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The gradual increase in the number of vehicles driving this year is the year of the “Eleventh Five-Year Planâ€. At the end of the third quarter, some energy major provinces are also the major urea provinces. For example, Shanxi, Henan and Inner Mongolia are facing urgent pressure for energy saving and emission reduction. In the case of power cut interventions, urea companies were forced to stop production for maintenance or pressure load production, and production capacity was forced to be suppressed. The overall driving rate of the industry remained at 60%, which caused tight supply and led to continued price increases. At the same time, the real estate industry continues to be pressured by policies this year, and some speculative funds have taken the opportunity to switch to urea circulation, and their behavior has also helped increase urea prices to a certain extent.
However, after entering mid-November, local regions have adopted tough measures in advance, and the completion of energy-saving and emission reduction targets has reached a certain number. In addition, urea prices are at a high level, and related companies have applied to local authorities for lifting power-reduction orders, and are rushing to increase operating rates in order to catch up. Points "a cup of soup." It is reported that, after the power restriction policies have gradually been loosened, the operating rate of urea in Shanxi, Henan, Inner Mongolia and other provinces has rebounded, and Anhui and Jiangsu in the eastern region have also increased from the previous 30% to more than 50%. Obviously, if the measures for limiting power supply in the main urea production areas are lifted one after another, the steep increase in supply will inevitably exert a strong pressure on the current price of urea.
Suppression of the inflation signal is another key factor in the sharp rise in urea prices is cost-driven. Since the second half of the year, the domestic price index has gradually increased. In October, the consumer price index (CPI) and industrial product ex-factory price index (PPI) rose by 4.4% and 5.4% year-on-year, respectively, and the CPI exceeded 25 months. The new high. Reflected in the manufacturing industry, the price of urea as the main raw material for coal has risen tremendously and has risen from 1,100 yuan in the middle of the year to 1,500 yuan at present, and there has been a situation of tight supply. In combination with the increase in other auxiliary materials, labor costs, and shipping costs, the average cost of urea production reached 1,750 to 1,800 yuan, which drove up the urea market price.
At present, in the face of severe inflationary pressures, the country has already begun to exercise restraint on inflation caused by the proliferation of liquidity. Shortly after the central bank decided to raise the interest rate by 0.25 percentage point on October 20, it announced on November 10 that it would increase the reserve requirement ratio of the six banks by 50 basis points from November 16 to its highest level of 17.5%. . At the same time, in view of the current surge of hot money, it is not ruled out the possibility of raising interest rates again during the year. It can thus be seen that the country has issued a clear signal to curb inflation and that excessive price increases will be effectively controlled. Therefore, urea prices will also be regulated by macroeconomic policies and will not maintain an independent upward trend.
The export policy may adjust to the impact of the continuous depreciation of the US dollar, the international crude oil and natural gas prices have been rising all the way, causing the soaring price of urea in overseas markets. The leading cause of international urea price increases is due to the increase in Ukrainian product prices. As one of the five largest exporters of urea in the world, Ukraine, due to its production of urea gas from Russia, the impact of gas source price increases by nearly 10%, the country's urea will be passed through the product. The Ukrainian market covers the entire Europe, North Africa and India. Due to the increase in international food prices, the demand for urea by major agricultural countries such as India has continued to increase, which has also directly pushed up the international market price of urea. Against this backdrop, China’s urea companies have seized the opportunity to maintain large exports in recent months. It is reported that from January to October this year, cumulative urea exports have exceeded 4 million tons.
However, urea is a high-energy-consuming product, and long-term large-scale export does not meet the relevant national policies. The recent sharp rise in domestic urea prices and the large increase in exports naturally lead to policy interventions from relevant authorities. Therefore, companies in the industry generally expect that the current 7% export tariff rate may be terminated early and the 110% export tax rate will soon be re-executed. Affected by this expectation, some prophetic production and distribution companies have begun to strengthen inventory control and expand market supply.
Since the middle of the third quarter, domestic urea prices have been affected by many factors such as energy saving and emission reduction, raw material coal price increase, international crude oil and natural gas prices, and an increase in exports. From the previous period of 1,600 yuan (t price, the same below) all the way up to nearly 2,000 yuan. However, due to the implementation of a new round of quantitative easing monetary policy in the United States, resulting in high global resource prices, all economies are worried that this will trigger a new round of large-scale inflation. Domestically, at the end of the current year, the loosening of the degree of power restriction in the provinces and regions where urea production is mainly a problem, coupled with factors such as the adjustment of the export tariff window, the power of domestic urea prices will continue to decline, and may peak after the peak of the year. Inflection point." Industry insiders remind production companies that they must pay close attention to new market conditions and properly arrange production and business plans.