According to the survey data of business associations, the average market price in East China is about 1676.67 yuan per ton. The light soda commodity index on August 13 was 85.98, which was the same as yesterday. It was 27.05% lower than the peak of 117.86 points in the cycle (2017-11-21), and 36.15% higher than the low of 63.15 points on November 18, 2015. (Note: Period refers to 2011-09-01 to date)

Domestic soda market is mainly stable, the market is not warm. At present, the mainstream factory price of light alkali in China is 1500-1680 yuan/ton, and the terminal price of heavy alkali is 1700-1800 yuan/ton. The actual transaction price can be further discussed. The domestic soda market operates in a narrow range and is relatively stable as a whole. Heavy caustic soda market consolidation is the main, manufacturers shipment situation is still acceptable.

Soda analysts believe that the recent start-up load of soda manufacturers has been maintained at about 80%, and the overall supply of goods is sufficient. Downstream demand is sluggish, more cautious wait-and-see market-oriented. Affected by the typhoon, the enterprise load has been slightly reduced, the start of construction has been slightly inadequate, and the demand side has not improved significantly. In the short term, how narrow the soda market is to be sorted out and operated, specifically looking at the downstream market demand.

A Glimpse of Price Trend of Aluminum Ingot

Aluminum prices bottomed out in 2018, hovering at year-round lows, with a range of 13,450-15,000 yuan/ton. In the first nine months, the price of aluminium was running in a “W” trend, and in the fourth quarter, the price of aluminium dropped significantly.

In the first half of 2019, the price of aluminium was generally inverted “V” operation. The low oscillation in January lasted until before and after the Spring Festival. After the first ten days of February, the price of aluminium ingots began to rise. After a slight decline in late March, the price of aluminium ingots continued to rise in mid-April, breaking through the 14000, 14100, 14200 and 14300 levels continuously. At the end of May, the price of aluminium ingots reached its peak in the year and fell in June. On July 3, the price of aluminium stopped falling and rose, opening up the mode of shock and attack.

According to the data of business associations, the average price of aluminium (99.70) market as of August 13 was 14260 yuan/ton, up 5.84% compared with the average price of 13473.33 yuan/ton at the beginning of the year (January 1); the trough value of 13223.33 yuan/ton (January 15), up 7.84%; the peak value of 14383.33 yuan/ton (May 15) fell 0.72%; and from the beginning of 2019 to the beginning of 2019. The current interval amplitude is 8.61%.

Aluminum ingot prices jumped 2% this week.

Aluminum ingots, with an annual amplitude of only 8.61%, have risen by 2% this week. According to data from business associations, the average market price of aluminium (99.70) on August 13 was 14,260 yuan/ton, up 2.20% from the average market price of 13,953.33 yuan/ton at the beginning of the week (10 August); it is reported that the market price of aluminium ingots began to rise in the afternoon of 12 August, with a daily increase of 2.08% as of the afternoon of 13 August.

Expected Enhancement of Price Bottom of Alumina Raw Material

1. China’s domestic bauxite consumption declined in July

According to relevant data, China’s domestic bauxite consumption in July was about 7.07 million tons, a decrease of about 3.0% annually, and a decrease of about 12.2% year on year. From January to July 2019, China’s domestic bauxite consumption totaled about 54.2 million tons, a decrease of about 5.0% over the same period last year.

The data show that the consumption of domestic bauxite in Shanxi in July is about 3.27 million tons, which is about 2.7% lower than that in the previous year; the consumption of domestic bauxite in Henan is about 1.38 million tons, which is flat; the consumption in Guangxi is about 1.23 million tons, which is about 3.2% lower than that in the previous year; and the consumption in Guizhou is about 830,000 tons, which is about 3.5% lower than that in the previous year.

2. Increased reduction in alumina production in July

Affected by the persistent decline of alumina price in the early stage, the loss of alumina enterprises in northern China intensified in July, and the reduction of production of alumina enterprises in Shanxi and Henan increased. It is reported that the production line of Xing’an Chemical Alumina in Xiaoyi, Shanxi Province has been repaired since July 20, involving a capacity of 1 million tons per year for about 30 days; Huaxing Aluminum Industry in Shanxi Province has reduced its roasting capacity by 300,000 tons per year; and Sino-Aluminum Mining Industry has reduced its roasting capacity by 200,000 tons per year due to environmental problems. It is estimated that the total affected capacity will be about 1.5 million tons per year. In addition, during the 2nd National Youth Games in Xiaoyi City (August 8 – August 20), Xiaoyi related enterprises organized staggered peak production, and alumina enterprises are expected to limit production by 50%. Recently, the domestic market is expected to strengthen the bottom of alumina prices.

