October 14 Urea Daily : Loose Supply-Demand Pressures, Urea Spot and Futures Run Weak

Domestic Urea Price Index:

Based on FDD data: on Oct 14, the urea small-granule price index was 1,769.09, down 2.27 from the previous working day, or -0.13% week-on-week and +8.62% year-on-year.

Urea Futures Market:

Today, the urea UR2701 contract opened at 1,700, with a high of 1,703, a low of 1,664, a settlement price of 1,681, and a closing price of 1,667; the closing price was -34 versus the previous trading day's settlement price, or -2.00% week-on-week. The 01 contract's Shandong-region basis was +53; the 01 contract added 8,171 lots today, with open interest at 303,828 lots as of now.

Today, the urea futures market continued its weak downward pattern, with no incremental drivers on the board during the off-season gap and overall cautious sentiment. There is no substantive positive in the spot market: the earlier export positive has landed but actual volumes have not yet materialized, agricultural demand has entered the seasonal off-season, industry daily output stays high, enterprise inventories keep accumulating, and the loose supply-exceeds-demand pattern clearly weighs on the futures board. On the demand side, agricultural autumn fertilizer demand for urea is limited, operating-rate gains in compound fertilizer and downstream industry are insufficient, new-order volumes are weak, and although low-end cargoes trade somewhat, they struggle to lift market confidence. On the cost side, raw material and policy bottom-support effects have not yet fully expired and still provide sentiment support at the bottom. Overall, urea futures will most likely remain in stalemate consolidation and weak range-bound operation in the short term; if new orders stay persistently insufficient and producers' inventory pressure mounts, prompting renewed concession selling, the board may continue to weaken along with spot; conversely, if export volumes materialize or reserve demand starts up, a phased recovery is possible. 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 ran in a stalemated, weak manner. There is currently no substantive positive support in the market; the export expectation the market had pinned high hopes on has not yet actually materialized, and combined with agricultural demand entering the seasonal off-season and industry daily output staying high, the overall fundamentals maintain a loose supply-exceeds-demand pattern, and enterprise inventories continued to accumulate this week. In the past two days, after some enterprises lowered quotes, low-end cargoes traded slightly; cost support and forward export expectations provide some bottom support, limiting a rapid downward probe. 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 maintains stalemate consolidation in the short term; if new orders continue to struggle to ramp up and producers' inventory pressure accumulates, renewed concession-selling operations cannot be ruled out. However, the raw material side still provides bottom support, and the deep-decline room is limited. 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 stable at 1,700-1,730 yuan/t. Prices in Central China were stable at 1,710-1,920 yuan/t. Prices in North China were stable at 1,570-1,800 yuan/t. Prices in South China were cut to 1,800-1,840 yuan/t. Prices in Northwest China were stable at 1,860-1,910 yuan/t. Prices in Southwest China were cut to 1,650-1,900 yuan/t.

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

Market News and Updates:

Oct 14: Guangzhou, Guangdong market urea receiving reference price 1,810-1,820 yuan/t, a downgrade from the previous working day's high price.

Oct 14: Nanning, Guangxi market urea receiving reference price 1,800-1,810 yuan/t, unchanged from the previous working day.

Oct 14: Shijiazhuang, Hebei market urea receiving reference price 1,710-1,750 yuan/t, basically unchanged from the previous working day.

Oct 14: Wen'an, Hebei market urea receiving reference price 1,720-1,750 yuan/t, basically unchanged from the previous working day.

Oct 14: Today, Shangqiu market small and medium-granule mainstream reference 1,710-1,730 yuan/t, large-granule reference around 2,040-2,050 yuan/t.

Oct 14: 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 14: Tieling, Liaoning market ex-warehouse/steam-lifted price reference 1,780-1,800 yuan/t, unchanged from the previous working day.

Oct 14: Heze, Shandong market urea receiving reference price near 1,700-1,710 yuan/t, down 10 yuan/t from the previous working day.

Oct 14: Linyi, Shandong market urea receiving reference price 1,710-1,720 yuan/t, basically unchanged from the previous working day.

Oct 14: Xianyang market mainstream price reference 1,800-1,820 yuan/t, unchanged from the previous working day.