Oct 20 Urea Daily: Market Atmosphere Persists, Upward Drive Pauses

Domestic Urea Price Index:

According to FDD data estimates, on October 20 the urea small-granular price index was 1,777.73, up 4.55 from the previous working day, a month-on-month change of +0.26% and a year-on-year change of +9.31%.

Urea Futures Market:

Today the UR2701 contract opened at 1,694, with a high of 1,696, a low of 1,681, a settlement price of 1,688, and a closing price of 1,681. The closing price was down 9 from the settlement price of the previous trading day, a change of -0.53%. The basis for the 01 contract in Shandong was +56; the 01 contract saw open interest change of +590 lots today, with open interest standing at 307,693 lots as of now.

Today the urea futures market was mainly in narrow-range, slightly weak oscillation. The weekend's incremental export news, after the initial sentiment reaction, has not further fermented for now; lacking drivers to continue upward, the board edged lower. However, spot-market low-price transactions continued to improve, quotes were raised slightly, and the market's stabilizing posture has not yet been broken; bearish sentiment on the board has eased for now, with most participants watching whether export materialization can form a new round of traction for the spot market. At present the market has policy floor expectations plus cost and export expectation support; at the same time, as spot prices have kept falling, expectations for subsequent winter-storage restocking have warmed somewhat, lending a degree of sentiment support. However, there is no sufficiently strong real-world improvement, making it hard to reverse the weak pattern; the market is in a phase where fundamental reality and forward fertilizer-stocking expectations wrestle with each other, incremental drivers remain limited for now in the short term, and overall sentiment is still cautious. Overall, urea futures are expected to stop falling for the time being and shift to a range-bound pattern, mainly waiting for expectations to materialize. Going forward, watch the sustainability of downstream procurement, whether Indian tender expectations are realized, and the release of stocking demand.

Spot Market Analysis:

Today the domestic urea spot market atmosphere continued, but the momentum was somewhat lacking: upstream quotes in mainstream regions kept edging up, while follow-through in other regions was somewhat feeble. Low-price orders at some producers improved, and after the pace of price declines slowed, signs of stabilization had already appeared; still, the overall fundamentals have not reversed, and the upward momentum in prices is limited. In terms of supply and demand fundamentals, overall supply remains ample; on the demand side, agricultural autumn fertilizer provides fairly limited urea demand, operating rates in compound fertilizer and downstream industrial sectors have improved only modestly, and substantive demand release is weak. For the moment the market is mainly watching for further materialization of export news. Overall, the urea market is expected to remain in narrow-range oscillation in the short term; if new orders continue to fail to scale up and producers' inventory pressure accumulates, further concessional selling cannot be ruled out. However, there is still bottom support on the raw material side, so the room for a deep decline is limited. Going forward, focus on the landing of positive export-side developments and the pace at which real demand and stocking demand start up.

Overall, the domestic urea spot market is currently oscillating at low levels. On the supply side, units previously under maintenance are gradually restarting, industry daily output remains at a high level, supply pressure is gradually accumulating, and overall supply remains loose. On the demand side, although terminal demand shows signs of improvement, its sustainability is not promising; downstream buyers maintain rigid-demand procurement, agricultural autumn-fertilizer stocking is limited, operating rates in compound fertilizer and industry have improved only modestly, and substantive demand release is weak. The market is currently in a phase where cost support and export diversion provide a floor while loose supply and demand exert pressure; short-term prices show signs of steadying and repairing, but the drivers supporting a rebound are not particularly strong, and after the burst of sentiment there may still be a softening decline, though the room for a deep fall is limited; if prices fall back to absolute lows, that could trigger a release of bargain-hunting sentiment.

Specifically, prices in the Northeast held stable at 1,760-1,800 yuan/t. Prices in East China rose to 1,730-1,760 yuan/t. Prices in Central China held stable at 1,730-1,920 yuan/t. Prices in North China rose to 1,610-1,800 yuan/t. Prices in South China held stable at 1,800-1,840 yuan/t. Prices in Northwest China held stable at 1,860-1,910 yuan/t. Prices in Southwest China held stable at 1,650-1,900 yuan/t.

Market News Roundup:

October 20: In the Guangzhou, Guangdong market, the reference price for urea pick-up was 1,820-1,840 yuan/t, flat versus the previous working day.

October 20: In the Nanning, Guangxi market, the reference price for urea pick-up was 1,800-1,810 yuan/t, flat versus the previous working day.

October 20: In the Shijiazhuang, Hebei market, the reference price for urea pick-up was 1,740-1,760 yuan/t, up 10 yuan/t from the previous working day.

October 20: In the Wen'an, Hebei market, the reference price for urea pick-up was 1,740-1,760 yuan/t, up 10 yuan/t from the previous working day.

October 20: In the Shangqiu market today, mainstream medium/small granular was referenced at 1,730-1,740 yuan/t, with large granular at around 2,040-2,050 yuan/t.

October 20: In the Jingmen market today, mainstream medium/small granular was referenced at 1,730-1,750 yuan/t, with large granular at around 2,020-2,030 yuan/t.

October 20: In the Tieling, Liaoning market, the ex-warehouse/ex-factory pick-up price was referenced at 1,760-1,780 yuan/t, flat versus the previous working day.

October 20: In the Heze, Shandong market, the reference price for urea pick-up was around 1,730-1,740 yuan/t, up 20 yuan/t from the previous working day.

October 20: In the Linyi, Shandong market, the reference price for urea pick-up was 1,740-1,760 yuan/t, up 10 yuan/t from the previous working day.