The 2023 urea market in Shandong Province experienced a V-shaped fluctuation
According to the Commodity Market Analysis System of SunSirs, the urea market in 2023 generally showED a V-shaped trend of first falling and then rising. Narrow rise in the first quarter, significant decline in the second quarter, significant increase in the third quarter, and first rise and then fall in the fourth quarter. The highest point of the year was in early March, with an average market price of around 2,841.88 RMB/ton. The lowest point of the year was in mid June, with a price of around 2,210 RMB/ton. The maximum decline for the year was 22.23%.
From the monthly K-bar chart, it can be seen that urea had experienced more decline than increase throughout the year. The largest decline was in May, a decrease of 8.08%, and the highest increase was in July, an increase of 15.86%.
First quarter: ups and downs. After New Year's Day, the logistics and transportation situation improved, and agriculture began to prepare fertilizers. Downstream compound fertilizer factories made up their positions at low prices, and the market began to warm up. In early February, daily urea production remained high, but coal prices fell and cost support was insufficient, resulting in a slight decline in urea prices. In late February, as spring plowing approached and agricultural demand was strong, urea prices ushered in a new round of increase. But in mid March, there was a decrease in spring plowing and fertilizer supplementation, while the price of raw coal continued to decline. The downstream compound fertilizer market was average, and downstream demand weakened. Urea showed a characteristic of not being prosperous during the peak season, and urea prices began a downward trend.
Second quarter: All the way down. In April and May, agricultural demand continued to weaken, entering the off-season of agricultural demand. Urea companies started at a high level, causing serious accumulation of urea stocks. Urea manufacturers significantly lowered their prices, creating a strong bearish market atmosphere. The summer fertilizer production of composite fertilizers was delayed, and the composite fertilizer industry started below expectations. The production of sheet factories continued to be sluggish, coupled with insufficient cost support, multiple negative factors led to a continuous decline in urea prices. In early June, agricultural demand was concentrated and replenished, coupled with the impact of a new round of bidding in India, market sentiment improved, and urea prices surged.
Third quarter: Significant increase. Affected by the sharp drop in urea prices in the second quarter, the social inventory of urea remained low, and planned maintenance and malfunctions led to a decrease in the operating rate of enterprises. But with the outbreak of fertilizer demand in summer, coupled with a significantly higher than expected number of bids in India, the market trading atmosphere was hot, urea supply was in short supply, and urea prices continued to fluctuate and rise, showing a characteristic of not being weak in the off-season.
Fourth quarter: first rising and then falling. In late October, urea prices saw a significant increase again due to the favorable export performance of India and the slow start of winter storage. In the futures market, on November 16th, the main contract price for urea futures was 2,383 RMB/ton, an increase of over 40% compared to mid June. In order to bring urea prices back to rationality, maintain normal production and sales profits, and ensure the supply of winter storage and spring plowing fertilizers in 2024, policy efforts had begun. On November 17th, twelve companies including Sinochem Chemical Fertilizer issued a joint initiative to promote the supply and price stability of urea in the market. They will not hoard or pursue price increases, and if necessary, take timely measures to serve the supply and price stability. Once the initiative was launched, the domestic urea market began to fluctuate and decline.
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