Looking back on March, the urea market price has been rising in succession. The market price of urea has risen from 1850-1900 yuan/ton at the beginning of March to 2050-2100 yuan/ton at present. Domestic urea market is more active, industrial and agricultural demand is more vigorous, urea quotations have increased in varying degrees, manufacturers have more orders, strong willingness to bid, the market is expected to continue to run at a high level in the future.

Strong agricultural demand and high prices

In recent weeks, urea market around the mainstream factory prices continue to break through new highs, the market was not expected to continue to rise, it is shocking. As of this week’s press release, the actual factory price of small particles in traditional urea producing areas in China is 2000-2030 yuan/ton, and that of large particles is 2100 yuan/ton. In less than a month, the price of urea market has risen by 200 yuan/ton. After the Spring Festival last year, urea prices in March were mostly in a downward trend. Why are prices rising all the way this year?

Wang Zhiqiang, deputy general manager of chemical industry management center of Shanxi Orchid Science and Technology Venture Co., Ltd., thinks that the rising trend of urea market is mainly affected by the strong demand for agriculture. At present, the Northeast market is actively starting up for farming, but the time is delayed. The southern market will also have the demand for rice fertilizer before and after the Qingming Festival. In this way, the demand for fertilizer in Northeast China and the demand for rice fertilizer in South China will be increased. Time just overlaps, the peak season is shorter and more concentrated than previous years, so price increases are larger.

Wang Zhiqiang said that, on the one hand, with the start of spring farming, farmers are actively preparing for farming, purchasing willingness continues to strengthen, the market gradually warmed up. On the other hand, the urea market as a whole has a low starting rate, tight market supply, prices continue to rise, and market turnover is good.

In summary, the current urea market price has stabilized at a high level of 2,000 yuan/ton. Influenced by favorable factors such as downstream market demand and upstream raw material price support, the recent urea market trading atmosphere has improved, and inventory has remained low. The offer continues to rise. With the operation of the downstream purchase-sale mode, some manufacturers still intend to increase, while the short-term price is running at a high level.

Increased industrial demand to support urea market

Compound fertilizers, which had been depressed before, have recently added a spark to the high price of urea. At present, the compound fertilizer market has changed significantly. In mid-March, the purchasing willingness of raw materials in compound fertilizer and mixed fertilizer factories is strong, and the industrial demand supports the urea market price significantly.

It is understood that the current urea mainstream ex-factory quotation in Shandong Province is 2000-2030 yuan/ton, the agricultural market demand basically sweeps away, the industrial market demand continues to develop, and the downstream purchasing quantity increases. At present, the urea raw materials that have arrived in the downstream compound fertilizer enterprises can be maintained at least until the middle of next month. The quantity is too large, and the downstream acceptance of high-price urea is relatively general. In summary, urea overall price has been rising recently, and some wait-and-see distributors began to purchase again. It is expected that although the late quotation has been raised, the purchasing intention of compound fertilizer plants still needs to be paid attention to.

The bullish mentality of the future market is in the majority

Speaking of the future urea market, Zeng Qingliang believed that the peak season of the compound fertilizer market will continue in the short term, which will still support the urea market, and fertilizer will follow in the summer after this wave of market, urea market will show a stable bullish trend.

Wang Zhiqiang is optimistic about the future urea market. He said that due to the extension of fertilizer use period in the Northeast market to the Qingming Festival, there will be more than 10 days to support the urea market. Influenced by tight supply and concentrated demand, urea market prices are expected to remain high and there is still room for growth.

Generally speaking, the overall starting rate of urea enterprises is less than 60%, industry and agriculture have better demand expectations, and most manufacturers have sufficient orders to be issued, less pressure on shipment, factory price mentality is strong, it is expected that the urea market prices will continue to rise in the short term, continuing a steady upward trend.

Crude Oil Market: Brent closed at $67.99 a barrel last night (3 a.m. Beijing time, April 1), up $1.47 from the previous deal.

