Off-season export tariffs surviving variables
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From the China Nitrogen Fertilizer Association's website, as of November 2010, total urea production decreased by 3.591 million tons year-on-year. Although the December data has not yet been announced, it is estimated that the annual reduction in urea production will be at least 4 million tons. Observed from the next 3 months, the trend of urea production reduction will continue. The industry generally believes that limited electricity, natural gas shortages and the production capacity that was shut down in the early stage of energy conservation and emission reduction will affect urea production in the first quarter of this year will be about 1.5 million to 1.7 million tons. At the same time, urea exports rose sharply from the same period last year. As of November last year, urea exports had a net increase of 2.13 million tons year-on-year, and it is expected that the net increase in exports will not be less than 2.5 million tons for the full year.
Some market observers believe that from the perspective of domestic urea supply, the urea supply and demand balance has been broken. By the first half of 2011, it is expected that the urea supply will be reduced by about 7 million tons compared with the same period, affected by this, and in spring plowing. Pulling, urea prices are expected to stand at a high of 2,100 yuan.
One side is the reduction of urea production. One side is the surge in exports. Between this decrease and increase, the total supply of domestic urea market is at least 8 million tons lower than the same period of last year. However, taking into consideration that there are still 500,000 tons of urea waiting for export at the port, which has not yet been included in the total amount of urea exported in 2010, by the end of the first quarter of this year, the reduction in the domestic supply of urea compared to the same period should be at 8.5 million. About tons.
In addition, due to the high tariff period from January to June 2011, exports are almost impossible. If the total urea export volume of 1.54 million tons in the first half of 2010 is used as a benchmark, this part of the urea originally used for export will return to the domestic market. Will increase the domestic supply, so if you ignore the second quarter of the urea industry may face reduced production, the total domestic urea supply will decline by 7 million tons.
From the supply perspective, the urea shortage trend is very obvious. It is based on this that the industry speculates that the price of urea cargo will continue to be extended to the onset of the off-season tariff period, and will put tremendous pressure on the country to implement a new round of fertilizer price regulation.
Wang Jinan, an industry observer who has long tracked the research on nitrogen fertilizer market information, believes that prices will maintain a rising trend in the first half of this year, and March and June and July will be two key periods. According to the new policy, in July, the window of low-tariff export of urea will be opened, and the price of fertilizer will continue to surge. If the inflation situation in China and the Mainland is difficult to change and the international fertilizer market continues to pick up, under this circumstance, the policy level may further tighten tariffs and even take some temporary market interventions.