New tariffs have little effect on the market

"The new tariff policy has not changed much compared with last year, and is basically consistent with the previous expectations, so the impact on the urea market will not be too great." Said Ye Guoqing, manager of Shandong Hualu Hengsheng Fertilizer Sales Department.

The industry generally believes that the recent introduction of new tariffs clarifies that the export benchmark price does not include tax. For urea, it is relatively favorable for exports in the long run.

Zhang Xuenong, deputy general manager of New Huinong Agricultural Production Materials (Beijing) Co., Ltd., said: “The new tariffs clarify that the basic price does not include taxes. On the surface, it is good for exports, but this has little impact on the market and exports. No matter what kind of policy is adopted, the domestic and international markets will influence each other. At present, the oversupply of the urea market still exists, and domestic enterprises will have certain export opportunities next year."

Chen Zhihao, assistant general manager of Zhejiang Agribusiness Group Co., Ltd., also believes that the impact of the new tariff on the urea market will not be too large. From the perspective of the urea export policy, the country has not sealed off its exports, but its export policy is gradually tightening. He said: "If commodity prices rebound next year and grain prices are good, China's urea may still be exported, but before the export, domestic prices will definitely fall back, waiting until the opening of the export window, domestic and international markets. It should be linked.

Urea market adjustment needs

Although unanimously agreed that the new tariff has limited impact on the urea market, once the tariff policy was announced, the price of urea still fell. As of now, the ex-factory price of urea in Shandong has dropped by RMB 50/ton, and the mainstream factory price is RMB 2050/ton. Ye Guoqing believes that the fall in urea prices is mainly due to the recent end of procurement in the southern region. Although fertilizer manufacturers have a small amount of procurement, the market demand is obviously insufficient to support the current price. Therefore, price adjustment is inevitable.

Since the domestic low-grade urea price continued to run at a low level during the off-season this year, Zhang Xuenong believed that this was mainly because the tariff policy of this year was not announced in the earlier period. The suppliers agreed that there will be certain opportunities for the export of the next year, so they have been very pricey; The reason is that after the rise in electricity prices caused the urea cost to increase by 30-40 yuan/ton, the market speculation factor has increased significantly. He said: “The adjustment of demand for urea before the spring plowing is mainly due to the use of fertilizer in the off-season, and the international urea price has been reduced from 520 USD/ton to below 400 USD/ton, while the domestic urea price has remained at a high level. This off-season It is not normal for prices not to fall back, and the continuous high price operation has affected the enthusiasm of the distributors for stock preparation. Therefore, the urea market should maintain a downward trend before the Spring Festival, but this is not due to the effects of tariff policies but market demand. Only the price of urea falls back to the normal price, dealers can begin to reserve."

There will still be opportunities for the market next spring

The off-season urea market has experienced peak season this year. With the introduction of the new tariff policy, the current price drop of the urea market is unanimously regarded as a market adjustment demand, but the market is not without opportunities in the face of the next year.

Ye Guoqing said: "Because the progress of this year's winter storage situation is not very good, and grassroots stocks are not very large, the domestic market supply will be basically balanced in the spring of next year, but local regions may increase prices due to shortage of goods, but the duration will be short. ."

Chen Zhihao believes that the fall in the price of urea in the short term is beneficial to the market. He analyzed that: "This year's off-season peak season season has led to few grass-roots sources. If the prices are not yet adjusted, dealers will still wait and see if they do not take goods. When the Spring Festival is over, the goods will surely rise before the Spring Festival. If the price of urea is reduced to 2050 yuan/ton, it will be a good time to get goods.Overall, due to short-term, the urea market should also have a wave of market, if the market appears before the Spring Festival, then the duration will be shorter If it appears after the Spring Festival, then the market will maintain a relatively long period of time with the use of fertilizer, but it is still not optimistic for the medium-term market, if the rising prices appear before the Spring Festival, prices may fall in early February. After the Spring Festival, the price of urea will surely drop in March.

According to the reporter's investigation and analysis, the situation in which the urea market price has fallen in the short term has been established and the price will gradually be adjusted back to about 2,000 yuan/ton. The price correction will lead to the start of the northern market, and the urea market still has certain operating opportunities. However, in view of the market trend after March, the current industry views are generally not very optimistic. Regardless of the trend of the urea market next spring, in the short term, if prices fall as expected, dealers should actively prepare fertilizers, and only take goods at low positions to reduce risks.

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