Price dynamics: on April 1, Qilu Petrochemical quoted 4600 yuan/ton; Yangzi Petrochemical quoted 4650 yuan/ton; Hainan Petrochemical Refining quoted 4650 yuan/ton; Wuhan Ethylene quoted 4650 yuan/ton; Huaxing Petrochemical quoted 4350 yuan/ton; Zhenghe Petrochemical quoted 4350 yuan/ton.

Fluctuation Trend: According to the analysis and prediction of relevant models, the price of pure benzene is stable today compared with the previous trading day.

Analytical Comments: Petroleum benzene market inventory continues to be high, Sinopec and Sinopec Group’s listed price is stable.

In recent years, the domestic coal-based polyolefin industry has achieved rapid development, and has become a new bright spot in the olefin industry. As far as polyethylene is concerned, since 2014, the capacity expansion of coal (methanol) olefin plant has been concentrated, resulting in the continuous increase of polyethylene production capacity. Coal chemical plants have been put into operation for five consecutive years from 2014 to 2018, with coal production capacity increasing by 4.24 million tons. Due to the abundant coal resources in the central and western regions and the convenience of local material acquisition, domestic coal chemical enterprises are mostly concentrated in the central and Western regions. As of March 2019, the total domestic polyethylene production capacity reached 18.44 million tons, of which the domestic coal-based polyethylene production capacity reached 454, accounting for 24.6% of the total domestic polyethylene production capacity.

Production Plan of New Polyethylene Plant in 2019

According to statistics, there are 8 PE units planned to be put into operation in China in 2019, involving a capacity of 3.68 million tons per year. The production units are mainly concentrated in LLDPE/HDPE varieties. From the source of raw materials, coal production capacity is still the main force of capacity expansion, accounting for 41.6% of the total capacity, oil production capacity accounted for 31.2%, LPG accounted for 27.2%. At present, Inner Mongolia Jiutai Co., Ltd. 600,000 tons of coal to olefin project on March 20 upstream MTO plant trial run, full density device follow the test run, has not yet produced products, is expected to open in mid-April.

Coal chemical enterprises usually adopt the marketing mode of combining online bidding and offline planning. In terms of production, coal chemical enterprises generally adopt extensive production scheduling, once the production cycle is generally longer, the output is large, which has a greater impact on the market supply. In recent years, coal chemical enterprises have made breakthroughs in research and development of technology, equipment and catalysts. New brands of coal-based polyolefins have emerged in endlessly. With the continuous enrichment of coal chemical products, the market share of coal-based olefins products has further increased. Generally speaking, the production capacity of coal-based polyethylene enterprises will continue to increase in the later period, and the impact on the market can not be underestimated.

Agrimin is considering a 388-kilometre transport route and a Mackay potassium sulphate plant in Wyndham.

At the end of last year, Agrimin had submitted five applications for exploration permits covering Lake Percival, located in the desert about 450 kilometers southeast of Broome, at 2792 km2. Percival Lake has the highest potassium taste in Australia’s salt lakes. The company extracted evaporated salts from previous Lake Mackay tests and produced potassium sulfate samples from them.

Iran’s Ministry of Agriculture has recently received tender orders for potassium fertilizer, including 30,000 tons of potassium chloride and an unknown quantity of potassium sulfate. According to the outside world, there is no European supplier in this tender, which may be related to EU and UN sanctions, and the most likely source of potassium sulfate is from China.

