In recent ten years, India has been occupying an important position in China's urea export market. Since 20 10, the total urea exported from China to India has accounted for 36. 19% of the total urea exported from China on average. Even in 20 17, when new urea production capacity was released in Indonesia, Malaysia and other southeast Asian regions, India still occupied 2 1.88% of China's urea export market. During 20 12, 20 15, 20 19, and September-September 2020, the Indian share in China's urea export market exceeded 40%, accounting for almost half of China's export market in the peak period.
Note: Statistics of export data in 2020 are as of September.
In 2020, India's demand for urea is more urgent than in previous years, and the phenomenon of the largest single urea tender and two tenders in one month has also aggravated the fluctuation range of urea futures prices in China. Therefore, it is of great significance to analyze the details of urea bidding in India to study the fluctuation of urea futures price in China. This paper deeply analyzes the "past lives" of India's international urea bidding from the perspectives of Indian climate characteristics, crop growth, Indian urea industry, supply and demand, and bidding process.
I climate characteristics and crop cultivation in India
1. Climate characteristics of India
India is located in the Indian subcontinent, mainly composed of the Himalayas in the north, the central plain in the south and the Deccan Plateau. Most parts of India belong to tropical monsoon climate, so monsoon is the most important feature of Indian climate. There are usually two monsoons in a year, one is the southwest monsoon from the Indian Ocean, and the other is the northeast monsoon from the Bay of Bengal. Among them, the influence of southwest monsoon on rainfall and agriculture is far greater than that of northeast monsoon.
In terms of time, the southwest monsoon lands in southern India at the end of May or early June every year, then moves northward and westward, reaches northern India in early July, and runs through the whole Indian subcontinent from June to September, bringing 75%-80% of the annual rainfall, so it plays a vital role in the formation of Indian climate. The northeast monsoon usually reaches India around 65438+1October 20th every year, lasting about 50 days. Because of the water vapor brought from the Bay of Bengal, the precipitation in the southeast coastal area of India from 10 to 165438+ 10 is also considerable, creating a favorable environment for agricultural production.
The change of monsoon is the thermal difference reflected by the different properties of the earth's surface, such as land-sea distribution, atmospheric circulation and continental topography. If the time, path and intensity of monsoon change, it is very likely to cause meteorological disasters such as heat damage and flood, which will affect the sowing and yield of crops.
2. Characteristics of agricultural production in India
In agricultural season, India divides agricultural production into rainy season (Kharif) and cool season (Rabi).
The rainy season begins with the first rain of the monsoon, usually in July-10 every year; After the rainy season, the cool season generally lasts from June 10 to March of the following year. The remaining April-June is a hot season. At this stage, crops are difficult to grow due to high temperature, early drying and lack of precipitation. Therefore, most crops in India are planted and grown in rainy and cool seasons.
The crops planted in rainy season in India mainly include rice, cereals, peanuts, soybeans, cotton and sugarcane. Crops that grow in cool seasons include wheat, oilseeds and potatoes.
The seasonal growth of crops in India also determines that the use cycle of fertilizer is mainly concentrated in rainy season and cool season, so there will be a large number of fertilizer use gaps to be filled by imports during this period. According to the data, the urea imported from India is mainly concentrated in 65438+ 10 and 9-65438+February each year.
Two. Overview of urea industry in India
1. Production and demand of urea in India
India's fertilizer industry has concentrated production, and its production capacity has increased from 2 1 167000 tons in 2009 to about 25 million tons in 2020. In 20 18, there were 3/kloc-0 large urea production enterprises in India, which could cover 80% of the country's urea demand, but urea factories lacked continuous investment and some factories stopped working. The data show that there are 25 urea production enterprises in India in 2020, involving an annual production capacity of about 25 million tons of urea, and the actual annual output is about 24 million tons, accounting for about 14.2% of the global urea production.
In recent years, the Indian government has formulated a series of protection mechanisms to ensure the profits of urea production enterprises, so that these urea enterprises can continue to operate, so the restoration of urea plants that have been shut down at present has been put on the agenda. It is estimated that by 2023, the transformation of the closed factory will be completed and put into production. At that time, India's urea production will also be greatly increased, and self-sufficiency will be gradually realized.
India has a huge demand for urea. The annual demand has been above 30 million tons since 20 15, and even reached 34 million tons in 20 19. Driven by such strong demand, the average load rate of urea plants in India is as high as 96%, and the production plants are even overloaded in 20 15 years. Even so, India's urea production still can't meet the domestic demand, and the annual import dependence is about 23.5%.
In recent years, under the circumstance that the Indian government keeps pushing the urea plant to shut down and resume work, the Indian Ministry of Fertilizer and the Indian Ministry of Petroleum actively expand the natural gas pipeline project to enhance the domestic urea production capacity in India, and are determined to completely end the situation of high dependence on urea imports in 2022. The report issued by Ind-Ran rating and research institute IND-RA also mentioned that India is expected to stop importing urea before March 20021.
