First: Monthly Market Overview

_Feb. 2019 is the Spring Festival holiday in China, urea market overall performance is weak, especially after the end of the Spring Festival holiday (Feb. 11), due to the obvious increase in domestic urea production and limited growth in demand, domestic urea market showed a significant decline, but by the end of February, driven by rising demand, domestic market rebounded. On the demand side, at the beginning of the Spring Festival holidays, due to the cold climate and other factors, the domestic agricultural market demand is weak. Only some areas such as northern Jiangsu are affected by the rain and snow weather, and there is a slight agricultural demand. Then, with the warming of the weather, the demand for green manure in northern wheat-producing areas started at the end of February, which has also become the main driving force to boost the domestic urea market. After the Spring Festival, the demand of industrial market also showed a slow recovery trend. Plywood factories resumed driving after January 15, but the demand for urea was still inactive. The downstream compound fertilizer factories were affected by poor sales and other factors. The recovery of start-up was not very optimistic, and the recovery of urea demand was also slow. In February, the domestic urea plant started to restore obviously. The average daily production of urea in the whole month was 143,000 tons. The annual average daily production of urea increased by 19,000 tons compared with the average daily production of 124,000 tons in January, and about 18,000 tons compared with the average daily production of 125,000 tons in February 2018. Prices, before February 25 by the supply side increased and demand continued to weaken, the domestic urea market showed a downward trend, and with the end of the Spring Festival order delivery, factory sales pressure increased significantly, and after February 25 with the rise in temperature, wheat-producing areas began to start agricultural demand, domestic urea market rebounded, while affected by the buying-up-not-buying-down mentality, Industrial demand also slightly. There is recovery.

2. Yield analysis

Data from Feb. 28 show that in February 2019, the daily output of urea maintained between 138,000 tons and 147,000 tons. This month's output was 4015,000 tons, compared with 3.5 million tons in the same period in 2018.

According to the full load of 237,000 tons, the start-up rate is maintained between 58% and 62%. Reproduction of gas-head urea plant is the main reason for the increase of production, while parking overhaul of Yanzhou Mine, Zhongshan Coal Mine and Zhengyuan Hebei Province this month has briefly restrained the growth of production.

_3. Import and export data

In January 2019, China's urea export volume was about 590,000 tons, doubling from 143,000 tons in January 2018, with a growth rate of 312.6%. Domestic urea imports in 2019 were about 0.03 million tons, a decrease of about 76.9% compared with the 0.13 million tons imported in January 2018.

_. Analysis of Start-up State

In February 2019, the average daily production of urea in China was 143,000 tons, and the starting rate was about 60.3%. In January 2019, the average daily production of urea in China was about 124,000 tons, the starting rate was about 52.4%. The annual growth rate was 15.3%. In February 2018, the average daily production of urea in China was 125,000 tons, an increase of about 14.4%.

_Data are available as of February 28.

V. Analysis of Market Demand

_. Agricultural urea market demand: domestic agricultural urea market demand was weak in February. Affected by the cold climate and other factors before February 25, agricultural demand was relatively limited. Only some areas such as northern Jiangsu had a slight demand for winter wax fertilizer, while affected by the decline in factory prices, downstream agricultural distributors were mostly in a wait-and-see state. After February 25, with the warming of temperature, the demand for green manure in Shaanxi, Henan, Shandong and Hebei wheat-producing areas began to start, and market transactions began to release, which also became the main advantage to promote the rebound of domestic urea market at the end of February.

_Industrial urea market demand: The overall performance of domestic industrial urea market in February was not satisfactory. Production of downstream plywood and compound fertilizer plants recovered slowly after the Spring Festival. After the 15th day of January, downstream plywood plants resumed operation one after another, but the overall start-up rate was still about 50%. Affected by poor sales and high inventory of finished products, the downstream compound fertilizer plant started to recover less than the plywood plant. The overall start-up rate in February was less than 40%, and the demand for downstream urea products was tepid.

_. Price Trend of Raw Materials

_In February, the power coal market shocked and the coking coal market stabilized and improved. Specifically speaking: Affected by the Spring Festival holiday in February, the overall market runs smoothly, and the coal market before the festival runs steadily. After the Spring Festival, the demand releases and the power coal and coking coal markets have risen. After the rising price of power coal in northern ports, the sales pressure increases gradually, and the price is weaker again.

In March, the domestic coal market may appear upstream and downstream game market. In March, with the gradual increase of temperature, the peak season of winter coal use will gradually end, the demand for heating coal will be significantly reduced, while the inventory of downstream power plants is still relatively high and the demand for purchasing is general. In the supply side, due to recent accidents, the safety inspection of the production area has been intensified, and the resumption of production of coal mines in some major coal-producing provinces is slow. Relevant departments need to do their best. During the period of the "two sessions", coal production in the first quarter of the country will be greatly affected; on the whole, the supply and demand of power coal are weak, and the price may oscillate strongly. Coking coal market, domestic coking coal production is basically normal, due to Australian coal import restrictions, superimposed Shandong requires rock burst coal mine nuclear reduction of 20% production capacity, the overall advantage, coking coal prices are expected to rise steadily.

VII. Trends in the International Market

_7.1 International Summary

_This week, some regions of the international urea market showed signs of stabilization. This week, the overall performance of the market is still relatively quiet, with fluctuations occurring alternately, with little fluctuation. Earlier this week, two batches of low-priced large-granular urea were closed, equivalent to the net export price of urea in the Middle East at $231-233 per ton FOB. The lowest price of Nora Port in the United States is less than 230 US dollars/short ton FOB.

At present, the international urea market is mostly discussing the market expectations for the coming April-May. Generally speaking, the volume of international urea market transactions in April-May will be relatively low, and the possibility of this change in April-May 2019 is not very likely.

International market focus:

_1, USA/Brazil

_Both US and Brazilian market prices are around $250 per ton CFR. Brazil's urea market demand is weak in March-April, and prices will continue to decline, while the U.S. spring urea market demand should be strong, but no one is sure this will happen.

_2. The demand of urea market in Asia is still low

Oriental urea market continues to be weak, Iranian urea is penetrating at low prices, to some extent affecting imports to other countries.

_3. The future market should still be cautious

_Most traders believe that international urea prices will continue to decline in April, so they are cautious and expect prices to be lower than about $20 per ton in the same period last year.

_7.2 International Price List

__. Future market forecast

International market: Affected by last week's Egyptian low-price urea turnover increment and other factors, this week's international urea market is showing signs of stabilization, but the overall market trading situation is still inactive. India is expected to issue a new round of urea tender before the end of March, and the global urea market demand is still in the traditional off-season in April-May, when the trend of urea market is still not optimistic. Overall, the impact of international urea market on China is still weak in March-May, so the trend of domestic urea market will mainly depend on the supply and demand status of the domestic market.

Domestic market: After a rebound at the end of February, the domestic urea market has gradually stabilized. Despite the general trading situation of new orders, the market can be maintained temporarily because of the low-price orders in the early stage of the factory. It is expected that the recent domestic urea market will mainly be stable and moderate fluctuations. However, after the end of domestic spring agricultural demand, industrial demand may have limited support for the market. It is expected that with the weakening of demand, the domestic urea market will return to a downward trend in March. The downward trend of prices may change in April. The high nitrogen compound fertilizer production season and the summer agricultural fertilizer preparation may boost the urea market in April-May.