The domestic potassium sulphate market has not changed much. The price of manufacturers in North China has increased slightly compared with the previous period. Because of the lower price in the earlier period, the price has increased greatly after the order has improved. At present, the factory quotation is higher, but the new orders are not active. The price of Mannheim potassium sulfate 50% powder is limited downstream acceptance. The mainstream ex-factory price of Mannheim potassium sulfate 50% powder is about 2850-3100 yuan/ton, and 52% powder ex-factory price is about 3000-3200 yuan/ton. The actual transaction discount range is about 50 yuan/ton. The mainstream arrival quotation of powdered potassium sulfate in Qinghai water-salt system is 2800-2850 yuan/ton, 51% powdered 3100 yuan/ton, 3250 yuan/ton, 52% powdered 3150 yuan/ton, 3300 yuan/ton, and 50 yuan/ton for acceptance. The actual turnover of 51% of the powder in the region is 2850-2900 yuan, and 52% of the powder is about 2900-2950 yuan/ton.

At present, the domestic potassium fertilizer market is steadily advancing, the domestic potassium shipment is normal, new imports of potassium have crossed the shore one after another, the price is temporarily stable, the international potassium fertilizer market is in a situation of low demand and high supply, and the price of some areas has slightly declined. Therefore, it is expected that the domestic and foreign potassium fertilizer market will remain weak in the short term.

“At present, the carbon black industry is encountering four major problems: excessive capacity structure, low industry profits, disorderly market competition, and severe export situation.”

Talking about the realistic problems faced by the high quality development of the industry, Wei Ming, chairman of the carbon black branch of China Rubber Industry Association, said.

This was learned from the 2019 China Carbon Black Annual Conference and Membership Conference held on March 14.

Structural overcapacity

Wei Ming said that since 2002, China’s carbon black production capacity has maintained an annual growth rate of nearly 400,000 tons.

By 2018, China’s total carbon black production capacity reached 7.52 million tons, with a production of only 5.7 million tons. The industry has a serious overcapacity.

In the next two years, there will still be large additional capacity, and the problem of overcapacity in the industry will become more prominent.

Low Profit in Industry

Wei Ming emphasized that with the change of national macro-policy and the weakness of downstream tire market, the situation of carbon black industry continued to decline, and the average start-up rate of the industry in the past five years was only about 70%.

From 2009 to 2018, China’s carbon black industry has made considerable progress, but its profit margin is at a low level. Until 2017, the whole industry had been in a slight profit, even in 2015 a loss.

Last year, the industry’s profit margin was only 7%. It is expected that the situation in 2019 will be even worse.

Market disorder competition

Wei Ming said that with the increasing contradiction between supply and demand, the pressure of operation of enterprises in the industry is increasing, the competition of market homogenization is intensifying, and the business situation of enterprises is becoming more and more difficult.

Due to the lack of effective market regulation mechanism, in order to compete for limited market resources, carbon black enterprises blindly rush to buy raw materials and products to continuously reduce prices, seriously disrupting the market and accelerating the decline of the market.

Export situation is still grim

Wei Ming pointed out that because the distribution of Chinese carbon black enterprises is only in China, the export situation depends mainly on the price difference between global oil for carbon black and domestic coal tar series resources for carbon black.

In recent years, global oil prices have been operating at a low level, while domestic coal tar has been a popular product with high price fluctuations. China’s carbon black enterprises lost their export price advantage.

With the problems of anti-dumping and green technical barriers facing the export market, part of the carbon black production originally planned for export has been transferred to the domestic market, which makes domestic competition increasingly fierce.

On March 29, the 5th China Commodity Industry Forum hosted by Xinhu Futures was held in Shanghai. In the afternoon colored sub-forum, Aladdin Sino-Ying Network Aluminum Research Institute President Shi Fuliang from the current market more concerned about the alumina problem, the aluminium market was analyzed.

From the current production of alumina, it can be seen that there is a steady growth trend. As of March this year, domestic alumina production capacity was 84.17 million tons, and operating capacity was 73.75 million tons. However, with the slowdown of demand growth, the growth rate of alumina production began to decline significantly from last year. Last year, China’s alumina production showed a trend turning point, with annual output of 71.61 million tons, an increase of 1.5% over the same period last year.