Smooth operation of downstream aluminium export for half a year

1. A Survey of Export Data of Aluminum Materials

According to customs statistics, China exported 487,000 tons of unwrought rolled aluminium and aluminium materials in July and 3.47 million tons in January-July, an increase of 7.4% compared with 3.23 million tons in the same period last year.

2. Domestic aluminium production (semi-annual data) declined year on year

According to Statistics Bureau data, in June 2019, China’s aluminium output was 4.333 million tons, down 3.0% from the same period last year; in January-June this year, China’s aluminium output was 23.373 million tons, down 0.5% from the same period last year.

A Glimpse of Price Trend of Aluminum Ingot

Aluminum prices bottomed out in 2018, hovering at year-round lows, with a range of 13,450-15,000 yuan/ton. In the first nine months, the price of aluminium was running in a “W” trend, and in the fourth quarter, the price of aluminium dropped significantly.

In the first half of 2019, the price of aluminium was generally inverted “V” operation. The low oscillation in January lasted until before and after the Spring Festival. After the first ten days of February, the price of aluminium ingots began to rise. After a slight decline in late March, the price of aluminium ingots continued to rise in mid-April, breaking through the 14000, 14100, 14200 and 14300 levels continuously. At the end of May, the price of aluminium ingots reached its peak in the year and fell in June. On July 3, the price of aluminium stopped falling and rose, opening up the mode of shock and attack.

According to the data of business associations, the average price of aluminium (99.70) market as of August 13 was 14260 yuan/ton, up 5.84% compared with the average price of 13473.33 yuan/ton at the beginning of the year (January 1); the trough value of 13223.33 yuan/ton (January 15), up 7.84%; the peak value of 14383.33 yuan/ton (May 15) fell 0.72%; and from the beginning of 2019 to the beginning of 2019. The current interval amplitude is 8.61%.

Aluminum ingot prices jumped 2% this week.

Aluminum ingots, with an annual amplitude of only 8.61%, have risen by 2% this week. According to data from business associations, the average market price of aluminium (99.70) on August 13 was 14,260 yuan/ton, up 2.20% from the average market price of 13,953.33 yuan/ton at the beginning of the week (10 August); it is reported that the market price of aluminium ingots began to rise in the afternoon of 12 August, with a daily increase of 2.08% as of the afternoon of 13 August.

Expected Enhancement of Price Bottom of Alumina Raw Material

1. China’s domestic bauxite consumption declined in July

According to relevant data, China’s domestic bauxite consumption in July was about 7.07 million tons, a decrease of about 3.0% annually, and a decrease of about 12.2% year on year. From January to July 2019, China’s domestic bauxite consumption totaled about 54.2 million tons, a decrease of about 5.0% over the same period last year.

The data show that the consumption of domestic bauxite in Shanxi in July is about 3.27 million tons, which is about 2.7% lower than that in the previous year; the consumption of domestic bauxite in Henan is about 1.38 million tons, which is flat; the consumption in Guangxi is about 1.23 million tons, which is about 3.2% lower than that in the previous year; and the consumption in Guizhou is about 830,000 tons, which is about 3.5% lower than that in the previous year.

2. Increased reduction in alumina production in July

Affected by the persistent decline of alumina price in the early stage, the loss of alumina enterprises in northern China intensified in July, and the reduction of production of alumina enterprises in Shanxi and Henan increased. It is reported that the production line of Xing’an Chemical Alumina in Xiaoyi, Shanxi Province has been repaired since July 20, involving a capacity of 1 million tons per year for about 30 days; Huaxing Aluminum Industry in Shanxi Province has reduced its roasting capacity by 300,000 tons per year; and Sino-Aluminum Mining Industry has reduced its roasting capacity by 200,000 tons per year due to environmental problems. It is estimated that the total affected capacity will be about 1.5 million tons per year. In addition, during the 2nd National Youth Games in Xiaoyi City (August 8 – August 20), Xiaoyi related enterprises organized staggered peak production, and alumina enterprises are expected to limit production by 50%. Recently, the domestic market is expected to strengthen the bottom of alumina prices.

