August 4 Urea Daily Review: Weak Demand and Policy Wait-and-See Mood Keep Urea Market in Weak Consolidation

Domestic Urea Price Index:

According to Feidoodoo data, on August 4, the small-granular urea price index was 1,799.09, down 8.64 from the previous working day, down 0.48% month on month, and down 0.06% year on year.

Urea Futures Market:

Today, the urea UR2609 contract opened at 1,673, reached a high of 1,678 and a low of 1,657, settled at 1,667, and closed at 1,663. The closing price was down 17 from the previous trading day's settlement price, a decline of 1.01%. The basis for the 09 contract in Shandong was +77. Open interest in the 09 contract increased by 2,551 lots today, with total open interest currently at 277,184 lots.

Urea futures fluctuated weakly today and remained under overall pressure. The expected support brought by the implementation of new export quotas has largely been absorbed by the market, and trading logic has returned to weak off-season fundamentals. On the supply side, industry operating rates remain high, producer inventories continue to accumulate, and factories face prominent destocking pressure. On the demand side, the market is currently in the traditional agricultural fertilizer-use gap. Downstream compound fertilizer and industrial sectors are operating at low loads, traders mostly buy as needed, and concentrated stockbuilding has not yet started. Spot trading sentiment is generally subdued, new orders are scarce, and most producers continue to lower offers slightly to stimulate shipments, creating a negative feedback loop between futures and spot markets. Meanwhile, international urea prices have pulled back after being pressured, and expectations of narrowing export profits have further weighed on sentiment. Although a meeting with relevant enterprises was held today, the market is still waiting for substantive measures, and short-term sentiment support remains limited. With domestic bullish factors exhausted and off-season demand weak, the main contract is approaching delivery and physical-market pressure is dominating price action. Overall, after export expectations were realized, the market has returned to weak physical-market logic. Under the off-season pattern of strong supply and weak demand, futures prices are expected to remain weak and rangebound in the short term. Later, attention may focus on the start of autumn fertilizer stockbuilding, raw material cost fluctuations, and follow-up policy moves, which could bring staged rebound opportunities.

Spot Market Analysis:

China's domestic urea spot market continued to run weakly today. New orders were generally scarce, trading sentiment remained deadlocked and subdued, and some producers continued to lower offers to promote shipments. Fundamentally, the current supply-demand contradiction remains. On the supply side, industry operating rates stay high, market supply is ample, and producer inventory pressure continues. On the demand side, agricultural top-dressing demand varies by region and has not formed concentrated purchasing support, making it difficult to effectively push prices higher. In the industrial sector, demand is limited to essential follow-up purchases, downstream buyers remain cautious, and overall transactions are limited. Overall, urea market fundamentals are unlikely to improve significantly in the short term. Although a meeting on supply assurance and price stabilization was held today, without substantive positive measures, the market is expected to continue weak consolidation. Further attention should be paid to the pace of agricultural top-dressing demand and the recovery in operating rates at compound fertilizer producers.

Overall, the domestic urea spot market is currently in a weak consolidation phase. On the supply side, industry capacity utilization remains high, daily output stays elevated, and equipment maintenance has limited impact, leaving overall supply pressure relatively large. On the demand side, agricultural demand has not yet shown new large-scale fertilizer-use support, and regional divergence is obvious. Industrial demand from downstream compound fertilizer, melamine, and other sectors remains weak, with purchases mainly for essential needs and limited overall demand drivers. In terms of inventories, producer inventories continue to accumulate and inventory pressure remains. Export quotas have already been implemented, but their support for the market has been limited. Later, attention should focus on the international geopolitical situation and the impact of the autumn fertilizer stockbuilding schedule.

By region, prices in Northeast China were stable at RMB 1,830-1,860/tonne. Prices in East China fell to RMB 1,720-1,750/tonne. Prices in Central China fell to RMB 1,720-1,900/tonne. Prices in North China were stable at RMB 1,590-1,860/tonne. Prices in South China fell to RMB 1,800-1,860/tonne. Prices in Northwest China fell to RMB 1,860-1,910/tonne. Prices in Southwest China were stable at RMB 1,680-2,080/tonne.

Market Updates:

August 4: In Guangzhou, Guangdong, the reference receiving price for urea was RMB 1,840-1,850/tonne, down from the previous working day.

August 4: In Nanning, Guangxi, the reference receiving price for urea was RMB 1,800-1,810/tonne, with the high end down from the previous working day.

August 4: In Shijiazhuang, Hebei, the reference receiving price for urea was RMB 1,740-1,760/tonne, down RMB 30/tonne from the previous working day.

August 4: In Wen'an, Hebei, the reference receiving price for urea was RMB 1,730-1,750/tonne, down RMB 30/tonne from the previous working day.

August 4: In Shangqiu today, the mainstream reference price for small and medium granules was RMB 1,720-1,740/tonne, while large granules were around RMB 1,820-1,830/tonne.

August 4: In Jingmen today, the mainstream reference price for small and medium granules was RMB 1,740-1,750/tonne, station self-pickup was temporarily around RMB 1,700-1,710/tonne, and mainstream large-granule station self-pickup was RMB 1,800-1,810/tonne.

August 4: In Tieling, Liaoning, ex-warehouse/truck pickup prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.

August 4: In Heze, Shandong, the reference receiving price for urea was around RMB 1,720-1,720/tonne, basically unchanged from the previous working day.

August 4: In Linyi, Shandong, the reference receiving price for urea was RMB 1,740-1,750/tonne, down RMB 10/tonne from the previous working day.

August 4: In Xianyang, the mainstream reference price was RMB 1,840-1,860/tonne, unchanged from the previous working day.