Looking at this year’s performance of alumina, he believes that supply tension will ease relatively, and global supply and demand fluctuate around the balance line. “The main variables affecting supply and demand this year focus on imports and exports, and the most direct correlation is the possibility of the first half recovery of the Brazilian alumina plant in Hyderu. Exports are currently expected to remain unchanged in the first quarter, but uncertainty increases in the second half of the year. He said that the supply of domestic alumina is increasing. If there is no special export situation, the supply of alumina is still under great pressure.

In terms of policy, he said that after the reform of supply side of electrolytic aluminium, the state will further introduce the regulation and control policy of alumina. At present, bauxite has become the core focus of the market. With the continuous stringent environmental protection policy, the examination and approval of mining rights continue to be strict, and the production capacity of inland alumina has expanded, and the supply and demand pattern is still tense.

In terms of price performance, alumina prices have been driven by rising costs for a long time, and in the short run by Alunorte’s 50% capacity reduction and Russian and Aluminum sanctions. As costs continue to rise, industry profits will be squeezed.

PVC inventory to be digested, small rebound of PVC wait-and-see as the main small rebound. On April 1st, the small rebound of PVC was the main reason for the news of the main tax cut, and the small rebound of PVC social inventory level was the main reason for the sufficient supply, coupled with the fact that the real estate terminal had not yet centralized procurement of raw materials. The main contract of PVC was about 1905, which closed at 6410, with a small rebound and wait-and-see ratio of PVC and small rebound and wait-and-see ratio, up 0.08% from last week.

1. Macroscopic aspect

1.1 The small rebound of PVC at the beginning of PMI in Markit Manufacturing Industry in March in the United States was the main reason to create a new low of nearly two small rebounds of PVC.

In March, the small rebound of PVC in PMI of Markit manufacturing industry in USA was 52.5, and nearly two small rebounds of PVC were the new low. In March, the small rebound of PVC in PMI of Markit manufacturing industry in the United States was 52.5, which was the lowest since June in 2017, with an expectation of 53.5, while that of pre-PVC was 53. Among them, the output sub-index of PVC slightly rebounded to 51.6 at the beginning, and reached a new low since June 2016 when PVC slightly rebounded to wait-and-see. In March, the small rebound of PVC in Markit service industry was 54.8, with a forecast of 55.5, while that in former PVC was 56. In March, the small rebound of PVC in Markit comprehensive PMI was 54.3 and 55.5 respectively. The Federal Reserve maintained the Federal Funds Rate at 2.25% – 2.50%, and expected a small rebound in US PVC as the main index to bear pressure.

1.2 Sino-US economic and trade negotiations are conducive to the strengthening of the RMB

The RMB exchange rate has entered the Sino-US trade negotiation framework, and the RMB exchange rate will further strengthen. U.S. Trade Representative Letterheiser and Treasury Secretary Mnuchin will visit China and hold the eighth round of high-level economic and trade consultations between China and the United States on March 28 and 29. In early April, Vice Premier Liu He will be invited to visit the United States to hold the ninth round of high-level economic and trade consultations. Currently, the RMB exchange rate has entered the Sino-US trade negotiation framework, which means that the two largest economies in the world have expressed their policy intention of stabilizing the RMB exchange rate. Considering that the small rebound of PVC is the main trend of China’s macroeconomic operation, there will be no risk of economic stall. In addition, under the background that the scale of foreign capital inflows into domestic capital market tends to expand, the balance of payments can maintain its own balance, and the RMB exchange rate is also strongly supported. It is expected that the RMB exchange rate will further strengthen.

1.3 In February, the whole society of China mainly watched the slight rebound of PVC for electricity consumption. The slight rebound of PVC for electricity consumption was 7.2% longer than that of the same period.

