The first half of this year the operating rate of urea has been hovering near 55%-60%, was even lower to nearly 52%, as everyone knows, the operating rate compared to previous years at 70-80% operating rate is low, first we look at the reasons causing low operating rate of urea industry what? Then look at the urea manufacturers pleased that low labor rate brought about price increases, then why is it heartache? Of course, there is no goods available to sell, can not bring more revenue, specific below we talk carefully.
There are only three reasons for the low rate of work in the urea industry, one is the pressure of environmental protection. Since 2016 December, the environmental inspection project on each urea enterprise environmental protection efforts, the first is the Shandong river area, and then, Jiangsu and Anhui, Liaoning, northeast of Inner Mongolia, although the majority of enterprises have been urea environmental testing standards, but maybe those old equipment have some omissions. For example, the old equipment in Shandong two manufacturers to continue some urea parking; again, Inner Mongolia Dachang drive since at the end of April also suffered setbacks, May 13th after check again to stop because of environmental inspection, that could last for a month; also, Jilin Dachang is in order to avoid the latter encounter environmental inspection and production, previously in investigation of various maintenance oversight constantly, new and old equipment operation is not stable, about half the time load is below 50%; in Shanxi the urea manufacturers concentrated areas, some manufacturers twice because of environmental inspection and operating rate is only about 30%, other companies also half load running for about a month and a half.
The other is cost pressure. The first half of the coal price stability with a small rise, only recently fell twice, the price of natural gas market, temporary high urea manufacturers last year has been talking about the cost of pressure is not obvious, but for some of the old equipment, cost pressures still exist, the old equipment can not be started, such as obsolete equipment in Shandong two rivers some manufacturers in Jiangsu and Anhui; as for the price of natural gas, the gas price negotiations in Inner Mongolia two major manufacturers once stalled, the resumption of production time from the end of February was postponed to the end of April /5 at the beginning of the month; and most of the time in the first half of this year in ammonia, three amine and other chemical products prices are better than urea, a few of these chemical prolific urea enterprises the product, such as a factory in Henan, a factory in Jiangsu, a factory in Hubei, a factory in Ningxia, a factory in Sichuan.
Third, equipment reasons. In addition to the above mentioned equipment do not meet environmental standards and maintenance, urea production capacity since 2013 new also have to overhaul period, such as Shaanxi Dachang, Xinjiang Dachang, Inner Mongolia Dachang two maintenance time is slightly longer than expected, and so on, is not the cost pressure, do not want to meet the demand of spring and summer season, but the equipment to run down, the loss is too large, not cost-effective, helplessly looking at others in the price, we are out of stock.
These three factors a reasonable and contrary to expectation caused by urea industry operating rate lower than expected, the amount of the start of the year, we believe to be the peak season demand when urea operating rate will rise to 62% or even more than 65%, and exports less than the same period last year, the domestic price of urea does not appear to be such a sustained a substantial increase, but it is precisely the unexpected low operating rate has brought the spring end of the stock, brought the early summer demand, the price of urea has been rising, is really out of the accident more urea manufacturers, has been prepared for more advance slightly more price lower orders, price has not been too much profit. The dealer is even more so, spring wholesale upside down, summer with slightly high fill orders, such as the Northeast market prices.
So what should we do after the joy and heartache? The recent starts in the recovery, such as urea manufacturers have returned to full open, Xinjiang factory is also the case, and Xinjiang demand estimation after a week will come to an end, these low-priced goods from urea should bring down the price of urea; but in view of part of the Shandong Henan Dachang old equipment needs to be replaced by the new equipment. Some manufacturers to Inner Mongolia a week after the resumption of production, Xinjiang manufacturers to the end of the month before the turn out of Shanxi, there is a certain amount of urea manufacturers to order goods, the Northeast tight situation is estimated to continue for a short period of time, so the price of urea or present stalemate type to decline, to 7 months late domestic demand the end, exports are still not at the price of urea will be significantly lower.