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Affected by the falling price of raw materials in peak season and low profits of compound fertilizer, compound fertilizer manufacturers become more cautious in l procurement of raw materia in recent years. To avoid risks, it is likely to the on-demand purchase mode, especially for the raw material of urea, One purchase in five days or a week is common. Even in the production peak season, the inventory of raw material is controlled in a reasonable state.The reverse effect on urea is gradually weakened by the increase of purchasing frequency of compound fertilizer plants. However, with the launch of urea futures, there will be some changes in this way of procurement.
Urea futures began trading on August 9 at the Zhengzhou Commodity Exchange. Urea futures have added a hedge. Xu Shuxian, fertilizer analyst at Jinlianchuang, said that "low purchase and high trade" is the best condition for compound fertilizer factories, but things usually do not perform as well as desired. Especially in peak season, the price is low, failed not only in "high trade", but cost is difficult to pass on, and profit is also shrinking. With urea futures, manufacturers can sell in the futures' market if they are worried about the decrease of future price after buying goods. If the price does fall, the physical goods loss, but the futures are profitable, and the two offset, achieving break-even, avoiding risks, and also avoiding affecting or squeezing the profit.
"The listing of urea futures has a stronger guiding effect on the market.In the process of raw material procurement, whether to purchase goods and at what price mainly rely on their own judgment of future market trends.But with urea futures, there's a good guide."Mr Xu says that if futures prices are rising, we can buy more early.If it is falling, we can buy more slowly.In addition, if the buyers and sellers want to sign a forward contract, they can settle the contract directly with the futures price.Compound fertilizer manufacturers do not have to worry about "buy early losses", also do not have to worry about early out of the policy price without basis.
Xu shuxian believes that urea futures listed also more than a procurement channel.At present or before, there are two ways for factories to purchase raw materials for compound fertilizer. One is to purchase raw materials directly from factories, and the other is to purchase from traders. No matter which kind of purchase is spot goods.However, after urea is put on the futures market, manufacturers can buy goods from the futures market as well as the spot market. By comparing the price of urea in the futures market with that in the spot market, those who choose the lower price can conduct procurement, thereby lowering the procurement cost.In particular, when the market rises, spot enterprises are prone to insufficient supply, so buyers can purchase from the futures market, further avoiding the increase of procurement costs.
On the whole, the listing of urea futures will have a great impact and change on the raw material purchase of compound fertilizer factories.The effect and change may be slow at first, but the injection of new elements is also a new beginning for the compound fertilizer as a whole.