In February, the National Energy Bureau released the main data of the slight rebound of electricity-using PVC in the whole society. In February, the slight rebound of electricity-using PVC in the whole society was 489.1 billion kWh, while the slight rebound of PVC in the same period was 7.2%. From January to February, the whole society mainly watched the slight rebound of electricity-consuming PVC, totaling 11.63 billion kilowatt-hours, while the slight rebound of electricity-consuming PVC was 4.5% longer than that of the previous year. In the primary industry, 11 billion kilowatt-hours of electricity-consuming PVC rebounded slightly compared with the same period of last year, 7.9% of the total; in the secondary industry, 7.59 billion kilowatt-hours of electricity-consuming PVC rebounded slightly, 1.2% of the total; and in the tertiary industry, 1.5% of the total was 1994 billion kilowatt-hours of electricity-consuming PVC.

2. Supply and demand analysis

2.1 Calcium Carbide Market Supply Stability

The start-up rate of PVC plant by calcium carbide method is stable, and there is no obvious change in the small rebound and wait-and-see of the spot supply of PVC. Demand-side large and medium-sized enterprises have little change in start-up, small enterprises generally start-up, upstream enterprises and traders flexibly reduce the small rebound of PVC wait-and-see to promote shipment. Carbide market PVC small rebound wait-and-see as the main character of a small rise, carbide supply PVC small rebound wait-and-see as the main low, some processing enterprises gradually recovered.

2.2 The supply side has not changed much.

The overall production of PVC enterprises is stable, the vinyl PVC market maintains stable operation, Ningbo Hanhua resumes its work, and other enterprises produce normally. Ethylene PVC plant was upgraded due to the rework of Hanhua in Ningbo. The calcium carbide PVC plant was normally manufactured and no maintenance arrangements were issued for the time being. Inventory level of upstream enterprises showed signs of warming up. The strength of inspection and repair in March is more obvious than that in February, and the supply side mainly has a small rebound and wait-and-see of reducing PVC.

2.3 Downstream enterprises start to resume gradually

Demand in the north is weakening, overall stability in the south is maintained, downstream large enterprises are still operating at a high level, and parking is sporadic in small industries. Large downstream enterprises started construction steadily, the overall stock-up intention was not strong, and purchasing was the main demand. After the Spring Festival holiday, downstream construction began to recover gradually. The small rebound of PVC in 2019 was mainly in the middle of March. The terminal operation rate of the main consumption areas in North China, East China and South China gradually rose to a relatively high level. The preparatory work for the start of peak season was basically completed, and the terminal has not yet centralized purchasing of raw materials.

3. Technical Analysis

PVC low shock, small rebound. From the K-line chart of contract date of main contract V1905, it can be seen that the small rebound of PVC is mainly blocked near 6600. DAILLINE GREEN CONVERGENCE OF MACD GREEN COLUMN. The small rebound of PVC trading remained active, closing near 6400. Short-term pressure was formed on the 12th and 26th day averages, with strong support at 6100 points below.

In a word, in March, the small rebound of PVC in PMI of Markit manufacturing industry in the United States was 52.5, and nearly two small rebounds of PVC were the new low. At the same time, the RMB exchange rate has entered the Sino-US trade negotiation framework, and the RMB exchange rate will further strengthen, which will exert certain pressure on commodities.

Fundamentally, the small rebound of PVC on April 1st was the main reason for the news of the main tax cut. The small rebound of PVC in the short run was the main reason. The small rebound of PVC in the social inventory level was the main reason for the small rebound of PVC, and the supply was sufficient. In addition, due to the fact that the real estate terminal had not yet centralized the purchase of raw materials, the small rebound of PVC formed a certain pressure for the main character, and the rebound pressure of PVC was comparatively high. Major wait-and-see.

