Oct 12 Urea Daily Review: Lacking Substantive Positive Drivers, Urea Market Struggles to Shake Off Weakness

Domestic Urea Price Index:

According to FDD data: on Oct 12, the urea small-granule price index was 1,775.91, down 7.73 from the previous working day, or -0.43% week-on-week and +8.41% year-on-year.

Urea Futures Market:

Today, the urea UR2701 contract opened at 1,731, with a high of 1,734, a low of 1,711, a settlement price of 1,723, and a closing price of 1,713; the closing price was -30 versus the previous trading day's settlement price, or -1.72% week-on-week. The 01 contract's Shandong-region basis was +27; the 01 contract added 15,005 lots today, with open interest at 274,352 lots as of now.

Today, the urea futures market continued its weak decline, with overall bearish sentiment on the board, resonating with the weak downward drift of the spot market. Over the weekend, the market ran in a stalemate with a weak bias; some plants kept quotes firm by relying on previously placed orders, but the Indian tender's positive was below expectations, downstream follow-through in taking goods was insufficient, trading was quiet, quotes loosened somewhat, and the market was weakly stable. Today, spot market prices continued to drift lower modestly, most enterprises cut prices to attract orders, the overall market atmosphere was subdued, and support for the futures board weakened further. Currently, the supply side remains at a high level, enterprise inventories have accumulated somewhat, while downstream actual demand still shows no clear improvement; agricultural fertilizer use is in an off-season gap, the industrial sector remains cautious in taking goods, and the overall fundamentals show no substantive improvement. Overall, the urea market currently lacks substantive positive drivers; under the multiple pressures of ample supply, weak domestic demand, and the failure of the export positive to materialize, the short-term market is expected to be mainly weakly range-bound, and an upward price recovery requires a substantive easing of the supply-demand contradiction. Going forward, continue to track downstream purchasing pace, overseas order progress, and the release of reserve demand.

Spot Market Analysis:

Today, the domestic urea spot market drifted lower. Last week, the urea market ran in a stalemate with a weak bias; some plants kept quotes firm by relying on prior pending orders, but the Indian tender's positive was below expectations, downstream follow-through in taking goods was insufficient, trading was quiet, quotes loosened somewhat, and the market was weakly stable — focus on downstream new-order follow-through. Today, spot market prices continued to drift lower modestly, most enterprises cut prices to attract orders, and the overall market atmosphere was subdued. From a supply-demand fundamental perspective, overall supply is still relatively ample; on the demand side, agricultural autumn fertilizer demand for urea is fairly limited, and operating-rate gains in compound fertilizer and downstream industrial sectors are limited, with substantive demand release fairly weak. Overall, the urea market still has downside room in the short term, but low-level bargain-hunting will slow the decline; the market will most likely stalemate and probe lower, awaiting support from export news. Going forward, focus on the materialization of export-side positives and the pace of real demand and reserve-demand start-up.

Overall, the current domestic urea spot market runs weak. On the supply side, previously idled plants have been resuming one after another, industry daily output has risen somewhat, supply pressure is gradually accumulating, and overall supply remains ample; on the demand side, although enterprises have a pre-holiday order-collection and shipment intent, terminal demand shows no obvious improvement, downstream maintains rigid-need purchasing, agricultural autumn fertilizer stocking is limited, operating-rate gains in compound fertilizer and industry are limited, and substantive demand release is fairly weak. The market is currently in a tug-of-war phase between cost support plus export diversion at the bottom and ample supply-demand suppression; short-term prices may still loosen and drift lower, but the deep-decline room is limited; if prices fall to low levels, bargain-hunting sentiment may be unleashed.

Specifically, prices in Northeast China were stable at 1,790-1,810 yuan/t. Prices in East China were cut to 1,720-1,750 yuan/t. Prices in Central China were cut to 1,720-1,920 yuan/t. Prices in North China were cut to 1,580-1,800 yuan/t. Prices in South China were stable at 1,810-1,850 yuan/t. Prices in Northwest China were stable at 1,860-1,910 yuan/t. Prices in Southwest China were stable at 1,660-1,900 yuan/t.

Urea Small-Granule Market Quotation Overview (yuan/t)

Market News and Updates:

Oct 12: Guangzhou, Guangdong market urea receiving reference price 1,820-1,830 yuan/t, a downgrade from the previous working day.

Oct 12: Nanning, Guangxi market urea receiving reference price 1,820-1,830 yuan/t, unchanged from the previous working day.

Oct 12: Shijiazhuang, Hebei market urea receiving reference price 1,710-1,770 yuan/t, down 30 yuan/t from the previous working day.

Oct 12: Wen'an, Hebei market urea receiving reference price 1,730-1,760 yuan/t, down 30 yuan/t from the previous working day.

Oct 12: Today, Shangqiu market small and medium-granule mainstream reference 1,730-1,740 yuan/t, large-granule reference around 2,040-2,050 yuan/t.

Oct 12: Today, small and medium-granule Jingmen market mainstream reference 1,730-1,740 yuan/t; platform self-pickup temporarily around 1,690-1,720 yuan/t; large-granule platform self-pickup mainstream 2,020-2,030 yuan/t.

Oct 12: Tieling, Liaoning market ex-warehouse/steam-lifted price reference 1,780-1,800 yuan/t, unchanged from the previous working day.

Oct 12: Heze, Shandong market urea receiving reference price near 1,720-1,730 yuan/t, down 10 yuan/t from the previous working day.

Oct 12: Linyi, Shandong market urea receiving reference price 1,730-1,740 yuan/t, down 10 yuan/t from the previous working day.

Oct 12: Xianyang market mainstream price reference 1,800-1,820 yuan/t, unchanged from the previous working day.