Currently, it is the peak season for chemical fertilizer consumption, but the price of urea, a commonly used nitrogen fertilizer, has fallen instead of rising.
In terms of spot goods, SunSirs data shows that the price of urea on April 24 was 2,675 yuan/ton, down 5.88% from the year's highest value of 2,842 yuan/ton. In terms of futures, on April 24, the price of the main urea futures contract once fell to 1,989 yuan/ton, and as of the close, it was reported at 2,016 yuan/ton, a new low since April 2021.
In the context of the downward trend in urea prices, some urea production companies that have disclosed their performance reports or forecasts for the first quarter of 2023 have experienced varying degrees of decline in performance.
The nitrogen content of urea reaches 46%, which is the highest nitrogen content among commonly used nitrogen fertilizers, and it is also the nitrogen fertilizer with the highest application rate at present. From the perspective of demand proportion, the downstream agricultural demand for urea accounts for 70%, of which direct application accounts for 53% and compound fertilizer accounts for 17%.
On the supply side, some people in the industry analyzed the "Securities Daily" reporter: "my country's off-season fertilizer reserves have been put on the market one after another since March, superimposed on the high operating rate of enterprises, and the supply of chemical fertilizers is strong. In this case, fertilizers The market had a large increase in the early stage, and now the price has gradually returned to rationality. The rapid decline in the price of urea is mainly due to the decline in the price of direct raw material synthetic ammonia.” Huatai Securities Research Report shows that factors such as the continued reduction of raw material coal prices and the upside-down of exports also have an impact on urea prices.
From the perspective of demand, the relevant staff of Lutianhua told the "Securities Daily" reporter: "Although it is currently in the fertilizer preparation period for agriculture, the spring plowing has come to an end. At the same time, affected by the climate, there is little rain and drought in the south. And so on, the demand for chemical fertilizers is delayed. Therefore, the overall supply and demand of urea is still developing in a loose direction.”
In addition, there is the influence of foreign markets on the domestic market. Lutianhua further stated: "Foreign urea production capacity has been released rapidly, and the price has fallen sharply. Imported chemical fertilizers, which are already at a low price, have had an impact on the domestic market."
Hehua also told reporters: "Recently, fluctuations in foreign energy prices have led to a drop in urea prices."
Wu Yuanli, a urea analyst at Longzhong Information, said in an interview with a reporter from the Securities Daily: "It is expected that the situation of loose supply and demand will become more and more obvious, and the downward trend may continue."
Zhang Xiaozhen, a senior analyst at GF Futures Development Research Center, believes that, generally speaking, the domestic supply of urea is sufficient, and some manufacturers are still passively accumulating storage. On the demand side, compound fertilizer companies are slow to go to warehouse, and their purchasing intentions are not strong.
In this case, the profit margins of urea manufacturers have narrowed. On the evening of April 24th, Lanhua Kechuang, whose main products are coal and urea, disclosed its first-quarter report for 2023. The company’s revenue in the first quarter fell by 7.74% year-on-year, and its net profit fell by 11.62% year-on-year; Accumulated inventory, the company's inventory increased by 44% year-on-year.
Other urea production companies that have disclosed performance forecasts or reports for the first quarter of 2023 have also experienced varying degrees of decline in performance, and some urea production companies have even experienced a decline of more than 50% in the first quarter. A urea production company said frankly in a quarterly report, "Since the second half of 2023, the market prices of the company's leading products diammonium phosphate, urea, polyvinyl chloride and fine chemical products have gradually declined. Up to the first quarter of this year, prices continued to decline, resulting in related products. Weakened profitability.”
Hehua also stated: "The price of urea rose in the first quarter, but the production cost also increased, and the profit margin was not large; in March, the demand fell, and due to the fluctuation of urea price, the selling price of related products dropped. , had an impact on the company's performance in the first quarter."
A number of listed companies have also proposed measures to deal with price fluctuations, including increasing R&D and innovation, focusing on the market to develop new products; promoting equipment technology upgrades, adjusting product structure, tapping potential and reducing consumption and strictly controlling costs; expanding markets and strengthening marketing, etc.
In this regard, industry insiders said: "Facing the risks brought by product price fluctuations, increasing the self-sufficiency rate of raw materials and ensuring the integrity of the industrial chain can achieve effective hedging. At the same time, continue to strengthen the market research and judgment of outsourced coal and sulfur. Strategic reserve management, flexible adjustment of production plans and logistics transportation according to market changes; optimization of the internal governance system and strengthening of cost control capabilities, in order to show cost advantages and maximize the company's profit margins in the face of falling prices." (Reporter Li Rushi) Liu Zhao)
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