This week, the domestic urea market shows uptrend

1.This week, the domestic urea market shows uptrend.  After the stalemate in last week, the gains became more and more fierce. During the off-season demand, prices continued to rise. The three main reasons are: First, the low operating rate. In addition, temporary maintenance of equipment resulted in a low operating rate. Although the operating rate has increased slightly from last week, the current level of construction is still at a low level, and the supply is tight. Secondly, the Indian tender of 712,000 tons urea is done, all from Iran. The lowest price for East Coast was CFR278.95/ton. This undoubtedly gave China a reassurance, India's demand is vacant, and will tender again. And Iran may not be able to continue to provide at a low-cost , which will arise international market prices. Thirdly, after the constantly decreasing price in July, the dealer inventory was consumed. After the price rebounded in August, the market volume increased and the manufacture’s inventory was consumed. Therefore, the current total inventory is very low. Fourth, the recent advance receipts are fair, and the delivery time is basically 7-10 days, partially limiting the receipt. On the demand side, in mid-August, Su Shi rice fertilizer will be opened, which has support for the local market, and the demand for compound fertilizer still has certain potential. Therefore, it is expected that the market will maintain a strong upward trend in the later period.

 2. Supply and demand analysis

 On August 8, the domestic urea production was 129,500 tons, 0.27 million tons more than the previous week's 126,800 tons;24,500 tons higher than the 154,000 tons in the same period last year. The operating rate was 52.03%, 1.09% higher than 50.94% of last week and 9.79% lower than 61.82% in the same period last year. The operating rate of coal-head enterprises was 51.93%, 2.91% higher than last week's 49.02%, the operating rate of gas-head enterprises was 52.33%,  4.5% hither than 56.84% of last week. The operating rate of small-sized pellets was 50.54%, compared with 49.71 last week. % rose by 0.83%. Large grain operating rate was 59.14%, 2.33% high than 56.81% of last week.

 Enterprises shut off production lines: coal-head enterprises, there are 21 parking enterprises, total production capacity of 10.83 million tons. 6 enterprises shut off parts of production lines, total capacity 3.1 million tons. And 10 top enterprises shut down, total capacity of 6.21 million tons.

 Restart production trend: It is expected to affect the daily output of 5,000 tons in the middle of this month. but it is expected to resume production of around 8,000 tons per day next week. In theory, the operating rate will continue to rise slightly next week.

 Demand: In August, the agricultural fertilizer season was mainly for the preparation of fertilizer in the autumn. Purchasing is unstable. The industry continues to be affected by environmental protection, and the operating rate remains low. The operating rate of compound fertilizer enterprises will increase in August, but it is still mainly for autumn fertilizers, so the domestic demand for urea is still limited.

 3. Market analysis and outlook