Daily Urea Review: Lackluster Downstream Demand Leads to Continued Price Decline

Domestic Urea Price Index:

According to Feidoodoo data, on April 2nd, the price index for small granule urea was 2138.00, a decrease of 19.09 from the previous day, down by 0.89% day-on-day and 21.05% year-on-year.

Urea Futures Market:

Today's urea UR409 contract opened in 1870, with a high of 1873, a low of 1841, a settlement price of 1856, and a closing price of 1849. The closing price increased by 5 compared to the previous trading day's settlement price, marking a 0.27% increase, with fluctuations ranging from 1841 to 1873 throughout the day. The basis in the Shandong area for the 05 contracts was 211; the 05 contracts saw an increase of 22737 positions today, reaching a total of 192875 positions held.

Spot Market Analysis:

Today, the domestic urea market continued its weak downward trend, with enterprises receiving fewer orders than expected and prices continuing to adjust downward.

Specifically, prices in the Northeast region fell to 2090-2180 yuan/ton. In the East China region, prices fell to 2050-2120 yuan/ton. In the Central China region, prices for medium and small granules fell to 2070-2300 yuan/ton, and prices for large granules fell to 2080-2200 yuan/ton. In the North China region, prices fell to 1930-2120 yuan/ton. In the South China region, prices fell to 2200-2280 yuan/ton. Prices in the Northwest region remained stable at 2090-2100 yuan/ton. In the Southwest region, prices fell to 2050-2450 yuan/ton.

Factory Perspective:

Manufacturers are seeing less-than-ideal order intakes, leading to further reductions in factory prices. As the market continues to search for a bottom, low-price transactions may increase. Although current prices are running low, there are no signs of significant improvement in transactions, with a lackluster trading atmosphere and cautious sentiment among traders, lacking confidence, and adopting a wait-and-see approach. On the supply side, the restoration of previously shut-down units has led to a slight increase in daily production and continued sufficient supply. On the demand side, the basic application of green fertilizer in agriculture has ended, leading to a temporary gap period; demand from agriculture is weakening. Downstream industrial factories have lowered operational rates, reducing their enthusiasm for raw material procurement and maintaining a strategy of purchasing as needed at low prices, offering limited support to the market in the short term.

Overall:

The current urea market is characterized by weak new transactions against a backdrop of high supply. Downstream procurement demand remains cautious, leading to a weak market performance. It is expected that urea market prices will continue to seek a stable yet lower level in the short term.