August 25 Urea Daily Review: Positive Factors Fail to Offset Weak Demand as the Market Returns to Fundamental Pricing

Domestic Urea Price Index:

According to Feidoodoo data, the small-granular urea price index was 1,770.45 on August 25, down 2.27 from the previous working day, down 0.13% month on month and down 0.28% year on year.

Urea Futures Market:

Today, the UR2701 urea contract opened at 1,770, reached a high of 1,774 and a low of 1,753, settled at 1,762, and closed at 1,765. The closing price was 10 yuan lower than the previous trading day's settlement price, down 0.56%. The January contract's basis in Shandong was -75 yuan/tonne. Open interest in the January contract decreased by 8,473 lots today to 235,349 lots.

Urea futures traded with a volatile but weaker tone today. Positive factors previously priced into the market, including plant maintenance and export port accumulation, have gradually been absorbed by futures prices. Trading logic has returned to being driven by fundamentals, while domestic demand follow-up remains insufficient. Both the spot and futures markets edged lower.

On the supply side, overall availability remains ample. Although some plants have entered maintenance cycles, creating expectations of temporary supply contraction, large-scale production cuts have not yet been implemented in practice. Pressure from producer inventories remains and continues to weigh on prices. On the demand side, the market is in the traditional agricultural demand lull, and autumn fertilizer procurement has not yet fully begun. Compound fertilizer producers and industrial downstream users are purchasing only to meet rigid demand, with limited willingness to restock proactively. Demand remains weak, market trading is subdued, and spot producers are receiving few new orders and mostly lowering quotations.

Overall, loose supply-demand fundamentals and high inventory levels continue to constrain upside potential. With weak domestic demand and high inventories acting as a double constraint, the market has limited room to rise and is likely to continue operating with a weak and volatile tone in the short term. Attention should focus on changes in export policy, the implementation of plant maintenance, and the start of autumn fertilizer procurement.

Spot Market Analysis:

The domestic urea spot market operated weakly today. Weak domestic demand fundamentals have not improved. Agricultural demand has entered the off-season, while downstream compound fertilizer and melamine producers are purchasing only to meet rigid demand, with no incremental buying. New-order transactions have not followed up sufficiently, leaving the market in a stalemate. On the supply side, concentrated plant maintenance in late August has brought daily output down from high levels and tightened supply marginally. However, industry operating rates remain relatively high and overall availability is ample. Producer inventories have declined slightly through port accumulation, but total inventory levels remain high. Most producers recorded few new-order transactions and slightly lowered ex-factory prices. Market trading remained weak and stalled.

Overall, downstream demand is unlikely to improve materially. The export-driven rebound remains a phased positive factor, but before the fundamental imbalance of strong supply and weak demand is materially reversed, the market lacks sustained upward momentum. The market may maintain a weak and volatile pattern in the short term. Attention should focus on changes in export policy and the start of autumn fertilizer procurement.

Overall, the domestic urea spot market is maintaining a volatile pattern. On the supply side, industry operating rates remain high, supply is ample, and inventory pressure continues to build. However, some producers plan maintenance shutdowns and output reductions in late August, while export shipments remain smooth, providing marginal support to the spot market. Various expectations in the futures market also provide some support for forward contracts and reinforce producers' willingness to support prices. On the demand side, agricultural topdressing demand remains regionally differentiated and has not generated concentrated procurement. Industrial demand is limited to rigid-demand buying, compound fertilizer operating rates remain low, downstream buyers are cautious, and transaction volumes remain limited. The core contradiction of loose supply-demand fundamentals has not been materially reversed. Upward momentum is mainly coming from expectations of supply reductions and export diversion. Attention should remain on the implementation of maintenance-related output cuts, the pace of export order fulfilment, and marginal changes arising from the start of autumn fertilizer procurement.

Specifically, prices in Northeast China were stable at 1,780-1,800 yuan/tonne. Prices in East China fell to 1,690-1,740 yuan/tonne. Prices in Central China fell to 1,710-1,900 yuan/tonne. Prices in North China fell to 1,570-1,800 yuan/tonne. Prices in South China were stable at 1,800-1,850 yuan/tonne. Prices in Northwest China were stable at 1,860-1,910 yuan/tonne. Prices in Southwest China were stable at 1,680-2,000 yuan/tonne.

Market Updates:

August 25: In Guangzhou, Guangdong, the reference delivered price for urea was 1,830-1,840 yuan/tonne, unchanged from the previous working day.

August 25: In Nanning, Guangxi, the reference delivered price for urea was 1,800-1,810 yuan/tonne, with the high end lower than the previous working day.

August 25: In Shijiazhuang, Hebei, the reference delivered price for urea was 1,730-1,750 yuan/tonne, broadly unchanged from the previous working day.

August 25: In Wen'an, Hebei, the reference delivered price for urea was 1,720-1,740 yuan/tonne, broadly unchanged from the previous working day.

August 25: In Shangqiu, mainstream reference prices for small- and medium-granular urea were 1,710-1,740 yuan/tonne, while large-granular urea was quoted at around 1,840-1,850 yuan/tonne.

August 25: In Jingmen, mainstream reference prices for small- and medium-granular urea were 1,740-1,750 yuan/tonne. Self-pickup prices at railway terminals were temporarily referenced at around 1,700-1,740 yuan/tonne, while mainstream self-pickup prices for large granules at railway terminals were 1,800-1,810 yuan/tonne.

August 25: In Tieling, Liaoning, ex-warehouse/vehicle-loading prices were referenced at 1,780-1,800 yuan/tonne, unchanged from the previous working day.

August 25: In Heze, Shandong, the reference delivered price for urea was around 1,700 yuan/tonne, broadly unchanged from the previous working day.

August 25: In Linyi, Shandong, the reference delivered price for urea was 1,690-1,700 yuan/tonne, down 10 yuan/tonne from the previous working day.

August 25: In Xianyang, mainstream prices were referenced at 1,800-1,820 yuan/tonne, unchanged from the previous working day.