The achievements of the top three fertilizer companies doubled in the first three quarters, and price pressure will be exerted on fertilizers in the fourth quarter as supply-guaranteeing measures are implemented.

　　Demand weakens, fertilizer prices fall from high levels

　　From January to September this year, the average price per ton of domestically produced urea, diammonium phosphate, potassium chloride, and compound fertilizer was 2279 yuan, 3186 yuan, 2568 yuan, and 2696 yuan, respectively, up 25.2%, 30.1%, 23.7%, and 21.3% year-on-year.

　　In the futures market, the main urea futures contract hit a record high of 3357 yuan/ton in mid-October, and the spot price at the delivery base also climbed to around 3150 yuan/ton.

　　The rise in fertilizer prices has been driven by two factors. Firstly, a significant increase in raw material prices. The prices of coal, natural gas, sulfur, and other fertilizer raw materials have increased significantly. As of the end of September, the year-on-year increase in these raw materials was more than double. Secondly, a sharp rise in international prices. Affected by global ample liquidity and rising grain prices stimulating fertilizer demand, nitrogen, phosphorus, and potassium fertilizers have seen a sharp rise in international markets, with the increase exceeding that in China, thus leading to a significant increase in China's fertilizer exports. According to customs statistics, a cumulative 26.11 million tons of fertilizer were exported from January to September, an increase of 31% year-on-year.

　　Benefiting from the sharp rise in fertilizer prices, the profits of related listed companies have also increased significantly. Among them, Hubei Yihua's attributable net profit in the first three quarters was 1.487 billion yuan, an increase of 589 times year-on-year, and the attributable net profit growth rate of Huachang Chemical, Yuntainhua, Zangge Holding, and Liuhua shares all exceeded 15 times.

　　Weakening urea profits impact fertilizer companies' achievements

　　The continuous rise in fertilizer prices has pushed up the cost of grain production. In order to ensure the stability and reasonable price of domestic fertilizer supply, the National Development and Reform Commission recently jointly issued a notice on doing a good job in the supply and price stabilization of fertilizers.

　　Meng Wei, spokesperson for the National Development and Reform Commission, said that affected by factors such as production cost increases, international market transmission, and relatively low social inventories, domestic fertilizer prices have risen rapidly this year, reaching a new high in nearly 10 years. The significant increase in domestic fertilizer prices has had an adverse impact on protecting farmers' enthusiasm for grain production and maintaining national food security.

　　On October 20, the NDRC organized the first batch of potassium fertilizer reserve releases through low-price bidding. Meng Wei, spokesperson for the NDRC, said that the purpose of this bidding release is mainly to benefit farmers with low-price reserve resources, and at the same time, to guide market expectations and leverage the release of social resources through reserve releases, to meet the needs of compound fertilizer production in the coming winter and spring, and to ensure the needs of spring farming fertilizer next year.

　　In addition, regarding exports, the inspection and quarantine of some exported fertilizers have been implemented since October 15, 2021. The General Administration of Customs has decided to add the customs supervision condition "B" to 29 ten-digit customs commodity numbers involving exported fertilizers, and the customs will implement export commodity inspection for the relevant commodities.

　　Currently, fertilizer prices have fallen significantly. In terms of spot prices, data from Zhuochuang Information shows that last week, the average ex-factory Price of large-particle urea in China was 2887 yuan/ton, a decrease of 4.40% month-on-month; the average ex-factory Price of small-particle urea in China was 2764 yuan/ton, a decrease of 10.72% month-on-month. Urea futures prices also rose sharply and then fell, with the main contract falling nearly 16% month-on-month.

　　Wei Zhaoming introduced that after the implementation of the inspection and quarantine measures, the transmission of foreign demand and prices to the domestic market was effectively blocked, and the situation of urea supply and Price stabilization has improved significantly. As of the end of October, domestic social inventory reached 675,000 tons, a new high for the year; as of November 4, domestic urea production enterprise inventory reached 833,000 tons, also a new high for the year.

　　Geng Sai, an analyst at Zhuochuang Information, said that in the fourth quarter, agricultural demand will be at its lowest point of the year. Currently, the Price of urea has fallen significantly. In terms of supply, some manufacturers in southwest and northwest China are carrying out planned maintenance, and daily output may remain low, and the supply in the port market has not changed much. In terms of raw materials, in terms of natural gas, short-term prices are consolidating, and supply has not changed much. In terms of coal, prices are consolidating at low levels.

　　He said that overall, the fluctuation of urea enterprises' raw material Price is also limited. It is expected that the domestic urea market will continue to consolidate weakly, paying more attention to the follow-up situation of downstream compound fertilizer orders. At the same time, pay attention to the subsequent resumption of production of coal-based units, and suggest that traders flexibly conduct short-term buying and selling according to their own circumstances, and pay attention to changes in transportation and logistics and the buying and selling of new orders.