Fertilizer plate: supply shock worth the wait

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There are three investment logics in the fertilizer sector in history: First, the logic of seasonal investment in agricultural production, nitrogen, phosphorus, potassium, compound fertilizer and other varieties have opportunities along with the planting season cycle, buy before the peak season, sell during the peak season product prices The second is the logic of the price cycle of agricultural products, that is, the trend of agricultural product prices has led to a sustained increase in the price of agricultural resources; the third is the logic of resource values ​​and supply shocks. Because fertilizer products are close to upstream resource products, their value is often the upstream resource goods (potassium). The manifestations of phosphorus, coal, and gas are also vulnerable to the supply of resources.

With inflation falling and export tariff policy tightening in 2012, the first two big logics are difficult to surpass expectations in 2012. In the value of resource products, the value of potassium will no longer be sought after by the market as the share price of Salt Lake is lowered in December. The value of the phosphate rock has been fully recognized in 2011. Opportunities in 2012 will come from the existence of injections of expected stocks. With the start of the trial of natural gas price reform, the research center believes that the urea industry will experience supply shocks, and domestic urea will be in 2011. The production capacity is estimated at 6900-70 million tons, of which the gas head urea production capacity accounts for 30%, reaching 20 million tons, mainly concentrated in the west, southwest and northeast. In 2012, the natural gas price reform has become a fixed trend. According to estimates, if the natural gas price is raised by RMB 0.4/m3, the cash urea cash cost in the southwest and northeast will be higher than the coal urea urea, if it rises by 0.6 yuan/cubic meter, most of the southwest And the cost of gas head urea (about 10 million tons) in Northeast China will be higher than the current price. The coal urea companies in the relevant regions will benefit from the increase in market share and potential regional price increases.

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