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Last weekend, an expert who was unwilling to disclose his name pointed out in an interview with reporters that urea was a product of “two high and one capitalâ€. For a long time, China’s urea production has always enjoyed preferential policies in coal, electricity, gas, transportation, and taxation. This makes the urea export earn a full pan. However, since June 1, 2005, China has successively introduced a series of policies to curb the excessive growth of the “two high and one capital†industry, which imposes a high tariff of 30% on urea exports. After increasing export tariffs, urea companies that have been immersed in the joy of high export profits in previous years have suffered setbacks, and most of their products have been deterred domestically. From the end of this year to the end of June, both the ex-factory price of urea and the market wholesale price fell by RMB 30-50 per ton on the basis of May. In July, ex-factory prices of many manufacturers approached 1,500 yuan/ton, and the ex-factory prices of some small factories even fell to around 1400 yuan/ton, and they have already reached the cost price. As a result, some people are in conflict with the country's adjustment of the "two high and one capital" product export policy.
In response, the expert, who did not wish to be identified, pointed out that blind expansion of production capacity is the key to the urea problem. According to statistics from the China Nitrogen Fertilizer Industry Association, from January to May this year, China's urea production (including 100% N) has reached 10.288 million tons, an increase of 1.358 million tons over the same period of last year, with a growth rate of 13.2%. China's urea was only available in May. The output of N is 100%, which is 2.13 million tons, an increase of 286,000 tons over the same period of last year, and the growth rate is about 15%. In the first half of this year, the national urea production capacity will exceed 5 million tons, and 4 million tons of new production capacity will be put into production before the end of this year. In Shanxi, Shandong, Henan, and Yunnan, there are still a large number of urea projects that have been expanded. Participating in this near-crazy urea capacity expansion of the business and local governments, the international fertilizer market has been running at a high price. This precisely reflects their lack of understanding of China's sustainable development and blind illusions about the international market.
It is also understood that relevant persons from the National Development and Reform Commission have made it clear that this year's urea market is a normal rational return. This year's various policies, including import and export policies, will not change.
Since the second half of last year, the price of urea has been declining nationwide. A considerable part of the ex-factory price has reached the cost price. However, according to the view that “the country’s tariff policy on limiting urea exports has caused an overall decline in urea pricesâ€, people of insight point out that this is exactly the bitter fruit of the near-crazy capacity expansion of the nitrogen fertilizer industry in recent years.