October 26 Urea Daily: Short-Term Lack of Drivers Keeps Market Watchful as Players Await Expectations

Domestic Urea Price Index:

According to FDD data estimates, on October 26 the urea small-granular price index was 1,769.55, down 4.09 from the previous working day, a month-on-month change of -0.23% and a year-on-year change of +8.50%.

Urea Futures Market:

Today the UR2701 contract opened at 1,671, with a high of 1,696, a low of 1,666, a settlement price of 1,680, and a closing price of 1,687. The closing price was up 9 from the settlement price of the previous trading day, a change of 0.54%. The basis for the 01 contract in Shandong was +26; the 01 contract saw open interest change of -2,531 lots today, with open interest standing at 314,909 lots as of now.

Today the urea futures market continued to run within a oscillating range. Short-term export-related news remains volatile, yet the board lacks incremental drivers and sentiment follow-through is limited; at the same time, continued disturbance from the news side has also run into resistance in pushing confidence lower. Spot-market transaction sustainability is limited for now, prices in some regions continue to pull back, but the overall market is basically steady with little adjustment, with most participants watching and waiting for binary fertilizer export and Indian tender news to materialize. Overall, the market currently has policy floor expectations plus cost and export expectation support; at the same time, as spot prices keep falling, expectations for subsequent winter-storage restocking will gradually warm, but in the short term 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 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 pace of downstream procurement, whether export expectations are realized, and the release of stocking demand.

Spot Market Analysis:

Today the domestic urea spot market was broadly steady, with prices in some regions continuing to decline. A cautious mindset persists for now, willingness to chase prices is limited, and most are watching and waiting for export expectations to materialize. Contradictions in current market fundamentals remain, and demand lacks a sustainable driver. In terms of supply and demand fundamentals, overall supply remains ample; on the demand side, agricultural fertilizer demand at the tail end is fairly limited, operating rates in compound fertilizer and downstream industrial sectors mostly remain low, 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 from the raw-material side and policy stance, so the room for a deep decline is likewise 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, industry daily output remains at a year-on-year high, supply-pressure accumulation from available goods is gradual, 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 fertilizer application is basically finished, 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 relative 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 held stable at 1,730-1,760 yuan/t. Prices in Central China held stable at 1,730-1,920 yuan/t. Prices in North China held stable at 1,610-1,800 yuan/t. Prices in South China held stable at 1,810-1,840 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 26: 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 26: 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 26: In the Shijiazhuang, Hebei market, the reference price for urea pick-up was 1,730-1,750 yuan/t, down 10 yuan/t versus the previous working day.

October 26: In the Wen'an, Hebei market, the reference price for urea pick-up was 1,730-1,750 yuan/t, down 10 yuan/t versus the previous working day.

October 26: 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 26: 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 26: 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 26: In the Heze, Shandong market, the reference price for urea pick-up was around 1,700-1,710 yuan/t, down 20 yuan/t versus the previous working day.

October 26: In the Linyi, Shandong market, the reference price for urea pick-up was 1,720-1,730 yuan/t, down 20 yuan/t versus the previous working day.