October 19 Urea Daily: Export Expectations Rekindle as the Market Steadies and Recovers

Domestic Urea Price Index:

According to FDD data estimates, on October 19 the urea small-granular price index was 1,773.18, up 5.45 from the previous working day, a month-on-month change of +0.313% and a year-on-year change of +8.81%.

Urea Futures Market:

Today the UR2701 contract opened at 1,694, with a high of 1,712, a low of 1,684, a settlement price of 1,698, and a closing price of 1,694. The closing price was down 23 from the settlement price of the previous trading day, a change of -1.37%. The basis for the 01 contract in Shandong was +46; the 01 contract saw open interest change of -19,163 lots today, with open interest standing at 307,103 lots as of now.

Today the urea futures market staged a clearly higher opening and a rebound, surging intraday before pulling back to close the daily candle in a doji pattern. The main reason is that actual volumes concluded in the previous Indian tender were small, and the market expects India to launch another new round shortly; given upstream resistance to low prices in this round of bidding, market sentiment has begun to steady, spot market transactions have improved and quotes have edged up, and the futures board repaired accordingly. 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 strengthened slightly. Influenced by news that binary fertilizer exports may be liberalized and that a new round of Indian tender restocking is coming, the urea market atmosphere kept improving over the weekend, and upstream quotes in mainstream regions were raised slightly by around 10-20 yuan. On top of that, some producers had earlier stimulated shipments by cutting prices, so order books had already improved somewhat; as 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 has risen somewhat, 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 fell to 1,760-1,800 yuan/t. Prices in East China rose to 1,710-1,740 yuan/t. Prices in Central China rose to 1,730-1,920 yuan/t. Prices in North China held stable at 1,570-1,800 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 19: In the Guangzhou, Guangdong market, the reference price for urea pick-up was 1,820-1,840 yuan/t, up 20 yuan/t from the previous working day.

October 19: In the Nanning, Guangxi market, the reference price for urea pick-up was 1,800-1,810 yuan/t, up 20 yuan/t from the previous working day.

October 19: In the Shijiazhuang, Hebei market, the reference price for urea pick-up was 1,730-1,750 yuan/t, up 20 yuan/t from the previous working day.

October 19: In the Wen'an, Hebei market, the reference price for urea pick-up was 1,740-1,750 yuan/t, up 20 yuan/t from the previous working day.

October 19: 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 19: 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 19: In the Tieling, Liaoning market, the ex-warehouse/ex-factory pick-up price was referenced at 1,760-1,780 yuan/t, down 30 yuan/t from the previous working day.

October 19: In the Heze, Shandong market, the reference price for urea pick-up was around 1,710-1,720 yuan/t, up 20 yuan/t from the previous working day.

October 19: In the Linyi, Shandong market, the reference price for urea pick-up was 1,730-1,750 yuan/t, up 20 yuan/t from the previous working day.