① Spring cultivation and preparation for cultivation have been carried out one after another. Many urea manufacturers, such as Hualu Hengsheng, Sichuan Meifeng, Liuguo Chemical, and Lutianhua, raised the ex-factory price of urea products by about 50 yuan to 60 yuan/ton, and the price increase of urea prices was nearly 8% in the past month; ② Under high supply, urea prices were only 80% of the same period last year, and the profit margin was less than the same period last year.
Financial Services Association, Feb. 20 (Reporter Fang Yanbo) After the Spring Festival, the agricultural market gradually boomed as spring farming and preparation for cultivation began in various regions. A Financial Services News reporter recently learned from the industry chain that a number of urea manufacturers, including Hualu Hengsheng (600426.SH), Sichuan Meifeng (000731.SZ), Liuguo Chemical (600470.SH), and Lutianhua (000912.SZ), have raised the ex-factory prices of urea products, increasing prices by about 50 yuan to 60 yuan/ton. After this price increase, the market price of small-granular urea in Shandong has reached 2,300 yuan/ton, with a price increase of nearly 8% over the past month.
A relevant person in charge of a domestic fertilizer manufacturer told the Financial Federation reporter that under the impetus of demand for fertilizer for spring farming, the urea market is currently experiencing a phased rebound, and the profit margins of related companies have been restored. However, under the influence of current high supply, there is a big gap in both price and profit margins compared to the same period last year.
As an important agricultural product, urea is generally regarded as a “barometer” of the fertilizer market, and 70% of total domestic urea consumption is used for fertilizer production.
“After the Spring Festival, various regions began to enter the spring cultivation and preparation stage. Urea entered the traditional peak demand season, and the market began to gradually heat up.” A fertilizer dealer told reporters, “Currently, there is a general increase in sales in agricultural markets in mainstream regions, which has led to a rise in urea prices.”
The recovery in downstream demand has mobilized urea companies' enthusiasm for production. The reporter learned from a urea manufacturer in Jiangsu that the company currently has sufficient orders. With the support of pending orders and agricultural demand, the company's production load is high, and the company also maintains an uninterrupted organization of production around the clock during the Spring Festival.
The boom at both ends of production and marketing has restored the profit margins of urea companies. According to statistics from Longzhong Information, the theoretical profit margin of urea (emerging coal gasification process) is currently about 343 yuan/ton, an increase of nearly 10% over the beginning of this month.
A relevant person in charge of a fertilizer company told reporters that at present, agricultural demand for urea has gradually begun, and the expected demand for industrial sheets will recover as companies resume work one after another after the holiday season. It is expected that the urea market will continue to operate strongly in the future, which in turn will drive the restoration of the profitability of production companies.
Although the urea market has recently picked up, the reporter noticed that in terms of product prices and profit margins, it is still far from what it used to be.
Take the Shandong region as an example. Compared with the same period last year, the current market price of the same small-granular urea is only about 80% of the same period last year, with a price drop of nearly 500 yuan per ton. The theoretical profit value is less than half of the same period last year.
In response, the aforementioned corporate source said, “On the one hand, domestic urea supply has risen sharply since the second half of last year. Currently, daily production has exceeded 185,000 tons, and there are still expectations that additional production capacity will be put into operation this year. Sufficient supply will prevent the urea market from experiencing large price fluctuations due to cyclical changes in demand.”
“On the other hand, relevant state departments have also recently made arrangements for spring farming and annual fertilizer supply and price stability, strictly cracking down on illegal speculation of agricultural products such as urea, and further stabilizing the urea market.” The source further stated.