September 29 Urea Daily: Market Softens Ahead of the Holiday as Participants Await Guidance from the Indian Tender

Domestic Urea Price Index

According to Feidoodoo data, the small-granule urea price index stood at 1,785.91 on September 29, down 0.91 from the previous working day, 0.05% lower on a month-on-month basis and 6.45% higher year on year.

Futures Market Analysis

The UR2701 urea futures contract opened at 1,746 today, reached a high of 1,758 and a low of 1,745, settled at 1,749 and closed at 1,748. The closing price was 2 points below the previous trading day’s settlement, representing a decline of 0.11%. The Shandong spot basis against the January contract was +12. Open interest in the January contract decreased by 4,478 lots today to 249,434 lots.

Urea futures traded within a narrow range today. With the National Day holiday approaching, risk aversion increased among market participants, while futures continued to track the tug-of-war in spot fundamentals. The pre-holiday stalemate in the spot market directly constrained futures performance. On the one hand, expectations for another Indian tender after the holiday continued to provide psychological support through the prospect of stronger exports. On the other hand, domestic fundamentals remained weak: downstream restocking was limited and the spot market showed no clear signs of recovery, restricting the scope for an upward rebound. Actual downstream demand has yet to improve materially. Agricultural fertilizer demand is between application seasons, and industrial buyers remain cautious, leaving the overall fundamental picture largely unchanged. Overall, urea futures remain caught between expectations of export support and weak underlying fundamentals. Conditions are not yet in place for a sustained directional move, and the market is likely to continue fluctuating within a narrow range. Key factors to monitor include the outcome of the Indian tender, improvement in spot transactions and the pace at which autumn fertilizer demand begins.

Spot Market Analysis

China’s domestic urea spot market was broadly stable today, with prices consolidating. As the National Day holiday approaches, some producers in major regions still face order-book shortfalls, increasing shipment pressure and prompting softer offers. By contrast, plants with sufficient pending orders and limited shipment pressure remain willing to defend prices and are reluctant to cut offers proactively. Most market participants are currently taking a wait-and-see approach, and the market lacks a clear direction. Attention is focused on the opening of bids for India’s post-holiday urea tender, with participants hoping export news will provide guidance. From a supply-and-demand perspective, overall supply remains ample. On the demand side, large-scale autumn fertilizer restocking has not yet begun, while operating rates at compound fertilizer producers and other downstream industrial users have shown only limited improvement, resulting in weak underlying demand. Overall, the urea market is likely to continue consolidating in the short term. Mainstream offers are expected to remain broadly stable, although individual producers may make small, flexible adjustments based on order intake and inventories. The market should continue to monitor progress on the Indian tender and the release of pre-holiday replenishment demand.

Overall, China’s domestic urea spot market continues to consolidate on a weak note. On the supply side, plants that underwent maintenance earlier are gradually resuming operations, lifting daily industry output and steadily increasing supply pressure; overall availability remains loose. On the demand side, although producers are seeking to secure orders and move cargo before the National Day holiday, end-user demand has not improved materially. Downstream buyers continue to purchase only for essential needs, large-scale autumn fertilizer restocking has yet to begin, and operating rates in the compound fertilizer and industrial sectors have risen only modestly, leaving underlying demand weak. The market is currently balancing cost support and export diversion against pressure from loose supply-demand conditions. Prices may soften further in the short term, but the scope for a sharp decline is limited. If prices retreat to low levels, bargain buying may emerge. Key factors to monitor are progress on the Indian tender and the release of pre-holiday replenishment demand.

By region, prices were stable at RMB 1,790–1,810/mt in Northeast China; rose to RMB 1,740–1,780/mt in East China; remained stable at RMB 1,730–1,920/mt in Central China; remained stable at RMB 1,600–1,820/mt in North China; remained stable at RMB 1,800–1,840/mt in South China; remained stable at RMB 1,860–1,910/mt in Northwest China; and remained stable at RMB 1,660–1,900/mt in Southwest China.

Market Updates

September 29: The reference delivered price for urea in Guangzhou, Guangdong, was RMB 1,820–1,840/mt, unchanged from the previous working day.

September 29: The reference delivered price for urea in Nanning, Guangxi, was RMB 1,800–1,810/mt, unchanged from the previous working day.

September 29: The reference delivered price for urea in Shijiazhuang, Hebei, was RMB 1,750–1,800/mt, broadly unchanged from the previous working day.

September 29: The reference delivered price for urea in Wen’an, Hebei, was RMB 1,780–1,800/mt, broadly unchanged from the previous working day.

September 29: Mainstream reference prices in the Shangqiu market were RMB 1,730–1,750/mt for small- and medium-granule urea and approximately RMB 2,040–2,050/mt for large-granule urea.

September 29: Mainstream reference prices for small- and medium-granule urea in the Jingmen market were RMB 1,740–1,750/mt. Temporary ex-platform pickup indications were around RMB 1,690–1,720/mt, while mainstream ex-platform pickup prices for large-granule urea were RMB 2,020–2,030/mt.

September 29: Warehouse-release/truck-loading prices in the Tieling, Liaoning, market were referenced at RMB 1,790–1,810/mt, unchanged from the previous working day.

September 29: The reference delivered price for urea in the Heze, Shandong, market was around RMB 1,730–1,740/mt, broadly unchanged from the previous working day.

September 29: The reference delivered price for urea in the Linyi, Shandong, market was RMB 1,760–1,770/mt, down RMB 10/mt from the previous working day.

September 29: Mainstream reference prices in the Xianyang market were RMB 1,800–1,820/mt, unchanged from the previous working day.