Yonhap News Agency reported on March 25. On Monday, South Korea’s foreign ministry said it would discuss with the United States this week the issue of extending South Korea’s exemption from sanctions on Iranian oil imports. To this end, officials from the Ministry of Foreign Affairs, the Ministry of Trade, Industry and Energy, the Ministry of Economy, Finance and the Department of Oceanography and Fisheries of South Korea will meet with Assistant Secretary of State for Energy, Francis Fannon, and other relevant officials in Washington, D.C., on March 28, U.S. time. A South Korean ministry official said: “Since November last year, we have discussed with the United States to extend the United States’exemption from Iran’s oil sanctions. If the exemption of sanctions is not extended, it means that South Korea cannot import Iranian condensate oil. He said stopping importing this key raw material would have an impact on the Korean economy as Korean companies rely heavily on Iranian condensate for petrochemical production.

In February, propylene imports increased significantly and reached the highest level since January 2018. The import volume of Korea and Taiwan of China has increased significantly, which is the main source of the substantial increase in import volume. In the latter stage, the equipment maintenance situation in Asia will gradually increase, so propylene imports may be expected to decline.

In February 2019, China imported 296,432.704 tons of propylene, an increase of 13.44% over January and 22.16% over February 2018. The average import price was $949.86 per ton, up 1.35% from January and down 12.02% from February 2018.

From the point of view of the source countries and regions, Korea is still the main source of imports. In February, the total import volume was 12752.526 tons, accounting for 43%. Taiwan ranked second, with imports totaling 77,900 tons in February, accounting for 26%. Japan ranked third, with imports totaling 56 285.221 tons in February, accounting for 19%.

From the point of view of the source countries and regions of imports, Korea’s imports in February increased by 10213.744 tons, an increase of 8.74%, compared with January’s, while Taiwan’s imports in February increased by 8549.4 tons, an increase of 12.33%. It can be seen that the main source of the increase in propylene imports in February was South Korea and Taiwan, China, while propylene imports in Japan were basically flat.

From the point of view of trade mode, the proportion of general trade is relatively large. In February, the total import volume was 25791.774 tons, accounting for 87%. The total import volume of import processing trade in February was 38527.463 tons, accounting for about 13%.

Forecast for future market

Propylene plant spring overhaul season is approaching, China has many devices into the overhaul, Japan and South Korea and other places also have some devices such as LG, Hanhua, YNCC, Chuangguang Xingyi, Mitsubishi have entered or will soon enter the overhaul, propylene supply will gradually reduce, which will have a certain impact on the import of propylene. Propylene imports in the second quarter are expected to decrease annually compared with the first quarter, which will benefit the domestic propylene market to a certain extent.

Official U.S. statistics show that total U.S. coal exports in 2018 were 104.9 million tons, up 19.3% from 2017, the second highest level in history. Among them, India is the largest buyer of power coal in the United States, while Brazil is the largest buyer of metallurgical coal in the United States.

According to the data, total U.S. metallurgical coal exports in 2018 were 55.8 million tons, up 11.3% from last year, the highest level since 2014. Among them, the total export volume of Brazil was 7.6 million tons, an increase of 14.9% over 2017, the total export volume of Netherlands was 5.6 million tons, an increase of 82.5% over the same period of last year, and the total export volume of Japan was 5.4 million tons, an increase of 20.4% over the same period of last year. According to statistics, the largest metallurgical coal export areas in the United States are Norfolk, MoBayer and Baltimore.

Meanwhile, in terms of power coal, the total export volume of power coal in the United States in 2018 was 49.1 million tons, up 29.8% from last year, the highest level since 2012. India, South Korea and the Netherlands are respectively the top three buyers of power coal in the United States. Among them, the total amount of power coal exported to India in 2018 was 10.5 million tons, up 53% from 2017; Korea 5.8 million tons, up 9.6% from last year; Netherlands 5.6 million tons, up 3.2% from last year.

New Orleans is the largest power coal export region in the United States. Exports reached 17.6 million tons in 2018, up 75% from 2017, followed by 10.1 million tons in Baltimore, up 9.5% from last year, and 6 million tons in Seattle, up 10.6% from last year.