Smooth operation of downstream aluminium export for half a year

1. A Survey of Export Data of Aluminum Materials

According to customs statistics, China exported 487,000 tons of unwrought rolled aluminium and aluminium materials in July and 3.47 million tons in January-July, an increase of 7.4% compared with 3.23 million tons in the same period last year.

2. Domestic aluminium production (semi-annual data) declined year on year

According to Statistics Bureau data, in June 2019, China’s aluminium output was 4.333 million tons, down 3.0% from the same period last year; in January-June this year, China’s aluminium output was 23.373 million tons, down 0.5% from the same period last year.

On August 12, the phthalic anhydride commodity index was 57.42, unchanged from yesterday, down 52.20% from the cyclical peak of 120.13 points (2012-02-28), and up 18.59% from the lowest point of 48.42 on January 21, 2016. (Note: Period refers to 2011-09-01 to date).

Recent domestic market price fluctuation of phthalic anhydride, price fluctuation of phthalic anhydride and phthalic anhydride in eastern China, downstream factories maintaining just in need of purchase, factory inventory pressure, high-end transaction hindered, the mainstream of on-site neighbouring source negotiations is 5700-5900 yuan/ton, the mainstream of naphthalene source negotiations is 5300-5400 yuan/ton; the mainstream of phthalic anhydride market in North China is 5300-5400 yuan/ton. The quotation ranges from 5700 to 5800 yuan/ton, the market price remains volatile, the quotation of enterprises is temporarily stable, the downstream construction is not high, the procurement is on demand, the wait-and-see mentality is strong, the domestic phthalic anhydride plant is stable, the spot supply of phthalic anhydride is normal, and the price trend of phthalic anhydride is mainly volatile.

In the near future, the domestic price of phthalic anhydride upstream product Sinopec o-phthalic acid is 6000 yuan/ton. The import market of phthalic anhydride in the port area has fallen, the quotation is stable, the recent market of phthalic anhydride in the port is general, the port stock is low, the quotation of o-phthalic anhydride outside market has fallen concussively, the actual transaction price is based on negotiation, the factual details are discussed in detail, Market prices remain low and volatile. Downstream DOP raw material phthalic anhydride price is temporarily stable, isooctanol price is stable, DOP cost trend is stable. DOP prices remain stable temporarily, DOP downstream demand is general, customer purchasing enthusiasm is general, downstream PVC market shocks rise, DOP market mainstream transaction price is about 7400 yuan/ton, downstream price shocks low, it is expected that the market price of phthalic anhydride will maintain the trend of shocks in the later period.

The fluorite price fluctuation is clearly seen from the fluorite price trend chart. According to statistics, the average domestic fluorite price is 3106.25 yuan/ton as of August 12. Since the end of July, the domestic fluorite price trend has declined. According to statistics, the recent domestic price of 97 fluorite wet powder in Inner Mongolia is 2800-3100 yuan/ton, and that of 97 fluorite wet powder in Fujian is 290. The price of 97 fluorite wet powder in Henan is 2900-3200 yuan/ton, and that of 97 fluorite wet powder in Jiangxi is 2900-3300 yuan/ton.

Recent fluctuations in domestic fluorite prices. Firstly, the national environmental protection inspection, fluorite start-up rate is general. In 2019, domestic mines and flotation plants were partially shut down, which made the spot supply of fluorite normal. Some of the holders still have a strong price intention. Domestic fluorite price quotations have not changed much, but the actual turnover in the field is somewhat higher than before. Slide downward. Secondly, the refrigerant industry has been depressed recently. For the upstream demand is poor, the price of fluorite can not support the decline. The price of hydrofluoric acid and refrigerant in the downstream has been lower recently, which has a negative impact on the domestic fluorite market, and the domestic price of fluorite has been lower. In the near future, the hydrofluoric acid Market and refrigerant industry have no obvious positive support, and fluorite prices are expected to continue to decline slightly in the later period.

The market price of hydrofluoric acid has a downward trend.

