A Tight Supply of Natural Gas Would Have Limited Influence on Urea Prices in the Long Term

By CnAgri2017-12-22 11:11:45 Print Influenced by large-area natural gas instead of coal and heating in winter, the contradiction between supply and demand is more obvious, which brings certain influence on urea companies using natural gas as a raw material and directly leads urea prices to up 58 RMB/MT to 1,750 RMB/MT.  
 
Since middle November, more and more urea companies using natural gas as a raw material have started to stop or cut production, such as Inner Mongolia Tianye, Sichuan Meiqing, Zhongyuan Dahua, Xinjiang Tianyun, Sichuan Lutianhua, Yuntianhua, Erdos United Chemical, Sichuan Meifeng and Sichuan Tianhua; the operating rate of urea companies using natural gas as a raw material drops rapidly, and the operating rate on December 13^th was only 27.4%, down nearly 40% from last week. 
 
However, BOABC’s analysts think production suspension and reduction of urea companies using natural gas as a raw material would bring little influence on urea prices in the long term. 
On the one hand, in China, urea output using coal as a raw material takes up 70%, and urea output using natural gas as a raw material accounts for less 30%. Urea output using natural gas as a raw material only brings relatively great influence on some markets, and can’t bring great impact on the national market. The most important is the production situation of urea companies using coal as a raw material. 
 
On the other hand, production suspension or reduction of urea companies using natural gas as a raw material always takes place in winter of every year, and merely, large-area natural gas instead of coal this year makes the supply of natural gas tighter. In spring, natural gas companies would increase the supply of natural gas to fertilizer producers in order to support spring production, so it won’t bring long-tern influence on urea supply.