Urea exports may be blocked in April

Although the price of crude oil after the price of fertilizer market has been placid, but the long-term sharp drop in oil prices led to the decline in natural gas prices, so that the cost advantage of China's urea no longer exist, the latter will be full of urea export pressure.

The price of oil fell from June last year and has fallen by half. Taking into account the hysteresis caused by long-term natural gas agreements or regional pricing, the decline in oil prices lasted for 10 months in April of this year. The transmission of natural gas prices will inevitably occur, and this will cause global gas head urea costs. significantly reduce.

In November last year, Ukraine and Russia signed a natural gas contract, which expires in March this year and the price is 378 US dollars/million cubic meters. With the drop in oil prices, the contract price of natural gas in Russia and Uzbekistan will inevitably drop sharply in April. Foreign media reports that it may fall below 1.5 yuan per cubic meter, and the raw material cost equivalent to urea is less than 900 yuan per ton. Lower than the domestic cost of coal gasification urea companies. The start-up rate of gas-headed urea companies in Ukraine and other countries will inevitably rise, which will directly lead to a decline in China’s urea international market share. Ukraine is an important urea exporter in the world. In September 2013, Ukrainian urea exports were forced to stop production due to the impact of low price urea in China.

Global natural gas demand entered the off-season in April. North America and Europe mainly use natural gas for heating in winter, and winter is the peak season for global gas demand. In April, when the temperature rises, the demand for natural gas will inevitably drop drastically. On the one hand, it will cause the supply of natural gas to loosen and ensure the supply of raw materials for global gas head urea; on the other hand, it will result in price cuts of natural gas and a drop in the cost of urea, which will cause China's urea to lose cost competition. Advantage.

While the competitiveness of gas head urea has increased, with the drop in oil prices, the news of the successive production of the Indian naphtha urea plant has been heard. This shows that coal urea is no more competitive than oil urea and is less dominant than gas urea. India is a large market for China’s urea exports, and now India’s urea self-sufficiency is rising and imports will decline.

According to a comprehensive analysis, if oil prices maintain the current level, China will become the country with the highest urea production cost in the world, and the way to absorb excess production capacity through exports may already be near the end.