The average price of domestic hydrofluoric acid market was 11 430 yuan/ton on the 12th day. Recently, the price of domestic hydrofluoric acid market has been slightly lower. The mainstream of domestic negotiations on hydrofluoric acid in Fujian is 10 500-11 500 yuan/ton, the price of hydrofluoric acid in Shandong is 10 500-11 500 yuan/ton, the price of hydrofluoric acid in Jiangxi is 11 000-11 500 yuan/ton, and the price of hydrofluoric acid in Inner Mongolia is 10 500-11 500 yuan/ton. Negotiations in the 10 500-11 000 yuan/ton or so, hydrofluoric acid market supply is sufficient, market prices slightly lower.

In recent years, the domestic hydrofluoric acid start-up rate is more than 60%. Enterprises reflect that there is sufficient supply of hydrofluoric acid spot supply in the field. In recent years, the situation of on-site purchases is general. In recent years, due to poor downstream demand, some hydrofluoric acid manufacturers’prices have slightly declined. Recent downstream refrigerant products start at a low level, the upstream fluorite and hydrofluoric acid demand is poor, the recent downstream refrigerant trading market is general, hydrofluoric acid products price shocks. Recent downstream refrigerant market trading market is general, domestic refrigerant R22 market shocks down, from the market supply point of view, the production enterprise device is stable, but the pressure of goods is too high, inventory expansion appears to a certain extent, the enterprise aims to make profits to deliver goods. The downstream weakness continues, the peak season of refrigerants has passed, and demand has only decreased but not increased. The price of domestic large enterprises has maintained the level of 17,000-18,000 yuan/ton. Domestic market price trend of R134a shocks, production enterprises equipment start-up rate remains low, refrigerant market demand is general, manufacturers mainly export. However, the price of on-site transactions does not change much. Businessmen purchase on demand. At the end of the peak season, the downstream demand of terminals decreases but does not increase. The downstream demand is not good, and the price trend of hydrofluoric acid market is low. Recently, due to the common negative effect of fluorite and refrigerant industry, the market price of hydrofluoric acid is expected to continue to decline in the later period.

According to the monitoring of nickel prices by business associations, the spot price of nickel on August 12 was 122,833.33 yuan/ton, which was 2.71% lower than 126,250 yuan/ton on the previous trading day, 37.23% higher than the beginning of the year and 20.53% higher than the previous year.

Prior to that, nickel prices surged by more than 40 points on the basis of multiple bullishness.

Since this year, nickel prices have been in a good trend. In addition to a slight drop in March-June, nickel prices have soared to a new high of 126,250 yuan/ton at the end of June, up 41.05% from the lowest point at the beginning of the year, which is equivalent to the historical price level of 14 or 15 years. Nickel prices soared, mainly due to Indonesia’s possible ban on nickel exports in 2020, speculation about the second mining review in the Philippines, the impact of the Indonesian earthquake on town exports, and the release of ferronickel production capacity was not as good as expected.

Indonesian mining ban speculation suspended Shanghai nickel plunged by more than 5%.

After nickel prices hit a year high on Friday (9), it was reported that Indonesian President stressed that there are still many infrastructure projects in the country lacking foreign exchange input as construction funds, and no further discussion on the date of advance ban. Bambang Gatot Ariyono, Director-General of the Indonesian Mining Authority, said the industry would follow existing rules and that the market would ignore rumors as long as no new rules were introduced. Rumors of Indonesia’s early ban on mining, which has been hyped for many days, have temporarily come to an end, and nickel prices have fallen back.

According to the current nickel futures table of business associations, nickel spot price is higher than the main contract price in the near future. The main contract price is the price of nickel in the next two months. Before that, both spot nickel price is higher than the main contract price. Today, there is a turning point between the two, which shows that people are feeling better about the future nickel price.

There is no need to be overly pessimistic about supply-side tightening

Although the price of nickel had risen sharply before, which was disturbed by the supply side and the stock was low, a large part of it was due to market debates, capital speculation and hot nickel price speculation. So once the market rumors, Indonesia should ban mining ahead of time, regardless of the truth, nickel prices continue to rise and fall. Now, as soon as I heard that Indonesia’s early ban on mining proved untrue, market panic and selling psychology caused the price of nickel to fall sharply. But in the long run, the tight supply of nickel ore still exists. The depletion of nickel ore resources is an objective fact. Even if Indonesia does not ban mining in advance for a short time, who is not sure that this wave of operations will come again, even if it does not ban mining now, it will be banned by 2022, in terms of Indonesia’s virtue of changing day by day. The second round of review of mines in the Philippines is also ongoing, which will more or less affect the supply of nickel prices. So the tight supply of nickel ore is a long-term situation, which supports the price of nickel.