2. Indian urea import system
General situation of urea import in India.
Since the 20th century, the domestic consumption level of urea in India has rapidly exceeded the supply level, so the import of urea in India has also changed from a small increase in the previous period to a rapid increase. According to the data of Indian Ministry of Fertilizer, the import of urea reached 68,000 tons in the past year as of March 20001year, and India began to deepen its dependence on imported urea.
In 20 13, the Indian government proposed to lift the ban on private enterprises importing urea directly from the international market. Several companies that have purchased fertilizer production facilities overseas or near ports, such as Tata Chemical, Zuari Industry and Coramandel Fertilizer, can directly negotiate with international urea suppliers to reduce their dependence on the national designated import channels. At the same time, the Indian government has designated three state-owned import channel companies, namely, Indian State-owned Minerals and Metals Trading Company (MMTC), Indian Potash Company (IPL) and National Trading Company (STC), to import urea on behalf of distributors.
In recent years, Indian enterprises that have been approved by the government to import urea have changed. In 2020, four enterprises in India will import urea, an increase over previous years, including Rashtriya Chemical Fertilizer Company (RCF). The characteristics of urea bidding in the company are low efficiency and many uncertain factors. For example, the international urea bidding issued by RCF on September 30, 2020 has experienced two extensions of the validity period of suppliers' quotations. In recent years, MMTC has high bidding frequency and high efficiency. IPL has only invited bids once since 20 18, while STC has not invited bids for three years. Therefore, there are only two international urea bidding enterprises active in India at present, namely MMTC and RCF, among which MMTC has a high bidding frequency.
India's specific urea import procurement methods are divided into global bidding procurement and long-term contract procurement. Under the global bidding mode, the fertilizer import agent company is authorized to be responsible for foreign negotiations, issuing tenders, signing contracts with suppliers, and arranging payment by letter of credit. However, it is the Indian government and domestic delivery and distribution agents that ultimately decide the quantity of imported urea. After determining the final bid-winning quantity, the international bid-winning enterprise (the Indian government's business qualification for the bid-winning enterprise is usually unchanged at 1-3 years) is responsible for the unloading, filling and domestic distribution of urea, and the sales of imported urea are owned by the Indian government, and the import agency company obtains the agency service fee from the government.
At present, China's participation in Indian urea market is mostly in the form of global bidding.
2) Basic process of international bidding for urea in India
After being approved by the Ministry of Fertilizer of India, the Indian urea import agency began to prepare to issue a formal tender announcement, which included a clear bid opening time, bid closing time and the latest shipment date. Usually, the tender price will be announced 7 days after the tender announcement, and the final purchase quantity after counter-offer will be announced 7 days later, and a confirmation letter will be sent to the winning supplier. Subsequently, the supplier began to carry out a series of performance activities, such as stocking, delivering goods and finding ships.
India's urea import coast is divided into east coast and west coast. Countries and regions supplying to the west coast generally involve North Africa, Egypt, the Middle East and Iran, while the east coast mainly includes China and Southeast Asia. Generally speaking, the price on the west coast is relatively low. Judging from the bidding situation this year, the lowest price on the west coast in the first half of the year is about 5-6 USD/ton lower than that on the east coast. In the second half of the year, the price difference between the west coast and the east coast is only 1-2 USD/ton, and the prices of the east and west coasts in some sections are upside down.
Third, a brief analysis of India's bid in 2020
China's supply plays a very important role in Indian urea import. From June to September, 2020, China exported 2,930,600 tons of urea, including 0/286,300 tons exported to India/KLOC. For China, the Indian market accounts for 43.89% of China's urea exports. As for India, by the end of 10 this year, India * * * issued eight rounds of international urea bidding, and finally determined the purchase quantity of 7.79 million tons of urea. China's supply reached 2.736 million tons, accounting for 35% of Indian urea import sources.
Although China and India are highly dependent on urea import and export, the proportion of China commodities in India's urea import market has been declining in recent years. Since 20 16, China's urea industry has been continuously optimized and upgraded due to supply-side reform. After a long period of de-capacity and de-inventory, the price center of gravity has been constantly moving up. The domestic ex-factory price of urea has increased from/kloc-0 in September of 20100-1200 yuan/ton to 2,065,438+. The export price of FOB China rose from 195 USD/ton in September of 20 16 to nearly 340 USD/ton at the end of 20 18. The sharp rise of domestic urea price directly leads to the loss of absolute advantage of China's urea price in the world, and China's export share is gradually seized by Oman, Iran and other Middle Eastern sources.
Judging from the bidding situation in 2020, India's performance is also very different from previous years.
