How to Look at the Future Market of Urea of India 19 First Standard
Time：2019-01-24 Read：569second
On October 10, India MMTC issued a new tender for urea cargo loaded before February 28. The tender ended at 14:00 local time on January 16. The tender validity was up to January 23. The tender still did not purchase the supply of Iran. India's first urea tender in 2019 began quietly. It was informed from market feedback that the tender quantity might be 800,000 tons. Around the same time, due to the exclusion of the supply in Iran, the advantage of urea bidding in China is greater. Affected by this, through the market fermentation in the past two days, urea quotation in China stopped falling slightly, urea recipients in Linyi District of Shandong Province pushed up to 1900-1930 yuan (ton price, the same below), while some traders began to purchase more than one year ago, and some enterprises began to take stock. In recent two days, there has been a sharp increase in orders. Some large factories have suspended receipts of orders for more than 100,000 tons, waiting for a certain amount of orders to be consumed before proceeding to collect. Driven by India's tender, urea domestic market has turned from cloudy to sunny, but some enterprises have expressed their worries, mainly as follows:
Firstly, the specific details of bidding have not yet been clarified. The number of bids in India has not yet been determined, and the number of bids that China can win is not yet known. According to the current international market, China's off-shore price of urea is 285 US dollars, which translates into about 1750 yuan of urea ex-factory price in Shandong Province, which is more than 100 Yuan different from the current domestic urea price. In order to ensure that the domestic price does not fall too much, the export price will certainly strive for it, but this may be possible. According to the rough statistics of China Chemical Fertilizer Network, as of Friday, the stock of urea port is about 480,000 tons. For example, India only tenders 800,000 tons, which does not play a significant role in domestic urea supply and demand.
Secondly, gas enterprises are about to resume production. Before this urea tender, urea price declined in succession due to two factors: one is that although there is a demand gap in the downstream market, there is a strong wait-and-see mentality (this factor is affected by export tender, the enthusiasm of purchasing has been improved); the other is that after mid-late January, gas enterprises will resume production, because enterprises still have certain profits, such as cold urea market in the later period. However, with the increase of supply, the overall price level will go up or be affected to a certain extent.
Finally, the downstream market demand is relatively poor. In industry, due to the approaching Spring Festival, some small compound fertilizer plants have entered the holiday mode, and the start-up rate of large plants will also decline during the Spring Festival. It is expected that the overall start-up of compound fertilizer will be lower in the later period. Although there is demand for urea, a large number of purchases may be delayed for some time.
In summary, although this Indian tender has brought some benefits to China, due to the large capacity base of urea, and the later market supply will increase, the downstream market demand will release slowly, so we still need to be cautious and optimistic about this urea tender.
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