Taken together, there are six major factors that will affect the urea market in 2018.
First, the output is expected to rebound. In recent years, urea production has been declining year after year, especially in 2017, with a large drop of more than 10%. It is estimated that there will be some rebound in 2018. After the market ebb Tide sand, backward production capacity has basically been eliminated, the remaining urea companies are basically low-cost, highly competitive enterprises, without the strong interference of external factors, these enterprises can maintain high-load production. In the first quarter and the fourth quarter, the heating season was in full swing. Natural gas supply was tight. In addition to the need to control air pollution in winter, the environmental protection limit was relatively tight and the operating rate of enterprises was relatively low. The production environment in the second quarter and the third quarter was relatively loose and the supply of natural gas and coal improved significantly It is estimated that the operating rate of enterprises will exceed 60%.
Second, the decline in agricultural demand, industrial demand increased.
Fertilizers to be tested soil, zero fertilizer growth, substitution of organic fertilizers, low prices of agricultural products, and increased application of compound fertilizers, ammonium chloride and ammonium sulfate are all expected to reduce agricultural urea demand by more than 3% in 2018.
The amount of industrial urea is increasing. Relevant analysts said that the current demand for urea-wood-based panel industry accounted for more than 60%. In 2015, the total output of wood-based panels in China exceeded 280 million cubic meters. According to estimates of consumption of 304,000 tons of urea per 10,000 cubic meters of plate, the demand for urea exceeded 11 million tons. With the changes in consumer demand and the concept of decoration, the future of artificial board will maintain about 5% growth. Another major increase in industrial demand is diesel exhaust gas treatment, the state is advancing the national emission regulations, means that in recent years the automotive urea market will usher in a period of rapid growth. It is predicted that the incremental annual SCR system will be 350,000 vehicles per year. At 150,000 kilometers per vehicle per year, consumption of 1.5 liters of vehicle urea solution per 100 kilometers will increase the demand for vehicle urea by about 260,000 tons per year.
Third, export difficulties, be wary of imports. International urea has the cost advantage. In the first half of 2017, the international urea price was as low as US $ 180 (ton price, the same below), and the domestic enterprises could still insist on production. In the second half of the urea tender in India, led by two consecutive months soared, the highest price of more than 290 US dollars. Due to the low cost, the international urea factory has a lot of work to be done. When the price is low, it can insist on production and make profit when the price is high. The high cost of urea in China can only be exported when the international price is high and can not be exported when the price is low. In 2018, with the new urea plant in the United States and other places put into operation, the international urea output will further increase. The export of urea in China will be even more difficult. It is estimated that the annual export volume is hard to exceed 5 million tons.
Not only that, 2018 may face import problems. If the international price is lower than 50 dollars in China, the import is possible. South China is most likely to import, due to the inability to compete with the North urea, the current urea plant south of the Yangtze River significantly reduced the market has a big gap, the imported urea may take advantage of.
Fourth, coal prices support urea. Most of China’s urea as raw material for coal, urea prices greatly affected by coal prices. 2018 coal prices how? The negotiation of the 2018 Coal and Electricity Association in late November 2017 may provide some references. The annual long-term contract price is composed of “benchmark price + floating price”. The benchmark price is in line with that in 2017 at 535 yuan. The proportion of long-association sales of some large-scale coal enterprises is raised from 80% to 90%. As the shareholding ratio of the Association increases, it is expected that the coal price will be narrowed and the coal price will return to a reasonable range. Overall, coal prices will still be running at a high level in 2018, which also means high urea production costs and a strong support at around RMB 1,400.
Fifth, a new type of urea to further increase. Traditional urea highly competitive, many manufacturers are developing new urea, on the one hand can improve fertilizer efficiency; on the other hand can bring better benefits for the enterprise. It is understood that the current urea zinc acid, alginate urea and other value-added urea production capacity has exceeded 10 million tons, the development momentum is good.
Sixth, liquid ammonia, methanol market impact. There are many domestic manufacturers of urea using synthetic ammonia technology, both synthetic ammonia can also produce methanol; urea manufacturers can sell intermediate liquid ammonia, can also be processed into finished urea for sale. Urea, liquid ammonia, methanol is closely related to the manufacturers tend to which product prices are high, the benefits of producing more which. Liquid ammonia in 2017, strong methanol market, supporting high urea prices run. 2018 ammonia, methanol market continues to maintain a strong trend? This will have a great impact on the urea market, it is worth the industry’s attention.