What should we do if urea prices rise?

In the second half of March, the price of urea has gone up. Faced with this situation, what should dealers do to avoid losses and even maximize profits?

There are three reasons for the firmness of prices. One is that dealers were too cautious years ago. The previous year's Shandong Lianghe ex-factory price was 1,200 yuan/ton or slightly lower. The amount of fertilizer prepared was far lower than the same period of previous years. The first wave of rising prices continued after the end of the year. On the occasion of two weeks, everyone was still very cautious, and the amount of fertilizer was not very big. So on the eve of marketization of electricity prices (up on April 20th), at the time of the replenishment of winter wheat in Lianghe, Shandong and other places, the company arrived at the dealership. We have to increase the amount of urea purchased to ensure the timely arrival of goods when we reserve urea in advance for the use of rice in the Suyu Rivers and other places.

Second, the demand for industrial compound fertilizers and industrial boards and other industries will be very negative, years ago, the operating rate of compound fertilizer companies was 4 to 5 percent, and by mid-March, the operating rate had reached more than 8 percent, so the number of purchases of urea was compelled to increase. In particular, compound fertilizer manufacturers rarely have a large storage capacity for storing raw material urea, and think that the increase is not large, and they are unwilling to reserve in advance, which has led to a large increase in urea prices; in the second half of February to early March, industrial plate mills, etc. It is also in the adjustment period of the Spring Festival. By mid-March, it will gradually resume construction or have plans to purchase urea for resumption of production in April. It will also contribute to the rise in urea prices.

Thirdly, the confidence of the manufacturers is more adequate. The price increase stimulates the transaction, and the price increase promotes the delivery of goods. In order to maintain the stability of the price increase, the dealers increase the quantity of the shipments appropriately, but the price increase is higher than RMB 50/ At the time of tonnage, the quantity of single shipments has been reduced, and the speed has slowed down significantly. However, the manufacturers use their pre-paid low-price orders or Fed-to-letter joint sales orders, and the demand for industry and agriculture in spring is relatively large (although not continuous. The advantage of the price rises and rises again, firmly grasping the dealer's "buy up and not buy down" mentality, and maintain a strong offer as much as possible.

In the face of a firm urea price situation, what should we do?

First, we are still cautious, and there should be no room for further price increases. The above-mentioned several favorable factors are not very strong. Please look at the following data: Although there are still a few urea manufacturers compensating for the increase on Thursday, there are A small number of manufacturers due to lack of new orders and offer down 10-20 yuan / ton, coupled with the return of urea in the port Linyi compound fertilizer plant to accept the price from this wave of high-end market 1410-1420 yuan / ton gradually fell to 1380 yuan / ton, Since mid-April, it is the time for grassroots to digest compound fertilizers. Therefore, by mid-April, compound fertilizer companies should focus on delivery, and the operating rate should gradually decrease. In particular, India has repeatedly postponed its new urea procurement tender, the United States and other places. Prices continued to fall for three weeks. According to statistics from China Fertilizer Corporation, China's urea stock currently stands at 1.2 million to 1.3 million tons. In addition, the price of electricity prices raised in April has been overdrawn ahead of schedule. Therefore, the price of urea should be buffered for a period of time, ie, moderately adjusted downwards. .

Secondly, local distributors should appropriately set aside sales time according to their local fertilizer use time, set aside time for urea arrival, and then calculate the warehousing fees and interest rates required for the sum of these two times (of course, grassroots distributors. Do not need to consider this point), and then combined with the assumption that the next urea price is about 50 yuan / ton or even larger drop-off space, and ultimately consider whether the current price is appropriate, the risk of loss is not very large, etc. .

Thirdly, in the long run, the oversupply of domestic urea production should not be completely improved. About 4 to 5 million tons of new production capacity will be put into production this year, and new production capacity will be released internationally. The global environment is in a downturn and domestic demand in China And export demand should be steadily falling, combined with factory delivery cycle of 7-14 days, so the "half-month market" rule is still applicable to the current urea market, but the short-term logistics mobilization determines whether the rapid price increase will continue Can the time be longer than half a month?