2017: Urea prices will reach 1,900 yuan per ton! ?

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2017: Urea prices will reach 1,900 yuan per ton! ?Author/Source: Date: 2016-12-01 Clicks: 3 Some analysts say that the price of urea next year could reach 1,900 yuan per ton! ? 　　The biggest news in the urea market last week was India’s cancellation on the 23rd of the tender issued by STC on November 16; as a result, 800,000 tons of urea were returned to the suppliers, causing prices in the international market to drop by nearly $20 per ton. India’s actions constitute a blatant breach of agreements, a violation of business principles, and a challenge to the fundamental norms of commerce; they deserve to be condemned. 　　But was it really unexpected? Not necessarily. Earlier, the author conducted analyses based on the RMB exchange rate, China’s export tariffs on urea, and the agricultural seasons in the international market; the conclusion reached was that the notion that the international market experiences a peak in purchasing activity during the third quarter is not valid – it can only be said that the demand season is approaching. It was unexpected that India would provide proof of this through such an extreme approach. India’s cancellation of tenders will inevitably delay procurement in international markets, and prices in those markets will continue to fall. 　　In October, China exported only 330,000 tons of urea, the lowest level in recent years; excluding the quantity supplied as part of the tender process for India in September, China’s exports in October were practically zero. The figures for November are likely to be just as unfavorable (the author analyzed this in a previous article). With the exports of the world’s largest exporting country coming close to zero (over 13 million tons last year), it is only natural for international prices to soar. This rise in prices, in turn, reinforced the optimistic attitude of Chinese exporters, leading to a cycle of holding back sales, raising prices, holding back sales again, and raising prices yet further. The author has analyzed the issue of the \"dammed lake\" of urea in China; in fact, ports also have a \"dammed lake\" of over one million tons. It is rare to see such a phenomenon of groups forming in China, and although groups do form, there is no sign of \"mutual support\", as exports simply do not take place. It is time to reduce inventory at ports, as domestic demand has not yet recovered. In the future, it will be necessary to rely on gathering goods at ports and exporting them to support the domestic market. Meanwhile, new production capacity is emerging in the international market, leaving little time for China to export large amounts of urea. 　　Some people might conclude from this that the recent rise in urea prices is due to speculation; I have clarified this point on many occasions: the current increase is mainly driven by expectations of inflation – in an environment of inflation, it’s better to hold goods rather than money! Analyzing inflation is what sets me apart from other analysts, as changes in the macroeconomy can lead to widespread negative consequences, which is why I give priority to analyzing the macroeconomy. Only when the macroeconomy is relatively stable should one analyze the supply and demand of products. Since *** was elected as the next president of the United States, there has been more discussion about inflation, as he promised to increase investment in **infrastructure, thereby boosting demand and leading to inflation driven by demand – this is also the main reason for the recent sharp rise in prices of non-ferrous and ferrous metals. At first glance, it seems that inflation has indeed arrived, but compared to the inflation situation in 2007 and 2008, the world still does not have the conditions for inflation at present. 　　Returning to the fundamentals of urea, an increase in coal supply and a gradual decline in prices are likely outcomes; urea will soon lose its cost support ； A decline in exports has become a fact. If the transportation issue is resolved, on the one hand, the operating rate will increase; on the other hand, the inventory held by factories will flow into the market, which could lead to a significant drop in urea prices. Therefore, the author regards transportation as the key factor determining whether urea prices will change. 　　Some people have claimed that urea prices could reach 1,900 yuan per ton next year; it takes real courage to make such a bold prediction! Is there an urgent need for **macro-control? If not, then is it to mislead dealers? To borrow a phrase that’s popular these days: It’s good to have dreams – what if they come true? But returning to the understanding of inflation: the current rise in commodity prices is not driven by demand, but rather by a reduction in supply; there is no basis for continued price increases. Therefore, the author believes that it is a bit difficult to realize this dream. (Agricultural Inputs Herald)