Global urea trade pattern changes in China Urea Export under pressure -- Interview with Agus FMB, editor of the report of Mitchell Stephen
Since the cancellation of the policy of the national fertilizer export short season, the surface of China's nitrogen fertilizer export enterprises operating more flexible. However, with the global supply and demand of urea changed, the trend of international urea prices gradually lower. China's Urea Export enterprises are facing new competitive pressures. This year the global urea market will be affected by what factors? China's Urea Export enterprises should be how to make judgments? In this regard, the reporter interviewed the global fertilizer market analysis and price assessment agency Agus FMB nitrogen fertilizer report editor Mitchell Stephen (Mitchell Stephen), for readers to analyze the global urea market trend.
Reporter: how do you evaluate the global urea trade situation in the first quarter?
Stephen Mitchell: in general, since the beginning of 2016, the global market price of urea continued to decline. In the Middle East, for example, in January 1st the Middle East large particle urea spot FOB price of 225 U.S. dollars / ton, but now fell to 205 U.S. dollars / ton.
However, the trade situation in different regions is very different. 2-3 strong U.S. market, imports a large number of spot urea, support for North Africa and the Middle East urea prices. In contrast, a quarter of India market demand is reduced, the increase in the national range of urea inventory. South East Asia and southern Africa are also affected by drought demand for local use. Brazil is also due to further expansion of economic and financial problems, urea import restrictions. The demand for urea in Europe has increased, mainly because of the cost of nitrogen in urea compared with ammonium nitrate.
Reporter: the short-term trend in the global urea market will show how the characteristics? What are the main factors that will affect the two quarter urea trade price?
Stephen Mitchell: in the two quarter there will be new production capacity of urea into the market, mainly in Nigeria project, there may be a project in Iran. Increased supply may be further down the price, but whether the price change also depends on the speed of the new production capacity.
The two quarter will usher in the end of the northern hemisphere spring, Europe and the United States import demand will fall. But imports from India, Australia and Latin America will rise. Demand in these three areas will become the two quarter of the global price of urea is the main factor.
In addition, the Chinese market can be active and how long is another factor affecting prices, Chinese enterprises last year to actively export continued until June, this year is still looking at the level of export prices and participation of Chinese enterprises.
Reporter: compared to last year, this year the global scope of the supply and demand of urea will be what kind of change? Whether it will affect the structure of Global trade?
Stephenmitchell: 2016, except China, approximately has 750 million tons of new urea production capacity put into production, some countries are for export. Others, especially in the United States, in order to meet domestic demand, import substitution.
In 2016, the United States will be the main factor in the development of nitrogen fertilizer industry to drive the global urea market. Urea is expected to increase production capacity in the United States will replace imports, so as to force the export to the U.S. companies looking for other markets. The supply of Middle East producers accounted for most of the United States imports of urea, 2014-2015 annual trade volume of less than 4 million tons, they may go to Asia, especially in India, looking for alternative markets.
In 2016, some countries aimed at the export of urea production line will be completed, including Nigeria, Iran and Malaysia, especially Iran and Malaysia to increase export volume will be directly related to the formation of China's Urea Export competition.
Reporter: the Middle East, Russia, the United States, the cost of nitrogen production? Whether it will affect China's Urea Export?
Stephen Mitchell: the cost of each region is different, but the Middle East, Russia and the United States are synthetic ammonia and nitrogen fertilizer production costs lower. U.S. shale gas production is still increasing, and shale gas costs less than $2 /mmBtu. Middle East producers mainly benefit from long-term contracts for natural gas, at the same time, the factory is located in the vicinity of the port, the logistics cost is low, the market is conducive to the Asian and American transport.
Russian producers benefited from the devaluation of the currency, the last year, the dollar fell nearly 30% against the U.S. dollar exchange rate, raising the dollar led the export value of urea; at the same time, the cost of natural gas is relatively low. But most of the Russian factories in the inland, away from the port, to the Baltic Sea and the Black Sea port of high transport costs.
China has a large number of urea production enterprises, and a large number of coal production enterprises, it is difficult to summarize production costs. But the low cost of urea has continued to increase its competitiveness, which could depress global market prices, leading to a decline in exports of Chinese exporters in 2016.
Reporter: do you have any suggestions for the operation of China's Urea Export in the short term?
Stephen Mitchell: China's urea market in the short term and even in 2016 are more difficult to judge the market trend. 2016 1-2 China urea export volume decreased by 30% compared to the same period in 2015, mainly due to the decline in exports to Latin America and the United states. Chinese to the export market by other suppliers, especially the misuse of the former Soviet Union and the Middle East suppliers. It is estimated that this trend will continue in the two quarter. India will start the import, the Chinese suppliers can expect the India market. But China's export situation also depends on the competitiveness of exporters.