January 28, 2022

Urea enterprises in China or should aim at the international market

Drying equipment

China Drying Network News India announced on July 14 that 1.5 million tons of urea was tendered, which exceeded the industry's expectations. This is what export companies have been waiting for for a long time, but the final bid price has disappointed the company. At present, traders with urea FOB prices below 390 US dollars (t price, the same below) have profits, and this price may further decline. Exports have become a frustrating move for domestic companies.

It is understood that in order to participate in the tender, domestic enterprises have nearly one million tons of urea set. However, the result of this tender was surprising. India has marked a total of 1.48 million tons of urea, and there are indeed about 1 million tons of China's supply. However, the bid price received by India is as low as 406 US dollars, excluding shipping costs 17- 19 US dollars, combined with China's FOB price of 387 to 389 US dollars, so the price of the inverted launch of the factory price of 2030 yuan, the attractiveness of the company has been small.

July 1 is the export season of urea off-season. As early as mid-July, China’s urea companies had high expectations for the international market and exports were relatively active, but export prices were not high. Now, the FOB price of urea in China's port stocks is more than US$400. If the CIF price on the east coast of India is pushed back from US$408 to US$409, China’s FOB price must be below US$390 to make profits for traders. That means The FOB price of $390 is the bottom line.

At present, traders who purchase urea for India have bid prices for Chinese sources at 380-385 US dollars. Although the latest transaction's FOB price is between 383 and 388 US dollars, there are very few buyers who are willing to pay this price. There is a possibility of further decline in prices.

Industry sources pointed out that in the case of excess domestic production capacity, the demand for out-of-season exports appears to be the only way to absorb inventories. Thousands of troops have come to export this single-plank bridge, coupled with the decline in coal prices, and Indian importers understand this. Chinese companies In order to reach a deal with India, the price must decline. In the current recovery of oil prices and the United States' drought-reduced food production, India can still capture such a large amount of urea at a low price. The underlying reason behind this is that companies should rethink the market positioning of their products.

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