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Why is urea so expensive this spring? There are three reasons
Time:2022-03-28   Read:674second  

It's hard to fall once! I believe this is the doubt that has always existed in the hearts of people in the urea industry this spring. Urea always rises again before it falls. Today, the ex factory quotation of Shandong Lianghe urea manufacturer is 2910-2950 yuan / ton, which has fallen for three or four days. The urea price is still high, not to mention that the ex factory price of Shandong Lianghe urea was only 2100-2150 yuan / ton at the end of March last year. Looking at the whole March of this year, the urea price rose sharply by about 300 yuan / ton.
Why is urea so expensive this spring? There may be three reasons:

First, the spring demand is strong, which is so strong that agricultural buyers have been procrastinating, hesitant and unwilling to purchase, and failed to lower the price of urea. The demand of plywood factories and compound fertilizer enterprises increased one after another. As soon as the Winter Olympics ended, the procurement demand of plywood factories increased, and the receiving of goods in this regard was also good during the two sessions. In particular, plywood factories and compound fertilizer enterprises became more cautious about taking orders before production, and they did not pay much attention to the price of urea to purchase urea. This operation of making a steady profit / maintaining the cost brought about the purchase of urea, which was sometimes concentrated, Urea prices rose again and again.
On the evening of March 11, the central government once again issued a one-time subsidy of 20 billion yuan to the actual grain farmers. As soon as the news came out, it coincided with the end of the two sessions, the industrial demand increased, and soon urea rose again. On the evening of March 14, the national development and Reform Commission announced that the first batch of more than 3 million tons of spring ploughing fertilizer reserves in 2022 had been put on the market since March this year. It was clear that these goods were the goods for which each storage company was responsible for its own profits and losses. It coincided with the rise in the price of urea, and each storage company naturally slowed down the pace of sales. This interest rate reduction brought little bad news to the urea market.

Second, although the export volume is very small, the export price is high, and some people in the industry are always looking forward to a large number of exports for a long time. From January to February, the export volume of urea was about 80000 tons and 150000 tons respectively. From January to February, 2021, the export volume was 290000 tons and 140000 tons respectively, a year-on-year decrease of 70.8% and a year-on-year increase of 2.1%. Roughly speaking, it turns out that we will export 200000 tons of urea less in 2022. Assuming that part of the 200000 tons of urea is exported in the form of melamine and plywood, is it natural for the price of urea to rise!

The export price of ultra-high urea is either based on intergovernmental agreements or a very small amount of urea that has passed the legal inspection. The export price of urea is close to the price of other urea sources in the world. The offshore guidance price of large and small particle urea in China in January is 565-570 US dollars / ton, which is also similar in most of February. Since the war between Russia and Ukraine on February 24, In other words, the offshore guidance price of China's large and small granular urea rose sharply to $700 / ton with the international rise in March, and then finally reached $900 / ton. No matter which price is taken out for conversion, the domestic ex factory price is surprisingly high. Compared with the domestic ex factory price of about 2650 yuan in March, it rose to the highest of nearly 3000 yuan / ton, and even fell to the current 2910-2950 yuan / ton, the profit of middlemen is as high as ever, To take a step back, even if 1000 tons of high priced urea are exported, some people in the industry will expect a large number of possible exports. Of course, the rise of 300 yuan / ton in March is understandable in the international environment.

Third, the relevant departments are trying their best to ensure supply, but the epidemic has dragged down the circulation of urea, and the price increase is so large. From last November, Shanxi urea reduced the time of shutdown and production reduction in winter, and the price of natural gas in December fell quickly. The winter maintenance time of gas head urea was greatly shortened compared with previous years, from 20 billion subsidies to strict investigation of fertilizer storage in winter and bidding for fertilizer management in summer. Although there are some differences between the actual landing and the imagined situation of bringing low-cost urea, after all, we are not as high as the international urea, and the land planting cost has also increased, which will make some agricultural buyers feel that the price is high, the sales is unprofitable, they are worried about the sharp decline in the price, and dare not buy. The operation of "buy as you go" coincides with the epidemic situation, which makes the urea slightly insufficient in the grass-roots market, but brings the sharp rise of urea, Coupled with the intervention of large capital flow, the rise of urea is blinding!

Nowadays, it is still the best policy to pay attention to the progress of the epidemic and policy changes, and continue to operate on demand. If the epidemic is not alleviated and there is no more powerful policy, it is still difficult for urea to fall significantly.

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