August 5 Urea Daily Review: Policy Expectations Ignite the Market, Urea Futures Rebound Strongly

Domestic Urea Price Index:

According to Feidoodoo data, on August 5, the small-granular urea price index was 1,797.73, up 1.82 from the previous working day, up 0.10% month on month, and down 0.29 year on year.

Urea Futures Market:

Today, the urea UR2609 contract opened at 1,687, reached a high of 1,743 and a low of 1,680, settled at 1,721, and closed at 1,721. The closing price was up 61 from the previous trading day's settlement price, a gain of 3.66%. The basis for the 09 contract in Shandong was -8. Open interest in the 09 contract increased by -45,596 lots today, with total open interest currently at 231,083 lots.

Urea futures rebounded sharply today and stayed strong during the session. The core driver came from policy signals at yesterday's symposium that exceeded expectations. The meeting noted that current urea prices have moved outside a reasonable range and are at a bottom position. Policy guidance is pushing the market to stabilize and recover, clarifying reasonable ex-works price levels in mainstream regions. The results of state reserve tenders will soon be released publicly, and follow-up work on production-sales coordination will be advanced and implemented simultaneously. On the supply side, capacity controls will be implemented. The NDRC supports restricting producer output in line with the Ministry of Industry and Information Technology's minimum supply-assurance plan, with the association following up to implement relevant control measures. Producers with excess output will face export-related restrictions, while those that voluntarily reduce production will receive corresponding incentives. Export policy is becoming more relaxed. The NDRC said exports can be organized in an orderly manner whenever international market demand exists, with no further batch or quota limits. Together with the recent timing of India's tender, expectations for export volumes have risen significantly. Multiple bullish factors resonated and reversed the market's earlier pessimism in one move. However, the nearby contract is approaching delivery, funds have limited confidence in chasing long positions, and room for speculation is constrained, so the market still needs to watch whether the spot market improves in step. Overall, domestic spot supply-demand contradictions are unlikely to improve immediately in the short term. After sentiment is fully digested, the key question will be whether policy support can actually transmit to spot fundamentals. Short-term futures prices are expected to consolidate with a strong bias. Later, attention should focus on India's tender results, the start of autumn fertilizer stockbuilding, raw material cost fluctuations, and policy developments.

Spot Market Analysis:

China's domestic urea spot market ran strongly today. Yesterday's symposium released multiple positive signals, and today's futures market rebounded sharply, clearly boosting spot trading sentiment. New orders at producers increased, and some producers raised ex-works prices slightly. But 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, domestic spot supply-demand contradictions are unlikely to improve immediately in the short term. After sentiment is fully digested, the key question will be whether policy support can actually transmit to spot fundamentals. The spot market is expected to continue running with a strong bias in the short term. Further attention should be paid to India's tender results and the start of autumn fertilizer stockbuilding.

Overall, the domestic urea spot market is currently fluctuating at low levels. 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 were stable at RMB 1,700-1,760/tonne. Prices in Central China rose to RMB 1,730-1,900/tonne. Prices in North China were stable at RMB 1,590-1,860/tonne. Prices in South China rose to RMB 1,820-1,870/tonne. Prices in Northwest China were stable at RMB 1,860-1,910/tonne. Prices in Southwest China were stable at RMB 1,680-2,080/tonne.

Market Updates:

August 5: In Guangzhou, Guangdong, the reference receiving price for urea was RMB 1,850-1,870/tonne, up from the previous working day.

August 5: In Nanning, Guangxi, the reference receiving price for urea was RMB 1,820-1,830/tonne, down from the previous working day.

August 5: In Shijiazhuang, Hebei, the reference receiving price for urea was RMB 1,740-1,750/tonne, basically unchanged from the previous working day.

August 5: In Wen'an, Hebei, the reference receiving price for urea was RMB 1,720-1,740/tonne, down RMB 10/tonne from the previous working day.

August 5: 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 5: 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 5: In Tieling, Liaoning, ex-warehouse/truck pickup prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.

August 5: In Heze, Shandong, the reference receiving price for urea was around RMB 1,700-1,710/tonne, basically unchanged from the previous working day.

August 5: In Linyi, Shandong, the reference receiving price for urea was RMB 1,710-1,720/tonne, up RMB 10/tonne from the previous working day.

August 5: In Xianyang, the mainstream reference price was RMB 1,840-1,860/tonne, unchanged from the previous working day.