From one-and-a-half months from September 16 to October 31, urea exports are subject to a tariff of 110%. Many people had worried that such a high tariff urea export could not be exported, which would lead to a greater contradiction between supply and demand in the domestic urea market, and urea prices would face a new round of decline. Many dealers are also waiting for the increase in tariffs, urea prices fall, and then light storage.
However, from the actual trend, the urea market trend remained generally stable after September 16th. Although prices in Shandong and Henan have declined steadily, the decline rate is not large. On the contrary, prices in some areas such as Hunan still have RMB 20/tonne. About a slight increase. There are three main reasons for this situation:
First, the tariff negative factors have been digested by the market in advance. As the current implementation of the tariff plan was announced in late June, the market has already made preparations in advance and digested bad news ahead of time. Therefore, when the new tariff was formally implemented on September 16, the market reaction was relatively stable. If it is unexpectedly bad, there may be a clear pressure on the market and the price will fall sharply. In advance, the expected bad news, the market generally does not appear particularly strong reaction.
The second is that the export volume is too small and the influence of export factors on the urea market has declined. Due to the low price of international urea this year and the impact of high tariff factors, China’s urea exports have dropped significantly this year. From January to August, the country exported 1.24 million tons of urea, an average of 155,000 tons per month. From January to August last year, it was 410 tons, and the average monthly was 51.25 million tons, a 70% drop from the previous year. Last year, China’s average monthly urea export volume reached about 11% of monthly urea output. The export factor has a relatively large impact on the domestic urea market; this year, the average monthly urea export volume is only about 3% of monthly urea output. The influence on the domestic urea market has been greatly reduced. Even if a high tariff of 110% is not imposed, the export volume of urea is not large, and the impact on the urea market is not significant. Therefore, simply from the perspective of export volume, whether the levy of high tariffs or whether urea can be exported will have little impact on domestic urea, and tariff factors are more likely to be reflected in the psychological effects.
The third is production cost support. The current price of urea has fallen below the production cost of most urea producers. Only the gas head urea companies and a small number of cost-effective coal urea enterprises can make profits. It is estimated that more than half of the urea manufacturers are currently in the process. Loss situation. The cost factor has played a relatively large supporting role for the current urea price. The ex-factory price of urea has strong support at 1,450-1,500 yuan per ton. Although the market has repeatedly repeated this price, it is more difficult to break below.
However, from the actual trend, the urea market trend remained generally stable after September 16th. Although prices in Shandong and Henan have declined steadily, the decline rate is not large. On the contrary, prices in some areas such as Hunan still have RMB 20/tonne. About a slight increase. There are three main reasons for this situation:
First, the tariff negative factors have been digested by the market in advance. As the current implementation of the tariff plan was announced in late June, the market has already made preparations in advance and digested bad news ahead of time. Therefore, when the new tariff was formally implemented on September 16, the market reaction was relatively stable. If it is unexpectedly bad, there may be a clear pressure on the market and the price will fall sharply. In advance, the expected bad news, the market generally does not appear particularly strong reaction.
The second is that the export volume is too small and the influence of export factors on the urea market has declined. Due to the low price of international urea this year and the impact of high tariff factors, China’s urea exports have dropped significantly this year. From January to August, the country exported 1.24 million tons of urea, an average of 155,000 tons per month. From January to August last year, it was 410 tons, and the average monthly was 51.25 million tons, a 70% drop from the previous year. Last year, China’s average monthly urea export volume reached about 11% of monthly urea output. The export factor has a relatively large impact on the domestic urea market; this year, the average monthly urea export volume is only about 3% of monthly urea output. The influence on the domestic urea market has been greatly reduced. Even if a high tariff of 110% is not imposed, the export volume of urea is not large, and the impact on the urea market is not significant. Therefore, simply from the perspective of export volume, whether the levy of high tariffs or whether urea can be exported will have little impact on domestic urea, and tariff factors are more likely to be reflected in the psychological effects.
The third is production cost support. The current price of urea has fallen below the production cost of most urea producers. Only the gas head urea companies and a small number of cost-effective coal urea enterprises can make profits. It is estimated that more than half of the urea manufacturers are currently in the process. Loss situation. The cost factor has played a relatively large supporting role for the current urea price. The ex-factory price of urea has strong support at 1,450-1,500 yuan per ton. Although the market has repeatedly repeated this price, it is more difficult to break below.
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