November 3 Urea Daily: Geopolitical Sentiment Disturbance, Core Expectations Intact

Domestic Urea Price Index:

According to FDD data estimates, on November 3 the urea small granular price index was 1,792.73, up 4.55 versus the previous working day, a month-on-month rise of 0.25% and a year-on-year rise of 10.63%.

Urea Futures Market:

Today the UR2701 contract opened at 1,720, with a high of 1,744, a low of 1,720, a settlement price of 1,735 and a closing price of 1,741. The closing price was up 5 versus the settlement price of the previous trading day, a month-on-month rise of 0.29%. The Shandong basis for the 01 contract was +19; the 01 contract saw open interest change of -9,555 lots today, with current open interest at 280,529 lots.

Today the urea futures market as a whole opened lower and then recovered. The main reason was that overnight news of US-Iran talks cooled geopolitical sentiment and pulled related sectors lower at the open; however, since domestic urea has not priced in much geopolitical premium at present, the sentiment reaction was relatively limited, and the market's trading focus remains on the export expectations generated by recent Indian tender news, while reserve expectations have also gradually strengthened as time passes, with expectations of resonance between domestic and external demand keeping the market firm and oscillating in wait. The spot market atmosphere shows a certain divergence and stalemate: low-price business in some regions improved, but after prices rose in mainstream regions, market follow-through willingness declined and high-end quotations were adjusted slightly lower, leaving the overall market in a firm atmosphere of waiting. Overall, the market currently has policy support as well as support from cost and export expectations; at the same time, as time passes, expectations for subsequent winter storage restocking will also gradually heat up. However, in the short term there is a lack of sufficiently strong real improvement, so it remains difficult to reverse the fundamental pattern; the market is in a stage where fundamental reality and forward restocking expectations pull against each other, short-term incremental drivers remain limited, and overall sentiment is still fairly cautious. Overall, the urea futures market will remain rangebound in the absence of incremental drivers in the short term; going forward, watch the fulfillment of Indian tender export expectations and the pace at which reserve demand is released.

Spot Market Analysis:

Today the domestic urea spot market showed a degree of regional divergence: given repeated Indian tender news whose volume exceeded market expectations, prices in many regions were raised slightly recently. However, a cautious mood persists in the short term and willingness to chase prices higher after increases remains relatively limited; high-end prices in a few mainstream regions were adjusted down, but the overall firm situation has not fully faded, with most participants waiting to see how export expectations land. Looking at supply and demand fundamentals, overall supply is still fairly ample; on the demand side, demand at the tail end of the agricultural fertilizer season is fairly limited, compound fertilizer and downstream industrial sectors mostly maintain low operating levels, and the release of substantive demand is weak. In the short term the market is mainly watching further fulfillment of export news and the rhythm of reserve demand. Overall, the urea market will remain rangebound in the short term; if new orders continue to fail to scale up and plant inventory pressure accumulates, further concessions to move cargo cannot be ruled out. However, the raw material side and the policy stance still provide bottom support; going forward, focus on the realization of favorable export developments and the pace of purchasing for real and reserve demand.

Overall, the domestic urea spot market is currently ranging. On the supply side, industry daily output is at a high level year on year, supply pressure from cargo is gradually accumulating, and overall supply remains ample. On the demand side, although terminal demand shows signs of improvement, its sustainability is not encouraging: downstream buyers maintain rigid-demand purchasing, agricultural fertilizer use is basically winding down, compound fertilizer and industrial operating rates have limited room to rise, and substantive demand release is weak. The market is currently in a stage where cost support and export diversion provide a floor while ample supply and demand exert pressure; although prices show signs of stabilizing and repairing in the short term, the drivers supporting a rebound are not strong, and after the pulse of sentiment there may still be a soft downward drift, though deep declines are likely to be limited; if prices fall back to relatively low levels, bargain-hunting by reserve and other demand may be released.

Specifically, prices in Northeast China rose to 1,780-1,810 yuan/t. Prices in East China were stable at 1,750-1,780 yuan/t. Prices in Central China were stable at 1,740-1,900 yuan/t. Prices in North China were stable at 1,650-1,800 yuan/t. Prices in South China rose to 1,850-1,860 yuan/t. Prices in Northwest China were stable at 1,860-1,910 yuan/t. Prices in Southwest China were stable at 1,650-1,900 yuan/t.

Urea Small Granular Market Quotations (yuan/t)

Market News and Updates:

Nov 3: The Guangzhou market in Guangdong quoted urea pickup reference prices at 1,850-1,860 yuan/t, flat versus the previous working day.

Nov 3: The Nanning market in Guangxi quoted urea pickup reference prices at 1,850-1,860 yuan/t, up 10 yuan/t versus the previous working day.

Nov 3: The Shijiazhuang market in Hebei quoted urea pickup reference prices at 1,750-1,800 yuan/t, up 20 yuan/t versus the previous working day.

Nov 3: The Wen'an market in Hebei quoted urea pickup reference prices at 1,760-1,800 yuan/t, up 10 yuan/t versus the previous working day.

Nov 3: The Shangqiu market quoted mainstream medium and small granular urea at 1,750-1,760 yuan/t, with large granular at around 2,040-2,050 yuan/t.

Nov 3: The Jingmen market quoted mainstream medium and small granular urea at 1,740-1,760 yuan/t, with large granular at 2,020-2,030 yuan/t.

Nov 3: The Tieling market in Liaoning quoted ex-warehouse/pickup prices at 1,780-1,800 yuan/t, up 20 yuan/t versus the previous working day.

Nov 3: The Heze market in Shandong quoted urea pickup reference prices at around 1,750-1,760 yuan/t, flat versus the previous working day.

Nov 3: The Linyi market in Shandong quoted urea pickup reference prices at 1,760-1,770 yuan/t, down 10 yuan/t versus the previous working day.