In 2016 1-8, urea market competition, enterprises have suffered losses, China's urea industry to accelerate the process of production capacity, the overall operating rate of about 77% since the beginning of January has dropped to about 60%. In August 2016 -2017 December, the overall operation rate was maintained at about 50-60%, the market supply and demand were relatively balanced, and the urea enterprises gradually returned to profitability. During the period, the price rise and fall were significantly increased by the cost.

The beginning of December 2017, most of the northern region to achieve heating coal gas, natural gas tight supply, China's urea industry operating rate dropped to about 45%. In view of the 2018 spring stock is expected to increase, the downstream panic escalated, in mid December 2017, the company took the lead in major agricultural procurement volume increased, and urea prices soared, during an enterprise in Shanxi issued a day outside the factory increased 3 times, the cumulative increase of 150 yuan / ton. With the urea price of over 2000 yuan / ton in the main producing area, the downstream purchase gradually returned to reason, and the quotation of urea enterprises immediately adjusted with the sales situation, but it is still at the high-end level in recent years. But insiders who believe that basic level gap is bigger, more optimistic about the spring market.

The Spring Festival holiday has ended, the rise of temperature, heating required amount of natural gas to reduce and rationalize the allocation, due to gas based urea enterprises lack of gas production has begun to resume production, including four enterprises in Sichuan, Chongqing, Yunnan, Henan, a large gas enterprise, urea production increased about 15 thousand tons, the industry operating rate from about 44.72% before the Spring Festival quickly rose to about 55.23% at present. However, at present, Shandong's two rivers and farmers need to start gradually, and the sales of enterprises are smoother. The mainstream factory quotes have risen to 1950-2010 yuan / ton, then the urea price will obviously decrease because of a sharp rise in operating rate. When it falls, when will it be an inflection point?

First of all, taking into account the urea industry operating rate continued to about 45% of the approximately 60 days, 2017 annual general operating rate is only about 50-60%; while the balance of agricultural company stock, but enterprises no more pressure on the stock, the gap is relatively large, the overall social surplus inventory number; and now reviving demand Shandong rivers area has been reflected in greater demand; supply is difficult to quickly share the downstream pressure shortage.

And then a wide range of national agricultural needs will also be started, including Yunnan planting corn, rice, corn planting in Northeast Jiangsu and other regions of fruits and vegetables and so on, if the urea industry operating rate remained at about 55%, the probability of the occurrence of excess supply should not.

But the supply of natural gas is still worthy of attention at any time, as temperatures continue to rise, the northern heating will also end, where an enterprise in Sichuan has been doing before driving the preparation, Xinjiang Southern Xinjiang two enterprises, Gansu, Ningxia and Inner Mongolia gas enterprise head may also be complex; in addition, ammonia cooling market, part of urea enterprises said the profit space has been higher than that of urea ammonia, the enterprise may also be the focus to the production of urea, so the whole industry operating rate will continue to rise or.

In summary, Xiao Bian believes that the main factors affecting the price of urea in supply and demand, such as the basic balance between supply and demand, then the price of urea will be decided by the cost, slightly affected by other special factors (such as improved transportation, Xinjiang, Inner Mongolia, Shanxi price of urea outward caused by the market competition etc.). Therefore, the possibility of a strong price of urea in the short term is more likely. The local market may still be forced to purchase at the grass-roots level because of the immediate use of fertilizer and cause the price rise. And as the start rate continues to rebound, the price of urea may begin to return to reason in the late March, and the rate of recovery is slightly deviate from the rate of recovery. In the long run, the process of urea production in China is basically over, and the probability of vicious competition in the market is not large. Urea price should continue to be above a cost level. Therefore, it is believed that in the short term, we should pay more attention to the change in the rate of urea production in the short term, and at the later stage or should pay attention to the cost mainly.