2015 April 13 national development and Reform Commission price our website announced "on reducing coal-fired power tariff, commercial and industrial electricity prices notice", "notice" requirement in April 2016 20 days before the abolition of all chemical fertilizer price concessions, then from today start fertilizer electricity preferential abolished, which will butt down urea market bring good or bad? Urea analyst of China fertilizer network analysis from the following two aspects.
Policy adjustment
Notice that the "phasing out of fertilizer price concessions, fertilizer production of electricity to perform the same type of electricity industry and Commerce electricity prices; offers a larger spread in place, two steps in place, on the 20th of April 2016 abolition of all tariff concessions." North China, East China and central China and other places due to the large demand for fertilizer, the local fertilizer manufacturers more concentrated in 2015 before the majority of fertilizer manufacturers to enjoy preferential tariff policies. Although these areas in April 2015 fertilizer electricity prices have steps to cancel part of concessions, to urea manufacturers, for example, 2015 April fertilizer electricity concessions part after the abolition of price rose by about 0.8-1 angle / degrees, according to Xiao Bian learned from the market, 2016 in these regions after the completion of the step of the price adjustment, fertilizer electricity prices rose in the range of 0.5 to 1 angle / degrees. If urea manufacturers all use the national grid provide fertilizer preferential electricity, then in the adjusted price of urea production cost increase of about 80-100 yuan / ton, the nearly 40 million tons production capacity of urea affected, but it is understood currently these parts manufacturers have self generating system, completely rely on chemical fertilizer with urea manufacturers has very little.
Market feedback
Although estimates based on rough theory of the rate of price increases, the production cost of urea should be there will be 80-100 yuan / ton increase, but from the actual market to understand, at present most of the manufacturers have a certain self generating system, fertilizers, electricity ratio gradually reduced, comprehensive estimates down, though it makes the cost of urea increased, but actual growth is limited (a rough estimate for 20-50 yuan / ton). And macro urea market is also not conducive to the urea manufacturers will increase the production cost of switching to the downstream customers, excess production capacity of urea in China is had to consider the major premise, the urea market oversupply in agriculture needs, off-season urea enterprise ex factory price is almost close to the cost of the line. Reference 2015 price adjustments for the first time when the market changes, although the price of urea in adjusted prices are up about 80 yuan, but after lasted more than 20 days, urea prices began to decline and gradually fall back to before the price increases. At present, the downstream demand is mainly industrial compound fertilizer plant and export, although the market is still a certain short-term support, but in the long term the positive impact on the market outlook is limited.
On the whole, the price adjustment will increase the cost of urea production to a certain extent, but considering the impact of some manufacturers' self generation system, the impact of the price adjustment on the cost is limited. Despite the recent market affected by the impact of the price adjustment speculation, parts of urea price was up, but taking into account the next market demand exist small farmers need gap period, so the price should be there will be no sharp rise, the relatively strong market is mainly due to the compound fertilizer factory procurement and export due to favorable, brought about by the adjustment of the price impact is limited.