In the last week of October, the domestic urea prices continued to rise rapidly after the rational callback consolidation. The industry shows both expectation and worry ambivalence. The rapid rise of high priced urea brings risks to market operation, the downstream expects callback cooling; there are worries about the lack of support for off-season market. The operating rate of enterprises is low, the supply is limited, the demand for collecting ports increases, although the domestic market is weak, but the factory is not selling pressure, the low social inventory will become a new rebound power later. The author believes that from an objective point of view, the supply and demand situation of the urea market has not changed, and the urea market in the short term will be decided by the policy adjustment and the international demand in two aspects.

From the past experience, the strongest environmental inspection in winter. For a period of 4 months of Tianjin and the surrounding areas of 2017-2018 in autumn and winter tackling air pollution control action inspections starting from September 15th this year, inspection group began to enter the "2+26" (the two municipalities 26 prefecture level cities) city and county (city, district), urea and its downstream industries will be affected. The urea enterprises, limited production order is the main reason for the current round of Hebei, Shandong, Shanxi and other places of urea operating rate fell again, a week end date limit, production situation is not clear. Whether the environmental inspection will continue or upgrade remains unknown.
Coal as a raw material for urea production, has been the industry's attention, while the early rise of coal prices have also become one of the main reasons for the rise in urea prices. In order to curb coal prices, the NDRC first issued a document, stressed the protection of coal supply; after the relevant coal enterprises strive to stabilize prices. But with the northern heating season, the overall rise in coal demand, coal prices still have room to rise. Industry insiders from the northern heating coal increased, the peak period of the southern electricity consumption, coal power plants to reduce coal consumption angle analysis, forecast coal prices are expected to drop. However, due to the weather "uncertainty" and the policy of coal prices "compromise", the late coal prices are falling, the decline is not clear, but also continue to limit production urea plant insured reasons.
In the middle of October, the operation rate of urea enterprises was affected by many factors, and dropped to about 53%. The price of urea has certain parking enterprise risk expectations, coupled with the rational correction with uncertainty, it will be repeatedly postponed resumption of production plans. Some companies are also eager to resell ammonia urea complex. Therefore, most of the urea enterprises in the off-season demand is insufficient, partial or even tight goods phenomenon.
Although domestic demand is not optimistic, but the mentality of the industry is acceptable, more recognized the objective reality of low social inventory. The author believes that the downstream factors delayed light storage, at the end of the shortage of funds, but the policy scruples unpredictable. Large agricultural companies tend to buy on demand and follow the way, through the volume and channels of profit with the game of enterprises. Small and medium sized dealers are gambling city, but "buy evening down" phenomenon is really embarrassing. Considering that the terminal market is still difficult to start, the overall urea inventory in the market will still be below the normal value, leaving room for the later supplementary production.
In terms of foreign trade, it is different from the passive situation in the first three quarters. Due to the continuous round of bidding in India, China's urea has been sold, and the domestic manufacturers have changed their mentality. With the opportunity to narrow the price of the callback, just to digest the output of Hong Kong, enterprises can not only price the right to speak, but also to avoid domestic demand, it can be described as killing two birds with one stone.
If there is no policy interference, and the international urea prices continue to the current level of high shock level, urea market outlook will be expected cautiously optimistic.
This week, domestic urea prices moderate correction industry is expected, but the fundamentals of supply and demand, the policy has not changed, more cost and exports, some people worry that the large number of urea production is unlikely to hit the market. The industry is expected to touch the bottom or can stimulate the dealer preliminary stocking, the factory price is expected to touch 1600 yuan.