltd., general manager Yang Tongyu also said that the current Henan urea prices have dropped to 1320-1330 yuan / ton, the actual transaction price has fallen below 1300 yuan / ton. Although the price fell to nearly 10 years low, but the market turnover is still in the doldrums. Whether the demand for agricultural fertilizer or industrial compound fertilizer, there are no signs of improvement, with the increase in the stock of enterprises, urea prices showed a downward trend."
Outlook focused on the operating rate
The decline in the price of urea show, and the domestic urea industry overall operating rate will remain high, due to short-term market there is no obvious demand, so the price of urea whether stabilization is mainly decided by the operating rate.
Sundeliang analysts believe that the urea market overall operating rate remained at 70%, even if the price continues to decline, if the operating rate is not reduced, the market is difficult to climb. "Is not currently the industry's most difficult times, because the market is not a good support, 2016 a quarter of urea market may will be difficult to turn for the better, unless the operating rate is obviously reduced, but from a practical point of view, although about 90% of the enterprises has been a loss, but taking into account the overall operating and personnel costs and other factors, the short term operating rate will not appear to decline significantly." Sundeliang stressed that the operating rate of change requires a process, if the fat in the Spring Festival period, the urea market started the rate dropped to below 70%, while market demand can focus on the release, urea prices may also will stabilize.
Yang Tongyu also believes that is due to the current industry overall operating rate is high, the formation of a price game between the production enterprises, and the result of the game is the price, but the price did not return to the improvement of the market turnover. "Henan region currently prevailing market turnover is small, the hair is not very smooth, set in Hong Kong is very few, so under the pressure, enterprises only follow the market, once the price competition, enterprises are also only to fall, which also Shishuwunai." Yang Tongyu stressed that in the short term, if the operating rate remained high, the price of urea will be difficult to change the downward trend, and if the industry overall operating rate decreased significantly, urea supply competition pressure is reduced, prices will stabilize in the.
Overall, the year 2015, the urea industry started the rates remain high, which also determines the once demand side cannot release, prices fell also in reason. Therefore, 2016 urea market is mainly focusing on the operating rate of change.
Industry into a real reshuffle period
For the decline in the price of urea, Sun Deliang think the main reason or excess capacity. "Although a few years ago has been overcapacity, eliminate backward production capacity, but in fact, last year half due to urea prices rose sharply, the overall profitability of the industry, so some of backward production capacity did not really eliminated, the urea industry has entered a difficult period, although there are still some enterprises can be profitable, but for about 90% of the coal chemical industry, at present price of urea has been a loss, the industry entered a real shuffle period."
In addition, due to the sharp decline in grain prices in 2015, also to a certain extent, affected the price of fertilizer. Sundeliang said that the decline in food prices affect the farmers purchase fertilizer actively, exacerbated the market wait-and-see, has now entered in January, while the winter storage situation is not optimistic, has no improvement in the demand side, the contradiction between supply and demand will aggravate.
Yang Tongyu also believes that excess capacity is the supply side of the problem, while the demand side is mainly the decline in food prices. Both demand side and supply side are problems, which also caused the current decline in the price of urea.
The central economic work conference held the view that economic and social development for the 2016 is mainly to do a good job to productivity, to inventory, deleveraging, cost reduction, and make up for weaknesses in five tasks. Sun Deliang believes that the urea industry, in 2016 entered a real go to production capacity, to the inventory period. 2016 for the urea industry, has entered a real reshuffle period, and the market has no obvious positive, so go on, it is bound to have a part of the high pollution, high energy consuming enterprises will really quit the market."