Supply tensions boosted the recent rebound in urea prices

Recently, urea prices have returned to the upward trend, and there has been a trend of increasing prices before the special export tariffs. The emergence of this situation was mainly due to the impact of factors such as rising raw material prices, earthquakes, and the Olympic embargo. As a result, urea production costs continued to rise, supporting the rise in urea prices, while the volume of exports increased significantly from January to April 2008. The domestic urea supply has become tense. Even after strict policies have been introduced, supply tensions have not eased. This has led to the recent rebound in domestic urea prices.
After mid-May 2008, due to factors such as costs, earthquakes, and the Olympic embargo, the downstream market has a strong atmosphere of bullishness, domestic urea prices have continued to rebound, and prices that have exceeded the new tariffs have appeared. The price of urea in Henan has soared, and there has been one step ahead. At present, local mainstream orders are priced at 2,200-2,250 yuan per ton, and high-end offers are at 2,300 yuan per ton. In Guangxi, due to tight supply, although the peak season is coming to an end, The upward trend in prices has now reached about RMB 2,400/tonne; the urea market price in Yunnan remains high, and the mainstream price of urea has risen to about RMB 2,200/ton, while in some places the highest retail price has reached RMB 102/bag (40kg). .
Recently, the domestic urea price has returned to the upward trend and prices have continued to rebound. This is mainly due to the recent rising prices of urea raw materials such as petroleum and coal, and the transportation difficulties caused by the earthquake and the Olympic embargo, which caused the production cost of urea manufacturers to increase. There is a strong support for prices, and domestic urea exports continued to increase substantially in the same period of 2007 from the same period of 2007, making the domestic urea market tighter, even though the country has imposed 100% of exports since April 20, 2008. Tariffs, urea exports have basically been blocked, but the export volume is relatively large in the first few months, the domestic urea production in the short term is difficult to quickly meet the downstream demand, which is also an important reason for the recent rebound in urea prices.
In addition, the domestic transportation situation is tense, especially the impact of the Sichuan Wenchuan earthquake and the Olympic embargo, making the transportation situation even more tense. Recently, the prices of urea in Yunnan and Guangxi remained high, even once reaching 2,400 yuan/ton. This is inseparable from the earthquake's impact on the supply of coal raw materials by enterprises, and underemployment of some manufacturers has become one of the reasons for the recent rebound in urea prices. .
On April 20, 2008, the Ministry of Finance imposed a special export tariff of 100% on all fertilizers and some chemical fertilizer raw materials on the basis of the original export tax rate. The domestic fertilizer prices then consolidated at high levels and fell, but due to the original urea export orders. Execution, the export volume did not show immediate decline. In April, the export volume increased significantly year-on-year. In January-April 2008, China exported a total of 3.0102 million tons of urea, an increase of over 430% over the same period of 2007, which increased the domestic urea market supply. The tension, urea prices continued to rebound. However, it is expected that due to the impact of the new tariff policy, exports will decline sharply in May, when the domestic supply and demand of urea will be eased, the price may slow, but taking into account the rising cost, in the short term should not be a substantial decline.
In April 2008, the total amount of urea exported by China was 724,900 tons, and the total export amount was 255,730,966 USD, with an average unit price of 353 USD/ton. Compared with the same period of 2007, the export volume increased by 593,200 tons, an increase of 450.27%, the export amount increased by 216,096,917 US dollars, and the average unit price increased by 51 US dollars/ton.

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