echemi logo
Product
  • Product
  • Supplier
  • Inquiry
    Home > Chemicals Industry > China Chemical > Urea: Spot is expected to maintain a strong position to guard against bad policy risks

    Urea: Spot is expected to maintain a strong position to guard against bad policy risks

    • Last Update: 2021-06-10
    • Source: Internet
    • Author: User
    Search more information of high quality chemicals, good prices and reliable suppliers, visit www.echemi.com

      The current spot price of urea is still rising steadily, and the rising cycle that started since the third quarter of last year has not ended.
    Entering June, urea spot is expected to maintain a strong trend, and urea futures prices are still driving upwards, but we need to beware of negative policies.


      Pay attention to the expectation of new production capacity


      As of May 26, the daily output of urea was about 159,100 tons, which was at a medium to high level.
    Affected by the short-term shutdown of large installations such as Ordos Industry, Shanxi Fengxi, and China Coal Ordos, the short-term operating rate of the urea industry is difficult to increase significantly.
    It is understood that the Henan Junhua plant, which has been parked for nearly three months, will gradually resume at the end of May, and it is expected to restart heavy volume in June.
    However, in June Xinjiang Urumqi Petrochemical, Anyang Zhongying, Henan Xinlianxin, Jiangsu Linggu and Shandong Union all have maintenance plans.


      In terms of new production capacity, it is heard that Shandong Runyin Biochemical Phase III 1.
    4 million tons of urea plant, Anhui Haoyuan’s 700,000 tons of urea capacity replacement plant, and Ulan Da Fertilizer Project 1.
    2 million tons of plant are expected to be put into operation in the third quarter, but the specific commissioning from the tracking In terms of time, the new production capacity will have a limited impact on the main 2107 contract, and the 2109 contract may be suppressed in the medium and long term.


      Continuous procurement and replenishment


      June is the stocking period for domestic summer agricultural fertilizer demand, such as Northeast corn topdressing, North China corn base fertilizer and topdressing, and southern early rice topdressing and mid-season rice base fertilizer.
    Due to the long period of urea price increase in this round, from the perspective of agricultural demand, the current inventory is not high, and there is still a large replenishment rigidity in the later period.
    In addition, according to the report on the supply and demand situation of agricultural products issued by the Ministry of Agriculture and Rural Affairs in May, due to the good income of corn planting and the high enthusiasm of farmers to expand planting, the willingness to switch to corn varieties such as soybeans and sugar beets in the northeast production areas has increased.
    The area is 42670 thousand hectares (640 million acres), an increase of 14.
    06 thousand hectares (21.
    09 million acres) over the previous year, an increase of 3.
    4%.
    The increase in demand brought about by the expansion of crop corn is expected to be realized gradually.
    In terms of demand for compound fertilizers, the current compound fertilizer processing profit is low, and the start of compound fertilizer is at a low level compared with previous years.
    However, the current agricultural demand is gradually increasing, and the inventory of compound fertilizer products is accelerating.
    In the later period, compound fertilizer plants still have a large replenishment.
    demand.


      Subsequent printing is still expected to increase


      According to data from the Ministry of Fertilizers, India’s estimated demand for the Kharif season in the 2021/2022 fiscal year is 17.
    75 million tons, which is not much different from the actual sales of 17.
    786 million tons of urea in the Kharif season in the 2020/2021 fiscal year.
    At present, the epidemic situation in India is very severe, and it has already affected the regular increase in domestic urea production capacity in India.
    According to data released by the Ministry of Fertilizers of India, the output in March and April of 2021 was 1.
    727 million tons and 1.
    677 million tons, down 10.
    6% and 8% year-on-year, respectively.
    The absolute output data was the lowest in recent years.
    Taking into account the epidemic in India and India's own domestic production capacity of urea, it is estimated that India's own domestic production in the 2021 Kharif season will be approximately 11.
    8 million tons.
    However, the current domestic urea inventory in India is at a low level compared to previous years.
    To ensure that its domestic urea inventory is at a normal level, after deducting that India has purchased about 1.
    9 million tons of urea in the initial bid, India will still need to purchase 400 tons from the world in the following June to September.
    10,000 tons, that is, a round of urea bidding with a purchase volume of 1 million tons is issued every month.
    Since 2020, global agricultural product prices have been high, overseas currency liquidity has been loose, and major fertilizer importers in the United States, Brazil and Europe have also had large-scale procurement plans.
    International urea prices may remain high.


      In short, the current urea market fundamentals are good.
    However, as an agricultural product, urea is likely to cause great concern at the government level.
    In order to ensure domestic fertilizer supply and food security, it is not ruled out that bad policies will emerge under special circumstances.


      Transfer from: Futures Daily

      

    This article is an English version of an article which is originally in the Chinese language on echemi.com and is provided for information purposes only. This website makes no representation or warranty of any kind, either expressed or implied, as to the accuracy, completeness ownership or reliability of the article or any translations thereof. If you have any concerns or complaints relating to the article, please send an email, providing a detailed description of the concern or complaint, to service@echemi.com. A staff member will contact you within 5 working days. Once verified, infringing content will be removed immediately.

    Contact Us

    The source of this page with content of products and services is from Internet, which doesn't represent Echemi's opinion. If you have any queries, please write to service@echemi.com. It will be replied within 5 days.

    Moreover, if you find any instances of plagiarism from the page, please send email to service@echemi.com with relevant evidence.