Reasonable high drop nickel price short-term high shock

Liu Meimei, an analyst with business associations, believes that nickel prices fell sharply on Monday (12th). Spot nickel prices have soared by more than 40% before, with no 100-day bonus and no 100-day rise in prices. The high drop is also a rational demand. Whether Indonesia bans mines in advance, true or false, more hype is a mood, bans will not be banned now, has little impact on the current fundamentals. Previously, the corresponding price of low inventory is within a reasonable range. Now it is still the off-season in August. The demand is limited and can not be supported by demand. Nickel price is difficult to rise in place step by step. The current pattern of high-level shocks is influenced by the news and macro-level. High nickel prices are expected to remain in the peak season of September and October. Nickel prices may rise to a new height with rising demand and the closure of production in October of the highest-grade nickel mines in the Philippines.

Russia’s oil and gas production rose further in the first seven months of 2019, despite the impact of the oil pollution crisis and the recent decline in natural gas exports, the Russian Times reported on August 7.

According to data released by the CDU TEK Department of the German Ministry of Energy, Russian crude oil and condensate production increased by 2% from January to July this year, reaching 325 million tons (11.2 million barrels per day). However, in July, the mining output was 47.15 million tons, down 0.6% from the same period last year.

Millions of barrels of crude oil were found to be contaminated by organic chlorides, and exports through the Druzhiba pipeline were interrupted. Oil production fell by 10.7% in May to 11.11 million barrels a day. In early July, oil prices fell to a three-year low of 10.8 million barrels a day after Russian state pipeline operator Transneft stopped importing oil from Rosneft. The move is part of a larger controversy between the two companies in resolving the pollution crisis.

According to CDU TEK, oil supply rebounded in the second half of June, with total production reaching 47.15 million tons (11.15 million barrels a day) in July, but still down 0.6% from last July.

Rosneft produced 128 million tons in the first seven months of 2019, while Lukoil, the leading private oil company, and Surgutneftegaz produced 47.9 million tons and 35.1 million tons, respectively. Meanwhile, Russia’s gas production grew by 3% year-on-year from January to July, reaching 431.9 billion cubic meters. In July alone, production reached 54.66 billion cubic meters, an increase of 0.5% over the same period last year.

From January 1 to July 15, 2019, natural gas exports from Gazprom to countries outside the former Soviet Union dropped to 102.8 billion cubic meters, down 5.6% from the same period last year. The company’s output was unaffected by weak European sales, up 1.9% year-on-year to 294.5 billion cubic meters.

Novatek, Russia’s largest independent natural gas producer, produced 40.86 billion cubic metres of natural gas in the first seven months of this year, Rosneft 25.43 billion cubic metres, Lukoil 11.93 billion cubic metres and Surgutneftegaz 5.58 billion cubic metres.

According to the OGJ website on August 8, the U.S. Energy Intelligence Agency (EIA) said that as of August 2, the U.S. commercial crude oil stocks, excluding strategic oil reserves, had increased by 2.4 million barrels compared with the previous week.

EIA said in its weekly oil status report that oil stocks reached 438.9 million barrels, about 2% higher than the five-year average at this time of year.

It ended seven consecutive weeks of inventory decline. Many people were surprised by the increase in crude oil supply. Analysts and traders surveyed by the Wall Street Journal expect inventories to fall by 2.8 million barrels.

In September and October, the price of light, low-sulfur crude oil fell by more than $2.50 a barrel, the lowest settlement price for crude oil in recent months in New York since January. The September contract closed at $51.09 per barrel on August 7.

Total car gasoline inventories increased by 4.4 million barrels, 4% higher than the five-year average at this time of year. Stocks of finished gasoline and blended components increased. Distillate stocks increased by 1.5 million barrels, about 1% below the five-year average at this time of year.

Propane-propylene stocks increased by 2.9 million barrels in the week ending 2 August. It is about 8% higher than the five-year average for this season.

The capacity of American refineries was 96.4%, and the average input for the week ending August 2 was 17.8 million barrels per day, an increase of 786,000 barrels per day over the previous week’s average. Gasoline production increased, averaging 10.4 million barrels per day. Fractional fuel production increased, averaging 5.3 million barrels per day.