First of all, the frequency of bidding in India increased significantly in the second half of this year. In the first half of the year, India conducted bidding in March, May and June respectively, and the bidding rhythm was relatively normal. But in the second half of the year, especially in July and August, the frequency of bidding in India increased to twice a month. After such high-frequency bidding, the market expects that the bidding pace in India will slow down in the fourth quarter, but India still released the bidding information again at the end of September and in the middle and late period of 1 1. As of June 23rd 165438, India has invited tenders for 9 times this year, which has exceeded the 8 times in 20 19. From the second half of this year alone, India conducted six tenders in July this year-165438+ 10, and only four in the second half of 20 19.
Secondly, while maintaining high-frequency bidding, India's single purchase volume has also increased significantly. In the tender issued on September 30, 2020, * * * won the tender supply of 3.6 million tons, and the final procurement volume of India also reached 2184,000 tons, accounting for 60.67% of the total supply. The single purchase record is the highest in the history of printing and bidding. In the first eight tenders this year, India has purchased 7.79 million tons of urea, an increase of 1.7 1% compared with the 7.657 million tons purchased in 20 19. If we add 1 October 23rd 165438+ and the subsequent potential bidding purchase volume (calculated by two tenders before the end of the year, each purchase volume110,000 tons), the urea purchase volume in India may exceed 2019.30% this year.
Finally, the supply of goods in China has also increased this year. In the first eight tenders in 2020, the total supply of goods in China reached 2.736 million tons, compared with 4918.35 million tons in 20 19. In the eight tenders this year, only the supply of goods in China was zero in May, and China actively participated in the other seven, while in 20 19,
Four. Analysis of urea supply and demand in India and its later bidding.
India's high-frequency bidding and large-scale procurement this year are driven by its huge demand, and the huge demand for urea is also inseparable from the extension of the southwest monsoon in India this year.
According to the forecast of the Indian Meteorological Bureau, the time for the southwest monsoon to land in southwest India in 2020 will be around May 22, and in the past five years, the southwest monsoon has mostly arrived between May 29 and June 8. In 20 19, the southwest monsoon actually landed on the southwest coast of India on June 8. In other words, this year's southwest monsoon in India is about 2 weeks earlier than last year.
According to the arrival time of monsoon, the sowing time of autumn harvest crops in India is usually from the beginning of June to the end of July, but the rainy season half a month earlier this year has brought more than expected rainfall, and the sowing area of autumn harvest crops in India has also increased significantly compared with last year. According to the data of the Indian Ministry of Agriculture in late July, the sown area of autumn crops in India reached 69.2 million hectares in 2020, an increase of 2 1.2% compared with the same period last year. Some varieties, such as rapeseed, even set a historical record.
The substantial increase in crop planting area has greatly promoted the sales growth of urea in India. It is reported that from April to September, 2020, the total domestic urea sales in India was 6.5438+0.777 million tons, an increase of 2.4 million tons compared with 654.38+0.61%in the same period of 2065.438+09.
In addition, the Indian Meteorological Bureau also predicts that the southwest monsoon will subside by 2- 13 days later than that in 20 19 (the speed of monsoon decline varies from region to region), and the delay of monsoon decline will also boost urea sales in India. It is understood that from June 20 19 to March 2020, the total sales volume of urea in India was18.33 million tons. If calculated according to the above incremental data that the rainy season is two weeks ahead of schedule and the sales volume increases by 2.4 million tons, the total sales volume of urea in India from June 2020 to March 20265438 will be +0. In other words, in the six months after 10 this year, the average monthly sales volume of urea in India was 3.45 million tons.
In terms of output, if India does not have a large capacity, the overall change will not be great. The data show that in the six months from 20 19 10 to March 2020, India's urea production is * * *12.65 million tons, with an average monthly output of about 2 108300 tons. Assuming that the output of 202 1 from June 2020 to March 2020 remains relatively stable, India's urea deficit will reach 8.08 million tons. Even if we add 3.994 million tons of urea that arrived in Hong Kong in June 5438+ 10 (marked as August 18) and June 5438+065438+ 10 (marked as September 30), there is still a gap of 4.086 million tons.
India's urea supply and demand gap still needs to be filled by imports. At present, 165438+ 10 basically ends. As expected, India165438+1October 23rd released a new round of international urea bidding. However, there are only four months left before the end of this fiscal year. In other words, India can only improve the situation of insufficient supply and demand by keeping bidding once a month and purchasing at least 6,543,800 tons each time.
If India's single purchase volume is less than 6.5438+0 million tons, it is not surprising that the phenomenon of bidding twice in one month appears again. However, there is still a big gap between the international urea price and the domestic urea price. In India's late procurement of 4 million tons of urea, the proportion of China's supply is the key factor to determine whether domestic urea is in short supply in the next four months, and the decisive factor for China's participation in the late bidding is the price difference between domestic and foreign urea.