In the latter part of the third quarter of last year, affected by exports, the domestic urea market remained high, and the state introduced a series of measures to ensure the supply and price of fertilizers, and the supply of urea was increasingly sufficient. According to statistics, from October 2023 to April 2024, the total domestic physical production of urea is expected to reach 37.6 million tons, an increase of about 4.5 million tons over the same period. Judging from this data, the domestic spot supply is very sufficient, but the recent market performance is like a shortage of supply. So, from the perspective of the industrial chain, where does the increase in urea go, and how much is the possible surplus in the market?
Changes in business inventories
Although the inventory of domestic urea enterprises has shown a downward trend recently, it has increased slightly compared with the end of September 2023. As of April 24, the total physical inventory of domestic urea enterprises was 523,600 tons, an increase of about 220,000 tons from 296,800 tons at the end of September 2023.
Changes in the yield of compound fertilizers
According to statistics, the output of compound fertilizers from October 2023 to April 2024 is expected to be 32.5 million tons, an increase of about 1.1 million tons over the same period. Because the amount of urea used in the production of high-nitrogen fertilizer is relatively high, it is estimated that the amount of urea will increase by 220,000 tons year-on-year according to the proportion of 20%. Considering that the raw material inventory of the enterprise is enough for 7~10 days of production, the current raw material urea inventory of the compound fertilizer plant is about 400,000 tons.
Changes in melamine yields
According to melamine production data, the total domestic melamine output from October 2023 to April 2024 is expected to be 920,000 tons, an increase of 160,000 tons over the same period, considering that nearly half of the company's own synthetic ammonia or urea plants, the actual urea consumption will increase by 200,000~300,000 tons.
The demand for desulfurization and denitrification of thermal power plants
According to the policy, the urea substitution and transformation project of liquid ammonia level 1 and level 2 major hazard sources of liquid ammonia in public coal-fired power plants will be completed by the end of December 2022, and the urea substitution and transformation project of liquid ammonia level 3 and level 4 major hazard sources will be completed by the end of 2024. In the first quarter of this year, China's power generation capacity was 1,992.2 billion kilowatt hours, a year-on-year increase of 3.1%, so the demand for urea is still increasing, and the increase is expected to be 100,000~200,000 tons.
Consideration of agricultural needs
Although fertilizer prices are declining, the decline in urea prices is significantly greater than that of compound fertilizer in the demand season for regreening fertilizer. From the perspective of cost performance, urea in this year's green fertilizer market may replace part of the demand for compound fertilizer, and then there is an increase in the agricultural market, but its increase is difficult to count. In addition, the demand for automotive urea and other industrial urea may also increase to a certain extent, and the specific data is difficult to estimate.
According to the above data, the demand increase for urea is about 1 million tons, and there is a supply increase of 3 million tons, and the supply situation is still loose, otherwise the price will not be lower than 200~300 yuan/ton in the same period. This year's urea spring market is not completely over, according to the data can still be concluded that urea supply is loose, but the degree of easing still needs to be judged after more than half of the summer fertilizer market.
Data source: Longzhong Information
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Please indicate in the following format for reprinting: Source: Agricultural Resources Herald Author: Wu Yuanli Editor: Chen Ran Review: Chen Guoxing Producer: Wu Junsheng