Today is the first day of 2024, and I wish you all a Happy New Year!Recently, the domestic urea ** has fallen sharply, and the low-end ** in many places in the mainstream market is approaching around 2200 yuan tonsSo, how will urea ** go in January?Is urea 2200 yuan the bottom?Is there room for price drops?Let's do the analysis from the following fundamentals!
1. **Aspect: ExpectedThis week, the domestic urea daily production is expected to be at 154-15.Around 80,000 tons, Nissan rebounded slightly from last week. In the next three weeks, there are no planned maintenance enterprises, and there are expected to be 5-6 resumption of production enterprises.
2. Inventory:As of December 30, 2023, the total inventory of domestic urea enterprises was about 640,000 tons, an increase of 620,000 tons. Mainly due to the sharp decline in urea ** this week, the downstream is cautious in replenishing orders due to the influence of buying up and not buying down and bearish sentiment, and the inventory of some urea companies has increased. Recently, with the sharp reduction of urea**, the downstream follow-up replenishment or increase, but with the resumption of production of parking enterprises in the early stage and considering the flow during the New Year's Day or a slight decrease, the inventory will continue to increase slightly next week.
3. Demand side:In terms of agriculture, in the overall fertilization off-season, the agricultural market is mostly reserved fertilizer, but due to continuous fluctuations, the reserve plan has been postponed, and the mentality of taking goods is cautious. Compound fertilizer factories are not smooth in the delivery of finished products, the demand for raw material procurement is not high, and due to the impact of environmental protection early warning and other policies, some small factories and other downstream industries have been affected, and it is expected that the demand side will still be difficult to have substantial benefits in the short term.
Fourth, exports: At present, domestic exports are still limited and higher than foreign exports, so short-term exports and international support for domestic exports is limited(Focus on the impact of the printing results on the international market on January 4).
5. Cost (profit) aspect:This week, urea** fell sharply, and the overall profit margin narrowed. Based on the estimation of representative manufacturers in Shandong and Hebei - the theoretical profit of coal-based fixed bed technology is 80 yuan tons compared with last week. The theoretical profit of the new coal-water slurry process from coal to coal was reduced by 100 yuan tons compared with last week. Referring to the current actual market coal ** estimate, the complete cost of fixed bed is about 2100-2300 yuan tons, the complete cost of new coal gasification is 1800-2000 yuan tons, and the profit level of mainstream regional enterprises (ex-factory price 2200-2300 yuan tons) is about 100-300 yuan tons. (Theoretical estimates, for reference only).
After New Year's Day, a comprehensive analysis of the domestic urea ** trend:
1. **Aspect: It is expected that the daily output of urea this week will be 154-15.Around 80,000 tons, a slight increase from this week. The early stage of the shutdown device has been cashed in successively, and the urea plant will gradually resume production in the later stage, and Nissan is showing a steady upward trend.
2. In terms of enterprise inventory: exports are limited, domestic demand is released in a concentrated manner, and enterprise inventory is maintained and accumulated slowly.
3. In terms of cost: coal is stable and weak, and natural gas is tight, but most gas head companies are parked, and the cost has no great impact. The short-term cost impact on urea is limited.
4. Demand: In the near future, with the local ** to the downstream psychological expectations, the follow-up supplement may increase, after the New Year's Day, the environmental protection warning or one after another has been lifted, just need to have a rebound expectation, agriculture or appropriate caution. In addition, last Friday's low-end ** transaction improved, it is expected that the low-end ** may rise slightly in recent days, but because there is still a Spring Festival pre-harvest in the later period, whether the ** stage bottoming out depends on the resumption of work of downstream industries and the follow-up of agricultural reserves after New Year's Day. It is expected that the short-term domestic urea will fluctuate weakly, make up for the fall, and there will be no shortage of tentative small rises at the low end.
- In the medium to long term:With the parking benefits of gas head enterprises have been realized, the follow-up urea ** has gradually rebounded. In addition, entering January, with the approach of the traditional Spring Festival, urea companies may gradually start the Spring Festival acquiring. In terms of this, due to the large amount of urea before the end of December, the level of urea has been lowered to a certain extent, although it is expected to be affected by the bearish sentiment of the market in January, ** will still fluctuate at a low level, but the space to continue to explore may be limited. From the demand side, before the New Year's Day around the environmental protection early warning under the influence, the industrial operating rate declined, after the New Year's Day, local industrial start or increase, in addition to the winter fertilizer reserve time shortened, the acceleration of compound fertilizer finished fertilizer shipments will also increase the demand for urea, coupled with the ** gradually close to the bottom of the expectations, demand or better than before New Year's Day. On the whole, there is a phased bottoming out of urea in January, and the overall trend of falling first and then rising in the whole month is more probable, but the range is limited, or downward in the stalemate in demand, and it is firm when centralized procurement!
Disclaimer: The above ** analysis is the author's personal opinion and is for reference only).