Crude oil imports rose to 7.1 million barrels a day in the week ending August 2. This is an increase of 485,000 barrels per day over the previous week. In the past four weeks, oil imports averaged 6.9 million barrels a day, a 14.9% decrease over the same period in 2018.

Total imports of gasoline, including blended components of refined gasoline and gasoline, averaged 1.2 million barrels per day last week and 253,000 barrels per day for distillate oil.

In its latest short-term energy outlook, the Energy Information Administration (EIA) predicts spot Brent crude oil prices will average $64 per barrel in the second half of this year and $65 per barrel in 2020. EIA’s expectations of relative equilibrium in the global oil market and its forecast of stabilizing crude oil prices combine the risk of disruption of oil supply and lower expectations of economic growth.

EIA predicts that global oil stocks will increase by 100,000 barrels per day this year and 300,000 barrels per day by 2020.

EIA expects the price of West Texas intermediate crude oil to be lower than Brent crude oil by an average of $5.50 per barrel in the fourth quarter of this year and 2020, narrowing the gap from $6.60 per barrel in July. The narrowed price gap reflects EIA’s prediction that transportation restrictions on crude oil pipelines from the Permian Basin to the Gulf Coast will be eased in the coming months.

However, this latest variance forecast is larger than last month’s $4/barrel spread forecast, as EIA revised its marginal cost forecast for crude oil pipelined from Cushing to the Gulf Coast.

WTI September crude oil futures closed Wednesday (August 7) down $1.32, or 2.46%, to $52.31 a barrel. U.S. oil plunged more than 5% to a seven-month low, continuing the recent slump, following an unexpected increase in U.S. crude oil inventories and fears that the escalation of Sino-U.S. trade problems will lead to shrinking demand.

EIA data bearish pressure on oil prices

Oil prices fell earlier on trade concerns and then continued to fall as U.S. government data showed that U.S. crude oil inventories increased by 2.4 million barrels last week, with analysts expecting a 2.8 million barrel reduction.

The U.S. Energy Information Agency (EIA) said U.S. crude oil inventories had fallen for seven consecutive weeks before last week’s increase, but were still about 2% higher than the five-year average; U.S. gasoline inventories increased by 4.4 million barrels and distillate oil by 1.5 million barrels last week, both of which hit record levels in the Gulf Coast region in the same period in history.

John Kilduff, partner of Again Capital LLC in New York, said that after seven consecutive weeks of falling oil prices, some people believed that today’s EIA inventory report would reverse the trend of oil prices, but supporters of this view were squeezed out of the market.

Andy Lipow, president of Lipow Oil Associates, said the data disappointed the market and increased inventories of crude oil and refined oil. As refineries increased productivity utilization, the United States entered the final sprint of the driving season, and the supply of refined oil was more than enough.

Since last week, oil distribution has fallen by nearly 14% as global stock markets tumbled.

Gene McGillian, vice president of market research at Tradition Energy, said the market continued to decline because of concerns about demand growth and the belief that economic growth might be affected by trade conditions; the market was only concerned about demand trends for the rest of the year.

Josh Graves, senior market strategist at RJO Futures, said that unless bearish sentiment changes, U.S. oil could fall to a low of about $40 a barrel, but U.S. oil production is still soaring, and stock markets hint at heightened concerns about the economic downturn. Graves points out that we can continue to follow this trend. Crude oil stocks are disappointing and the stock market is in a worrying range.

Iran has seized several oil tankers in the Strait of Hormuz in recent weeks, and tensions remain in the Middle East; the Strait is a fortress for oil transport; Saudi Energy Minister Falkh and U.S. Energy Minister Perry expressed common concern Tuesday about the threat to free maritime transport in the Gulf region.

Urea futures are coming on the market on Friday. Urea is in a state of weak overall fundamentals and tight partial equilibrium. According to statistics released by the National Bureau of Statistics, as of July 20, the average price of small granular urea in the national market was 1964.30 yuan/ton, down 27.4 yuan/ton from the same period last month, a decline of about 1.38%. The peak season of domestic agricultural fertilizer demand is from March to May. At present, urea prices have decreased significantly compared with the peak season of demand. Although there are still some orders to export to India in the near future, which has slowed down the decline, most manufacturers will export goods to port next week or end shipments one after another. Domestic agricultural market demand is slowly declining due to seasonal impact, industrial demand is also showing a downturn, and in a short period of time demand is difficult to show signs of warming up, market sentiment is generally pessimistic. According to our survey in Shanxi and Hebei provinces, the industry is generally not optimistic about the future market, urea prices have been expected to decline at least until October will not change.

