September 21 Urea Daily Review: Weak Pre-Holiday Sentiment Keeps Futures and Spot Markets in a Narrow Range

Domestic Urea Price Index:

According to FDD data, the small-granule urea price index stood at 1,785.00 on September 21, down 4.55 from the previous working day, representing a decrease of 0.25% period on period and an increase of 5.45% year on year.

Futures Market Analysis:

The UR2701 urea contract opened at 1,760 today, reaching a high of 1,767 and a low of 1,757. The settlement price was 1,762, while the closing price was 1,762, down 2 from the previous trading day's settlement price, representing a decrease of 0.11%. The Shandong basis for the January contract was -12. Open interest in the January contract increased by 258 lots today to 248,080 lots.

The urea futures market traded within a narrow range today. On the supply side, the gradual restart of facilities that had previously undergone maintenance increased daily industry output, while producer inventories remained high compared with the same period last year. With the National Day holiday approaching, producers are seeking to accelerate order collection and shipments before the holiday. However, actual transactions have shown no significant improvement after spot producers cut prices and offered concessions. On the demand side, agricultural consumption is currently in a traditional off-season. Downstream compound fertilizer plants continue to operate at relatively low rates, while industrial buyers are purchasing only small volumes for essential needs. Pre-holiday stockpiling has generally been cautious, with traders mainly remaining on the sidelines. News related to export quotas has largely been absorbed by the market, and delays in shipment schedules have weakened the marginal positive impact from this factor. Futures and spot markets are currently moving in close alignment, with softer spot quotations transmitting upward to the futures market. Overall, urea futures lack a clear directional driver in the short term and are caught between disruptions related to export expectations and weak underlying fundamentals. The market is expected to remain weak and range-bound. Attention should continue to focus on the actual implementation of export quotas, improvements in spot transactions, and the start of autumn fertilizer demand.

Spot Market Analysis:

China's urea spot market continued to trade weakly today. With the National Day holiday approaching, producers are seeking to collect orders and accelerate shipments before the holiday. However, end-user demand has shown no significant improvement, downstream buyers continue to follow their existing pattern of purchasing only for essential needs, and large-scale restocking has yet to begin. At the same time, facilities that previously underwent maintenance are gradually resuming production, raising daily industry output. Supply-side pressure is accumulating, leaving room for spot prices to soften further. From a supply-demand perspective, overall supply remains relatively ample. On the demand side, large-scale agricultural stockpiling for autumn fertilizer has yet to begin, while operating-rate increases among compound fertilizer producers and downstream industrial users remain limited, leaving substantive demand weak. Overall, urea prices may soften and decline in the short term. However, raw material costs provide downside support, while the diversion of some cargoes into exports also supports the market, limiting the potential for a steep decline. If prices retreat to lower levels, bargain buying may emerge and gradually increase new-order volumes. Attention should continue to focus on pre-holiday advance orders, the fulfillment of export shipments, and the pace of downstream restocking.

Overall, China's urea spot market is currently undergoing weak consolidation. On the supply side, availability remains relatively ample. Although maintenance at some facilities caused daily output to retreat slightly from high levels and port deliveries diverted some cargoes from the domestic market, these developments have not fundamentally changed the loose supply structure. On the demand side, agricultural demand is in an intermittent period and purchases have yet to be released on a concentrated basis. Compound fertilizer producers and downstream industrial users have high finished-product inventories and low operating rates. They continue to maintain low inventories and remain cautious about purchases, placing only small replenishment orders for essential needs, which is insufficient to generate strong demand momentum. Current fundamentals reflect a contest between positive long-term export expectations and weak short-term conditions. Support from the issuance of export quotas is reflected mainly in longer-term expectations and is unlikely to materially change fundamentals in the short term. The market lacks new drivers capable of producing a breakout. Attention should focus on changes in downstream purchasing, the actual fulfillment of export orders, and progress in agricultural stockpiling for autumn fertilizer.

By region, prices in Northeast China remained stable at RMB 1,790-1,810/tonne. Prices in East China fell to RMB 1,740-1,790/tonne. Prices in Central China fell to RMB 1,740-1,920/tonne. Prices in North China fell to RMB 1,600-1,820/tonne. Prices in South China remained stable at RMB 1,800-1,840/tonne. Prices in Northwest China remained stable at RMB 1,860-1,910/tonne. Prices in Southwest China remained stable at RMB 1,660-1,900/tonne.

Market Updates:

September 21: The reference delivered price for urea in Guangzhou, Guangdong, was RMB 1,820-1,840/tonne, unchanged from the previous working day.

September 21: The reference delivered price for urea in Nanning, Guangxi, was RMB 1,800-1,810/tonne, unchanged from the previous working day.

September 21: The reference delivered price for urea in Shijiazhuang, Hebei, was RMB 1,750-1,800/tonne, broadly unchanged from the previous working day.

September 21: The reference delivered price for urea in Wen'an, Hebei, was RMB 1,780-1,800/tonne, down RMB 20/tonne from the previous working day.

September 21: Mainstream reference prices for small- and medium-granule urea in Shangqiu were RMB 1,760-1,800/tonne, while large-granule urea was quoted at approximately RMB 2,040-2,050/tonne.

September 21: Mainstream reference prices for small- and medium-granule urea in Jingmen were RMB 1,750-1,780/tonne. Temporary self-pickup prices at railway stations were approximately RMB 1,700-1,730/tonne, while mainstream self-pickup prices for large-granule urea were RMB 2,020-2,030/tonne.

September 21: The reference ex-warehouse/truck-loading price in Tieling, Liaoning, was RMB 1,790-1,810/tonne, unchanged from the previous working day.

September 21: The reference delivered price for urea in Heze, Shandong, was approximately RMB 1,730-1,750/tonne, down RMB 10/tonne from the previous working day.

September 21: The reference delivered price for urea in Linyi, Shandong, was RMB 1,740-1,760/tonne, broadly unchanged from the previous working day.

September 21: The mainstream reference price in Xianyang was RMB 1,800-1,820/tonne, unchanged from the previous working day.