Poor first half of the urea market trend, the trend is the worst period of the calendar year. I believe that the second half of the urea market is expected to be a certain degree of improvement. 

 

Ex-factory price of urea in the first half fell below 1,500 yuan (t price, the same below) after a lot of people from a cost perspective, consider the price of urea should be stabilized. But the result is to continue to fall, fell outward ex-factory price of about 1,350 yuan, hitting a 10-year low. After the end of May, with the start of corn fertilizer, Shandong, Henan and other regions prices HHH has some modest rebound, some manufacturers offer back on the 1,500 yuan mark, but the northeast, southwest and northwest regions prices little changed. 

 

Urea prices fell sharply for two main reasons: the new urea plant low cost, large impact on the market; international urea prices; coal prices lower; market confidence is seriously inadequate. Many enterprises in the first half of urea loss position. According to industry data, a quarter of the national fertilizer industry, the main business income of 63.75 billion yuan, down 3.1 percent from a year earlier profit 2.07 billion yuan compared with a decline of 152.3%, and poor efficiency of the rare history. 

 

Second half of the season is the demand for urea, 70% of the amount of urea concentrated in agriculture 1 to July, into August, the National urea market gradually into the off-season, from the demand for the second half of market pressure. Since the first half of the urea market trend is poor, I believe that the second half of the urea market is expected to be a certain degree of improvement, prices may rebound. There are three main reasons: 

 

First, the cost of support. In the first half the cost of support for the price of urea is not very obvious, but in the long run, the cost price of urea will form a significant support. Because companies can withstand short-term losses, but prolonged loss is unbearable. If urea prices continue to remain low, there must be more and more companies are forced to stop production of urea transformation. 

 

Urea prices have fallen substantially impact on business is gradually reflected. According to the National Bureau of Statistics, a quarter of China's total production of 17.73 million tons of urea, an increase of 3.82%. April due to the low price of urea, enterprises operating rate decreased urea production fell by 6.61%, in recent years the largest single-month decline in a month, 1-4 months total urea production also from positive to negative, down 0.23% . 

 

The second half is also facing gas price increases, increased urea costs. It is reported that the second half of the natural gas prices could rise to about 0.2 yuan / cubic meter. Tons of urea consumption by 700 cubic meters of natural gas is calculated, natural gas prices will increase urea costs about $ 140. About 30% of China's urea production capacity of natural gas as raw material, representing an overall urea costs about $ 40. 

 

From coal to see some places about 80 percent of small coal mines shut down due to losses, coal prices continue to fall sharply in the little room. Coal prices in the second half will support the formation of urea. 

 

Second, the international support. According to analysis of export professionals from international manufacturers of urea production costs and profitability perspective, the international price of urea is difficult to fall below $ 280. Ukraine OPZ company Yuzhny urea plant shut down on April 28 because of high gas prices. 

 

From July 1, the Chinese urea export window into the low tariff period, the off-season export tariffs on 15 percent less pay that is around $ 200. This makes China the urea in the international market competitiveness greatly increased. International media reported that at current prices, the Chinese urea in any market is very competitive. 

 

Third, the market support. Many people are afraid of urea production capacity is too large, but this is only one aspect of the problem, put into production capacity is killer. Currently many of urea manufacturers in their teeth. If the urea market downturn, companies will be able to fight on less and less. When urea utilization rate dropped to about 60%, urea market supply and demand will significantly ease; If drops below 50%, the market may even be a tight supply situation. Capacity utilization declined, reduced production, the market will get better.