September 28 Urea Daily Review: Pre-Holiday Order-Taking Bargaining Continues; Market Consolidates in a Narrow Range

Domestic Urea Price Index:

According to FDD data, the small-granular urea price index was 1,786.92 on September 28, up 4.09 from the previous working day, up 0.23% month on month and 6.39% year on year.

Futures Market Analysis:

The urea UR2701 contract opened at 1,757, reached a high of 1,758, hit a low of 1,745, settled at 1,750 and closed at 1,752. The closing price was 11 lower than the previous trading day's settlement price, down 0.62% from the previous trading day. The basis for the January contract in Shandong was +18. Open interest in the January contract decreased by 1,270 lots today, leaving total open interest at 253,912 lots.

Urea futures were volatile and slightly weaker today. With the National Day holiday approaching, risk aversion among market participants has increased somewhat, and the futures market continued to trade against the spot-market fundamentals. Expectations of exports arising from India's latest tender provided temporary psychological support, but the positive factor remained largely sentiment-driven and did not effectively push the futures market through the upside. Spot quotations softened ahead of the holiday. After some producers lowered their prices, orders began to recover, and signs that spot prices had stopped falling provided some downside support for futures. However, actual downstream demand has not improved significantly. Agricultural fertilizer demand is currently in a seasonal gap, while industrial buyers remain cautious. Overall fundamentals have not materially improved. On balance, urea futures remain caught between expectations of export-related support and weak underlying fundamentals. Conditions are not yet in place for a sustained trend, and the market is likely to continue consolidating within a narrow range. Market participants will need to keep tracking the outcome of India's tender, improvements in spot-market trading and the pace at which autumn fertilizer demand begins to emerge.

Spot Market Analysis:

The domestic urea spot market continued to consolidate within a narrow range today. As the National Day holiday approaches, some producers in major regions still face an order shortfall, while shipping pressure has increased and quotations have softened. After prices declined, downstream buyers showed a stronger willingness to replenish inventories on a needs basis at lower prices. Trading of low-priced cargoes improved from the previous period, and some producers received additional pending-delivery orders. Quotations consequently stopped falling and stabilized, while a few producers with stronger order intake tentatively raised prices slightly. However, the psychological boost from India's latest tender was relatively limited and did not generate any substantial market momentum. The stalemate between bullish and bearish factors continued. In terms of supply and demand, overall supply remains relatively ample. On the demand side, large-scale stocking for autumn agricultural fertilizer has not yet begun, operating rates in the compound-fertilizer and downstream industrial sectors have improved only marginally, and the release of real demand remains weak. Overall, the urea market is likely to continue consolidating in the short term. Mainstream quotations should remain broadly stable, while individual producers may make flexible, minor adjustments depending on their order intake and inventory levels. The main factors to monitor are the implementation progress of India's tender and the release of pre-holiday replenishment demand.

Overall, the domestic urea spot market is currently undergoing a weak consolidation. On the supply side, previously idled units undergoing maintenance are gradually returning to operation, lifting daily industry output and gradually increasing supply pressure. Overall supply remains relatively ample. On the demand side, although producers are seeking to take orders and ship cargo before the National Day holiday, end-user demand has not improved materially. Downstream buyers continue to purchase only as needed; large-scale stocking for autumn agricultural fertilizer has not yet begun, and operating rates in the compound-fertilizer and industrial sectors have improved only marginally. The release of real demand remains weak. The market is currently balancing cost support and the diversion of supply into exports against pressure from ample supply and demand. Prices may still soften in the short term, but the room for a sharp decline is limited. If prices fall to low levels, this could trigger more buying at lower prices. The main factors to monitor are the implementation progress of India's tender and the release of overall pre-holiday replenishment demand.

By region, prices in Northeast China were stable at RMB 1,790-1,810 per tonne. Prices in East China rose to RMB 1,730-1,790 per tonne. Prices in Central China were stable at RMB 1,730-1,920 per tonne. Prices in North China rose to RMB 1,600-1,820 per tonne. Prices in South China fell to RMB 1,800-1,840 per tonne. Prices in Northwest China were stable at RMB 1,860-1,910 per tonne. Prices in Southwest China were stable at RMB 1,660-1,900 per tonne.

Market Outlook:

September 28: The reference delivered price for urea in Guangzhou, Guangdong, was RMB 1,820-1,840 per tonne, unchanged from the previous working day.

September 28: The reference delivered price for urea in Nanning, Guangxi, was RMB 1,800-1,810 per tonne, lower than on the previous working day.

September 28: The reference delivered price for urea in Shijiazhuang, Hebei, was RMB 1,750-1,800 per tonne, broadly unchanged from the previous working day.

September 28: The reference delivered price for urea in Wen'an, Hebei, was RMB 1,780-1,800 per tonne, up RMB 10 per tonne from the previous working day.

September 28: The mainstream reference price for small- and medium-granular urea in Shangqiu was RMB 1,730-1,750 per tonne, while the reference price for large-granular urea was around RMB 2,040-2,050 per tonne.

September 28: The mainstream reference price for small- and medium-granular urea in Jingmen was RMB 1,740-1,750 per tonne. The temporary reference price for self-pickup at the rail terminal was around RMB 1,690-1,720 per tonne, while the mainstream price for large-granular urea picked up at the rail terminal was RMB 2,020-2,030 per tonne.

September 28: The ex-warehouse/truck-pickup reference price in Tieling, Liaoning, was RMB 1,790-1,810 per tonne, unchanged from the previous working day.

September 28: The reference delivered price for urea in Heze, Shandong, was around RMB 1,730-1,740 per tonne, broadly unchanged from the previous working day.

September 28: The reference delivered price for urea in Linyi, Shandong, was RMB 1,770-1,780 per tonne, up RMB 20 per tonne from the previous working day.

September 28: The mainstream reference price in Xianyang was RMB 1,800-1,820 per tonne, unchanged from the previous working day.