Since the beginning of the year, domestic urea production has been rising oscillatively. In the first seven months of 2019, the cumulative domestic urea production was about 30.88 million tons, an increase of about 1.455 million tons, or about 4.94%. From the perspective of start-up rate, the start-up rate of domestic urea enterprises has basically stabilized at the front line of 68% in the last two months after experiencing a sharp increase in the first quarter. Recently, some enterprises have finished overhaul and started production: Shaanxi Shaanxi Shaanxi 1 million tons of production capacity, daily output increased by 3400 tons; Shanxi Yangfengxi 800,000 tons of production, daily output increased by 2500 tons; Hulun Bell Jinxin, Shandong Ruixing and Inner Mongolia broad field, and so on. In recent years, many plants have been shut down for overhaul or planned to shut down for overhaul. For example, the annual shutdown of Zhongying 800,000-ton plant in Anyang, Henan, affects the capacity of 2600 tons per day; Ordos Chemical and Shandong Hualu parts of the plant are also planned to shut down for overhaul in August, affecting the capacity estimated at 5800 tons per day. Due to the current environmental restrictions in China, especially the impact of sulfur dioxide quota in North China, it is difficult to approve new urea plants, and the probability of future capacity increase is not very large.

Most of the increased supply is assimilated by rising exports. According to the data of the General Administration of Customs, the cumulative export volume reached 17678,000 tons in January-June this year, up 10.641 million tons from 7037,000 tons in the same period last year, an increase of more than 151.20%. However, the import is affected by the increase of domestic output and the slow growth of demand, which shows a considerable decrease over the same period of last year. In the first six months of this year, the cumulative import volume was 1041,000 tons, down by 34,600 tons, or 24.96%. Especially in June, the import volume dropped to almost zero, and the import volume in the second half of this year is likely to continue the sluggish situation in the first half of this year. Overall, net exports increased significantly in the first half of this year, reducing the impact of supply growth on the domestic market.

At present, the domestic summer urea topdressing is basically over, and the demand for agricultural urea is gradually declining. In August, except for a small amount of fertilizer used in some southern markets, most areas of China will enter the off-season of agricultural urea fertilizer. The demand for urea for industrial use in China is also relatively low due to the pressure of environmental protection on the downstream industry. Taking plywood as an example, the purchasing managers’index of plywood has been declining since March, which is 20.63 points lower than the high of 58.07 in March. Linyi, Shandong Province, an important domestic plywood producing area, has recently been under unprecedented pressure of environmental protection and production restriction. It is understood that the Office of the Leading Group of the Air Pollution Prevention and Control Action in Linyi City has issued the Implementing Plan for Strengthening the Control and Control of Air Pollution in Key Industries in July. According to the requirements of the plan, the 50% steam limit for thermal users has been operated since 24:00 on July 14, 2019. Linyi is divided into four areas A, B, C and D, and shut down in turn for six days each time. Gas and power outages are directly taken in the areas where shutdown occurs. At present, production in Lanshan and Luozhuang districts has begun to stop. The plywood factories in Linyi region have begun to stop production, and this situation may last until the end of August or even later. Now it seems that the resumption of production of plywood plants in Linyi downstream is far away. If it lasts for 2-3 months, it will not only have a great impact on the local industrial urea demand and spot market, but also have a certain impact on the overall price of urea.

On the whole, the fundamentals of urea are not very optimistic. Supply growth is not enough under the pressure of off-season agriculture and industrial environmental protection. It is expected that the situation of urea market will not be optimistic, and spot prices will continue to bear pressure. After urea futures are listed, urea enterprises can use futures to carry out hedging operation, lock in the selling price and avoid the risk of price falling. The turning point of domestic urea market is the resumption of production of plywood plants in Linyi area and the improvement of international urea market. Once the production resumes, the plywood enterprises in Linyi will start full capacity production, and then the demand for urea will increase significantly. At the same time, India’s next round of urea import bidding or after September, if the winning price rebounds, it will have a greater impact on domestic urea exports, thereby affecting the mentality of domestic urea market operators, should also be given priority attention.