Urea export regained good news

Game "Invited for victory in the three wars" in India

With the announcement of the third round of urea bidding in India last week, the international market once again saw China's performance in the price game. Comparing the three recent tenders in India: The tender results were announced on June 18 and 27 traders were bids. The lowest quotation is from Aries, India. The CIF price is only 266 US dollars (the same price per ton). Remove freight and cost, equivalent to China's FOB price of 248-249 US dollars; July 21 announced the results of the tender, the bid statistics of CIF price below $ 278 to reach 1.5 million tons, and most of the supply from China, China The price of the bank is approximately US$258-260; on September 17th, the tender results were announced. Twenty-two traders bid for a total of 1.17-1118 million tons, while Iranian cargoes accounted for 300,000 Chinese goods for 87-88 million tons. At US$302.77, the mainstream is concentrated at US$308-312 to shore, and China’s FOB price can reach around US$290. The FOB price of urea in China reached 248-249 U.S. dollars, 258-260 U.S. dollars, and 290 U.S. dollars, respectively. This is undoubtedly the vane of domestic sales for the domestic market which has been in demand for a few months in a row. It is supported by export expectations. The domestic mainstream factory price has also increased from 1420-1450 yuan to 1580-1600 yuan today. Visitors to watch the bidding in India, under the influence of the Nitrogen Fertilizer Association's boycott of low-cost export initiatives and rumors of an intentional FOB price of US$270, it can be said that the previous two tenders only ended up priceless. In other words, domestic manufacturers either intentionally or unintentionally gave up previously relatively low-priced urea export orders and used them as a good support to stabilise their domestic sales quotation.

Domestic supply and demand environment is not optimistic

Even if there is good export support as a market, domestic urea sales still maintain a state of priceless market. Since early July, the market has been in a slack season. Although the market has been gradually preparing for fall fertilizer in the middle of this month, the situation is not satisfactory. The downstream agricultural companies maintain a wait-and-see attitude and the overall agricultural demand remains stagnant. However, the procurement rhythm of industrial compound fertilizer companies has not been accelerated. At least before the round of the results of the bidding in India, most compound fertilizer companies lacked the ability to predict the future urea prices. Since there is a risk, the best way is to purchase on demand. Relative to the weak demand, domestic urea production has not dropped significantly. Prior to this, a number of media have been claiming that the operating rate of urea companies is low. According to the latest statistics from the National Bureau of Statistics, the actual situation does not seem to be the same as those of media statistics. In August, the total domestic production of urea in kind was about 5.734 million tons, a year-on-year decrease of 3.17%, while the total physical production of total urea from January to August was about 47.41 million tons, which was a decrease of only 1.72% year-on-year. This means that the domestic urea market still has hidden dangers of supply and demand.

Late export has been self-evident

Although in the previous two Indian tenders, most domestic manufacturers chose to wait and see the game, but with the bid prices continue to rise, plus the end of China's urea window period, it is believed that the actual demand for urea exports later will be difficult to suppress. Perhaps from a Barychem company's "Fuxin" of the Association of Nitrogen Association on September 19 last week, it has already reflected the urgent attitude of traders for urea exports. On that day, the nitrogen association responded quickly and clarified. On this occasion, the situation of the export of urea in the later period was also clear. In short, when Barychem’s export FOB price of US$292.77 was acquiesced, people also recognized the results of this round of bidding in India. If calculated according to the mainstream CIF price of USD 308-312 in the current round of tendering in India, the FOB price in China can basically reach 288-290 US dollars. According to the 6.15 exchange rate, the export tax is 40 yuan, and the Hong Kong SAR is 70 yuan, the urea collecting price will be About 1670 yuan. Remove the different distances of shipping, the ex-factory price can be reached to 1590-1630 yuan. Such a price can not only meet the current domestic price of urea, but also provide a certain amount of favorable support for the market. Looking back at the weak domestic sales situation, the export trend is self-evident.

To sum up, the continued weakness in domestic demand has been mainly due to the industry's guesswork and wait-and-see attitudes regarding the excess production of urea and the bidding in India. However, with the announcement of the third round of India's urea bidding, not only increased the price, but also a clear amount of purchases. Considering that China's urea window period ends this year until October 31st, manufacturers will most likely accept the result of the bidding in India and actively operate it. At least after a three-month price game, it is not easy to win the FOB price of US$288-290. Moreover, the ex-factory price corresponding to this kind of FOB price for 1590-1630 yuan can also provide reference support for domestic autumn fertilizer sales pricing. At this point, it is expected that the domestic urea export orders will increase in the near future. Although the FOB price of 290 US dollars is still considered as lower than expected by some industry players, the idea of ​​good returns has been recognized by most traders. At the same time, demand for industrial fertilizers in the domestic market in the first half of October is expected to be pulled by this export. All in all, the purchase of export and industrial fertilizers will be the main support for the urea market in October, and the demand for agricultural fertilizers will be difficult to recover.