September 23 Urea Daily Review: Futures and Spot Prices Trade Weakly in a Range as Pre-Holiday Order Collection Pressure Coexists with Cost and Export Floor Support

Domestic Urea Price Index:

According to FDD data calculations, the urea small-granule price index was 1,780.45 on September 23, down 1.36 points from the previous working day, down 0.08% sequentially and up 5.72% year on year.

Futures Market Analysis:

Today's urea UR2701 contract opened at 1,757, reached a high of 1,767, a low of 1,745, settled at 1,755 and closed at 1,748. The closing price was 14 points below the previous trading day's settlement price, representing a sequential decline of 0.79%. The basis for the January contract in Shandong was -8. Open interest in the January contract increased by 6,636 lots today, bringing current open interest to 256,779 lots.

Today's urea futures market traded weakly within a range, with a clear linkage between futures and spot prices. On the spot side, producers offered concessions to move cargo, and the previously bearish sentiment continued to transmit to the futures market. However, signs of short-term, phase-based restocking to meet essential needs emerged in the spot market, easing the pressure for a further decline to some extent. With the Mid-Autumn Festival holiday approaching, some funds chose to reduce positions to avoid risk, and wait-and-see sentiment strengthened. However, the market still faces the test of order collection before the National Day holiday. No clear sign of fundamental improvement has emerged at this stage, and the futures market is expected to continue fluctuating repeatedly near the bottom. News related to export quotas has largely been absorbed by the market. The postponement of shipment schedules has weakened the marginal bullish effect from this factor, while softer spot quotations continue to transmit to the futures market through the futures-spot linkage. Overall, urea futures lack a clear trend direction in the short term. The market is caught between export expectations and weak underlying fundamentals and is expected to continue consolidating within a weak range. Attention should remain on the actual implementation and timing of export quotas, improvement in spot transactions and the start of autumn fertilizer demand.

Spot Market Analysis:

Today's domestic spot urea market traded weakly. Most producers lowered their ex-works quotations over the past two days. Influenced by the previously bearish market sentiment, downstream buyers temporarily suspended purchases or postponed procurement during the preceding two days. As prices declined, some essential-demand orders began to emerge, and short-term transactions showed signs of recovery. The market may be able to pass smoothly through the Mid-Autumn Festival holiday with the support of this round of essential demand. From the supply-demand perspective, overall supply remains relatively ample. On the demand side, agricultural autumn fertilizer stockpiling has not yet begun on a large scale, while operating rates in the compound-fertilizer and downstream industrial sectors have improved only marginally, leaving effective demand release weak. Overall, after the Mid-Autumn Festival holiday, the market will still face pressure to collect orders before the National Day holiday. Since no substantive positive fundamental driver has emerged, the domestic spot urea market is likely to continue fluctuating at relatively low levels in the short term. However, raw-material costs are providing floor support, while the diversion of export cargoes is also offering a supporting effect, limiting the room for a sharp decline. The market should continue to be monitored for follow-up on pre-holiday advance orders, the fulfillment of export shipments and the pace of downstream restocking.

Overall, the domestic spot urea market is undergoing weak consolidation. On the supply side, previously idled units are gradually resuming production, daily industry output has increased, supply pressure is accumulating and overall supply remains ample. On the demand side, although companies are seeking to collect orders and ship cargo before the National Day holiday, end-user demand has not improved significantly. Downstream buyers are still purchasing only to meet essential needs, agricultural autumn fertilizer stockpiling has not begun on a large scale, and operating rates in the compound-fertilizer and industrial sectors have improved only marginally. Effective demand release remains weak. The market is currently caught between cost support and the floor provided by export diversion on one side, and pressure from ample supply and weak demand on the other. Prices may continue to soften in the short term, but the room for a sharp decline is limited. If prices fall to low levels, this may encourage buying on dips. Going forward, close attention should be paid to follow-up on pre-holiday advance orders, the fulfillment of export shipments and downstream restocking.

In detail, prices in Northeast China were stable at RMB 1,790-1,810/tonne. Prices in East China fell to RMB 1,720-1,780/tonne. Prices in Central China were stable at RMB 1,730-1,920/tonne. Prices in North China fell to RMB 1,590-1,810/tonne. Prices in South China were stable at RMB 1,800-1,840/tonne. Prices in Northwest China were stable at RMB 1,860-1,910/tonne. Prices in Southwest China were stable at RMB 1,660-1,900/tonne.

Market Information:

September 23: The Guangzhou, Guangdong, market's reference urea delivery price was RMB 1,810-1,830/tonne, with the high end raised from the previous working day.

September 23: The Nanning, Guangxi, market's reference urea delivery price was RMB 1,800-1,810/tonne, unchanged from the previous working day.

September 23: The Shijiazhuang, Hebei, market's reference urea delivery price was RMB 1,750-1,800/tonne, broadly unchanged from the previous working day.

September 23: The Wen'an, Hebei, market's reference urea delivery price was RMB 1,770-1,800/tonne, broadly unchanged from the previous working day.

September 23: The mainstream reference price for medium- and small-granule urea in Shangqiu was RMB 1,740-1,760/tonne, while the reference price for large-granule urea was around RMB 2,040-2,050/tonne.

September 23: The mainstream reference price for medium- and small-granule urea in Jingmen was RMB 1,740-1,750/tonne. Station pickup was around RMB 1,690-1,720/tonne, while the mainstream station pickup price for large-granule urea was RMB 2,020-2,030/tonne.

September 23: The Tieling, Liaoning, market's ex-warehouse/truck-loading price was RMB 1,790-1,810/tonne, unchanged from the previous working day.

September 23: The Heze, Shandong, market's reference urea delivery price was around RMB 1,720-1,730/tonne, down RMB 10/tonne from the previous working day.

September 23: The Linyi, Shandong, market's reference urea delivery price was RMB 1,730-1,750/tonne, down RMB 10/tonne from the previous working day.

September 23: The mainstream price in Xianyang was RMB 1,800-1,820/tonne, unchanged from the previous working day.