Reporter Chen Jiayun reported from Beijing
The prosperity of the fertilizer market continued to improve, and the performance of a number of listed urea companies in the first quarter of this year pre-increased.
Among them, Hubei Yihua (000422. SZ) is expected to achieve a net profit of 580 million yuan to 650 million yuan, an increase of 173.17% to 206.14% year-on-year; deducting non-net profit of 540 million yuan to 610 million yuan, an increase of 241.89% to 286.21% year-on-year. In addition, in the first quarter, including Hualu Hengsheng (600426. SH) and many other urea listed companies "production and sales are booming", and the performance is generally good.
Ruixing Group is one of the major urea companies in China, and an executive of the company said in an interview with the "China Business Daily" reporter that in the first quarter of this year, the volume and price of the urea market rose together, mainly because the international market affected the supply and demand of the domestic market, in addition, the production cost also drove the price up. The person believes that under the policy of ensuring supply and stabilizing prices, the price of urea will not rise sharply in the future. At this stage, due to the impact of logistics, some companies have already reduced production, but Rising Group has been producing at full capacity.
Production and sales are booming
Urea is currently the highest nitrogen content of neutral quick-available nitrogen fertilizer, suitable for a variety of soil and crop growth, agricultural urea can be used single or combined with phosphate fertilizer, potassium fertilizer, etc., can promote crop yield. Industrial urea is mainly used in polymer synthesis materials, as well as additives, softeners for the production of pharmaceuticals and reagents.
In the first quarter of this year, affected by the favorable market, the performance of some urea production enterprises was frequently predicted.
On April 8, Hubei Yihua released a performance forecast showing that it is expected that the net profit in the first quarter will be 580 million yuan to 650 million yuan, an increase of 173.17% to 206.14% year-on-year. In addition, Hualu Hengsheng expects to achieve a net profit of 2.25 billion yuan to 2.45 billion yuan in the first quarter, an increase of 43% to 55% year-on-year.
For the reasons for the sharp increase in profits in the first quarter of the urea industry, Qiu Chenyang, a researcher at Zhongyan Puhua, said in an interview with reporters that first of all, the urea market is in short supply, laying the foundation for the continuous rise in urea prices. In recent years, countries around the world have paid more attention to food security issues, the area of agricultural planting has increased, the demand for fertilizers has increased, and with the domestic supply-side reform, the international new production capacity is limited, and the prosperity of the fertilizer market has risen. At the same time, with the recovery of the domestic economy, the price of chemical products such as polyoxymethylene and yellow phosphorus has risen. Secondly, in the context of the new crown pneumonia epidemic, the operating rate of overseas urea production capacity devices is insufficient, which provides a favorable development opportunity for domestic urea product exports. Finally, the increase in sales prices is greater than the increase in front-end raw materials, driven by the rise in global commodity prices in the first quarter, the price of urea front-end raw materials also shows an increasing trend, but the continuous growth of downstream and export demand makes the price increase of urea prices far exceed the increase in front-end raw material prices.
The above-mentioned Ruixing Group executives said that the important factor that caused the "production and marketing of domestic fertilizers" is that the international market is in a situation of short supply, and its price increase far exceeds the domestic market. Now the domestic urea price is about 3,000 yuan / ton, while the South Korean price has long reached 6,000 yuan / ton.
In February this year, according to foreign media reports, Kyrgyzstan decided to temporarily ban the export of fertilizers to countries outside the borders of the Eurasian Economic Union, aiming to ensure the demand for fertilizers in Kyrgyzstan's domestic agriculture in the spring, which lasted for 6 months.
As early as 2021, affected by factors such as rising international energy prices, the actual production capacity of global urea weakened, coupled with the restriction of domestic urea exports, the supply of goods in the global urea market continued to be tight, and the international urea market continued to soar.
Xu Xiaoyun, an analyst at Jinlianchuang Fertilizer, said in an interview with reporters that it can be seen that in the short term, the international fertilizer market has suddenly changed, and domestic fertilizer spot and futures prices are not only difficult to stand alone, but even have "smelled the chicken dancing".
Guarantee supply and stable price
During the spring ploughing season, in order to ensure agricultural production, the relevant departments are taking many measures at the same time to ensure the supply and price stability of the fertilizer market.
According to the national development and Reform Commission, the second meeting of the fertilizer supply and price stabilization work mechanism held in March this year requires that according to the situation of ensuring the supply and price stability of chemical fertilizers in spring ploughing this year, it is necessary to start from multiple links such as fertilizer production, supply, storage and marketing, take multiple measures at the same time, consolidate all aspects of responsibility, and effectively do a good job in ensuring the supply and price stability of spring tillage fertilizers. From the current point of view, the supply of nitrogen fertilizer and phosphate fertilizer on the mainland is generally guaranteed, and potassium fertilizer needs to be partially imported to meet agricultural demand.
In this regard, Hualu Hengsheng said that the state actively promotes the production and supply of chemical fertilizers and price stability, introduces relevant policies to ensure the supply of production factors, focuses on improving the capacity utilization rate of chemical fertilizer production enterprises, continues to implement the current preferential freight rates for agricultural fertilizers, reduces operating costs, and at the same time adjusts the supply and demand of fertilizers in the off-peak season, requires strengthening the role of reserve regulation, and increases the supervision of the fertilizer market, which provides favorable support for the normal production and operation of fertilizer enterprises.
Rising Group said that under the price stability of supply, it is expected that the spot price of urea will not change much in the second quarter.
"From the perspective of the current domestic market environment to ensure supply and stable prices, there is still great room for domestic urea capacity utilization, and we can not only meet the domestic market demand, but also have a strong price advantage to occupy the international market." Xu Xiaoyun told reporters.
The time is set back to 2015, when the domestic urea device production capacity is at its peak, reaching an extreme value of about 89 million tons in the same period of history, with an output of 75.33 million tons in the same period, and the overall capacity utilization rate of the industry is as high as 84.64%.
Xu Xiaoyun believes that the effective capacity of domestic urea devices is expected to increase slightly to about 75 million tons in 2022, but due to multiple unfavorable factors, the overall capacity utilization rate of the industry may drop to about 70%, and the annual output may fall to a historical low of about 53 million tons.
The reporter noted that in recent years, the state for overcapacity industry supply-side reform, through environmental protection rectification and retreat into the park, gradually cleared the excess capacity in the industry, while nitrogen fertilizer and phosphate fertilizer new capacity is relatively limited, the era of serious overcapacity in the fertilizer industry has passed, the industry pattern is expected to continue to optimize.
At present, the mainland is not only the world's largest producer and consumer of urea, but also a major exporter of urea.
Customs statistics show that the mainland's urea exports in March 2022 were 70,000 tons, a year-on-year decrease of 82.1%. From January to March, urea exports totaled 300,000 tons, down 62.2% year-on-year.
Xu Xiaoyun said that from the monthly data of urea exports for many years, the peak of mainland urea exports is mostly concentrated in the third and fourth quarters of each year. Especially from the perspective of economic recovery, if the supply and demand of urea in the international market is still absent, and the sowing period of domestic crops has passed, the international urea market demand is "hoping for plums to quench thirst", and the possibility of urea exports being promising is not ruled out.
(Editor: Dong Shuguang Proofreader: Yan Jingning)