Increased gas prices drove fertilizer prices to rise in the off-season

September 3: "Our fertilizer prices have recently risen." Yesterday evening, Sichuan Meifeng [7.40 0.27%] (000731.SZ) Dong Shumi Shu Shaomin, who used natural gas to produce urea, told the "First Financial Daily". In the "upswing" of natural gas, the price of natural gas downstream fertilizer products also rose. Although it is now in the off-season fertilizer use, urea prices in Sichuan, Yunnan, Guangxi, and Shandong have recently increased.

China Chemical Network analyst Zhang Ming told the newspaper that 46% of small grain urea in Shandong was quoted at 1,530 yuan/ton in early August and rose to 1,730 yuan/ton at the end of August.

The insider of Tianmeng Agricultural Materials Chain Co., Ltd. also stated that the prices of fertilizers in Yunnan and Guangxi have reached 1,750 yuan/ton, which is more than 100 yuan higher than the prices in June.

The consensus view of the industry is that the increase in the price of urea is directly related to the price increase of natural gas of 0.23 yuan/m3 on June 1.

An analysis was made by Liang Bin, a researcher at China Fortune Investment Group [0.00 0.00%], assuming that a chemical fertilizer company obtained natural gas from Changqing Oilfield. After the adjustment of gas prices, the benchmark price of natural gas for the oil-supply fertilizer companies changed from 0.69 yuan/cubic meter to 0.92 yuan/cubic meter. In addition, the supplier will also increase gas prices by about 10% within the range permitted by the country. Therefore, the price of gas obtained by this fertilizer company is about RMB 1/m3.

“Generally speaking, 700 cubic meters of natural gas are consumed per ton of urea. Therefore, if the price of natural gas is increased by 0.3 yuan/m3, the price per ton of urea should rise by about 200 yuan,” explained Liang Bin.

Sichuan Meifeng, Jianfeng Chemical [10.02 2.77%] (000950.SZ) and Yuntianhua [20.52 2.04%] (600096.SH) have all announced that they will increase their annual The cost of 100 million yuan and 70 million yuan.

The increase in gas prices is not the only reason for the increase in fertilizer prices. A local fertilizer distributor in Guangxi told reporters that another reason for the increase in fertilizer prices is still export.

From July 1st this year, China's urea fertilizers began to implement a 7% off-season export tax rate, which is a lot lower than the 110% tax rate for the peak season (February to June). Many domestic urea plants are also within this period of time. Waiting for good export opportunities.

Zhang Ming said that around August 10, international urea prices rose sharply, and China's small-particle urea offshore quotation increased from US$260/ton to US$270/ton (equal to RMB1,836/ton).

The rapid increase in export prices has also led to a surge in urea export orders in Shandong, Shanxi, Hebei, and Jiangsu. In less than a week, new orders for urea exports have reached more than 300,000 tons. Due to this stimulus, the domestic wholesale price of urea increased from 1,600 yuan to 1,700 yuan.

Zhang Ming is not optimistic about the development of fertilizer prices. He said that because local governments have tightened their control over high-energy-consuming enterprises, there may still be 30% of the urea plants in China still shutting down production or limiting production, but the increase in urea prices is not as large as they think, which shows that the urea supply and demand in the market Still relatively balanced, inventory should not be too small. In addition, the peak season will soon come, and the country will increase the export tariffs on fertilizers, which will also put pressure on the continued rise in fertilizer prices.