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At present, a considerable part of the company's urea ex-factory price has fallen below 1500 yuan (t price, the same below) mark, the lowest ex-factory price of about 1,420 yuan, the market wholesale price is also continuing to decline, has basically reached the low price of the year. The most crucial issue is not only that prices are lower, but that the mentality has deteriorated and the market situation is rather severe.
Some manufacturers regard urea as a “hot steamed bunâ€, and they just want to hurry up quickly regardless of the price. In their view, July and August are the last sales season of the year. If there is inventory at this time, it may become winter urea, which is totally unacceptable. However, the market is not simply determined by the manufacturer. Both distributors and consumers hold the stance of “buying up and not buying downâ€. Prices continue to fall. Dealers immediately lose money when they buy it back. Of course they are unwilling to do so. Farmers do not want to buy 80 yuan a bag of urea they bought yesterday. It costs only 79 yuan today. Thus, the more prices fell, the more dealers and peasants dared not to buy easily, and the more they did not buy a vicious cycle of falling prices. This damage is not only the interests of a company, but the interests of the entire urea industry.
Although the production of urea increased rapidly this year, the contradiction between supply and demand has increased, and the price drop is normal, but such a fall is too abnormal during the season of using fertilizer. Because the overall environment of the fertilizer market has not changed, the price of grain has risen steadily. The enthusiasm of farmers for planting has been high, and the amount of fertilizer used has been on the rise. This year, the prices of fertilizers such as monoammonium phosphate and potassium chloride are rising. But still sell it. In addition, from the perspective of production costs, this year's coal prices and electricity prices are higher than last year, resulting in an average production cost of urea this year over last year. According to the current price level, a considerable number of companies are on the verge of loss.
Why would such phenomenon happen? The main reason is that the urea market has always been lacking in "mainstay", that is, no large companies have come out to guide the market. Market participants generally felt impetuous. Some people panicked when they saw the price drop during the peak season. They desperately sold their goods at low prices, and other people followed suit. As a result, prices drove down the entire market.
Looking at the actual trend of the urea market in recent years, one of the writer's impressions is that although the urea market has developed rapidly in these years, it is generally not mature, especially the market mentality is a big problem. The soaring and plunging prices of urea have a greater negative impact on the market. It is imminent to change this situation.
It should be said that the industry has basically met the conditions for solving this problem, because after a rapid development and industry consolidation in recent years, a number of leading companies have emerged in the industry. For example, Hubei Yihua Group currently has an annual output of urea of ​​more than 3 million. Tons, Lutianhua, Sichuan Meifeng, Hainan Fudao, Wuhua Petrochemical, Luxi Chemical and other companies have annual urea output of over one million tons. Market participants generally hope that these large-scale urea production leading enterprises will play a “main nucleus†role in guiding the healthy and stable development of the market when the urea market has experienced major ups and downs.
The urea market needs a "main heart"
This year's trend of urea prices did not rise in the peak season fell beyond the expectations of most people. In particular, after mid-to-late June, Shandong, Henan, and other places have entered the season of corn top-dressing, which is a period in which urea consumption is relatively large, and the price of urea has instead accelerated. The author believes that in the context of increasing production costs, the overall environment of the fertilizer market has not been changed, and the prices of other varieties of fertilizer continue to rise, this decline is mainly due to market sentiment, and the urea market expects the emergence of “mainstayâ€.