中文
Looking back at the just passed year 2024,the urea market as a whole showed a pattern of oversupply,with significant price fluctuations.In the first half of the year,the price of urea first fell and then rose.In the first quarter,the price gradually decreased.After entering the second quarter,due to the concentrated release of demand for spring plowing and fertilizer preparation and export news,the price of urea rebounded and continued to rise.But as we enter the second half of the year,with the addition of new production capacity and restricted exports,market supply pressure increases,demand is released slowly,urea prices continue to decline,gradually approaching the cost line,and the market is under significant pressure.
Compared with previous years,the production capacity of the urea market in 2024 has been concentrated and increased significantly,with a significant increase in supply.Export restrictions have made domestic urea mainly rely on domestic demand for digestion,but domestic demand growth is relatively limited,leading to prominent supply-demand contradictions in the market.”Zhang Yan,Deputy General Manager of Chuannong Fertilizer,said that the urea price trend throughout the year showed an atypical”W”shape,with the basis gradually turning from positive to negative,and the current structure shifting from a back structure to a contango structure.The continuous accumulation of enterprise inventory is at a historically high level,exerting strong pressure on prices and continuously compressing industry profit margins.
Zhang Yan stated that in 2024,the urea market will see an increase in both production and market size driven by capacity expansion.However,due to export restrictions and insufficient demand growth,the overall market presents a situation of oversupply.Although there was a brief period of strong supply and demand in the second quarter,the overall price remained in a downward trend with significant pressure on the market.
The significant drop in urea prices is the result of multiple factors such as oversupply,weak demand,restricted exports,and weakened cost support.Zhang Yan stated that the urea industry will face significant supply pressure in 2024.On the one hand,the concentrated deployment of new production capacity will lead to a significant increase in market supply;On the other hand,due to the decent production profits,the enterprise has maintained a high operating rate,and the daily urea production has been higher than the historical level for a long time,thereby exacerbating the situation of oversupply.In terms of demand,although the national grain planting area has maintained stable growth,the agricultural demand for urea has slowed down,and farmers’enthusiasm for purchasing fertilizers has decreased.In addition,the relatively insufficient demand in the industrial sector has also failed to provide effective support for urea prices.
In terms of exports,the domestic urea export volume will significantly decline after December 2023.Starting from June 7,2024,the legal inspection of urea exports was suspended,resulting in a significant reduction in export volume and further exacerbating the supply-demand imbalance.In terms of cost,the overall coal price in 2024 shows a weak downward trend.The decrease in raw material costs has reduced the production cost of urea,weakened the support for urea prices,and led to a shift in the price center.
Looking ahead to 2025,Zhang Yan believes that there are still many new production capacity plans for urea in China,and the daily output is expected to further increase.However,the pace of deployment should be more cautious to avoid a serious oversupply situation in the market.Driven by the food security strategy,the domestic grain planting area is expected to maintain stable growth,thereby driving the sustained increase in agricultural demand for urea.With the gradual recovery of the real estate market and the promotion of environmental policies,industrial demand is expected to improve marginally,providing certain support for the urea market.Strict urea export control will be implemented in 2024,and export policies may be relaxed in 2025.If the export quota policy is implemented,it will help to reduce urea inventory and alleviate the situation of domestic oversupply.
Overall,the urea market will continue to have a loose supply pattern in 2025.High initial inventory and sustained production capacity will result in abundant supply,while demand growth will be relatively limited.The basic loose trend will continue,and the overall operation center of urea prices may shift downwards compared to 2024.However,the seasonal performance of agricultural demand and potential adjustments in export policies may bring temporary price recovery opportunities,”said Zhang Yan.
Traders need to pay more attention to changes in supply and demand fundamentals,as well as the impact of the macro environment on the urea market.The adjustment of export policies will be an important factor affecting the urea market,and traders need to closely monitor policy changes and seize the opportunities brought by policy relaxation.Zhang Yan believes that in the context of loose supply,urea futures contracts may continue to maintain a contango structure,and the industry needs to change its mindset and choose appropriate timing for hedging.
Zhang Na from Guantong Futures Research and Consulting Department stated that in 2025,the supply and demand of urea will increase.In a neutral situation,the demand growth rate will not be as fast as the supply growth rate,and the basic loose trend will continue.The cost side coal support is also weak,and the central price operation of urea for the whole year may shift downwards compared to 2024.In terms of rhythm,pay attention to buying opportunities at low prices during the stage of preparing fertilizer for farmers after the Spring Festival;In the first half of the year,farmers need to prepare fertilizer and sell short in the later period when prices rise;In the second half of the year,we will pay attention to the adjustment of export policies.Despite the continued tightening of exports,we will mainly focus on short selling at high prices.Futures contracts may continue to maintain the contango structure,and the market is expected to provide more premium windows,which is beneficial for companies to sell hedging.It is advisable to pay attention to periodic month spread reversal opportunities.