September 9 Urea Daily Review: Strong Expectations Cannot Offset Weak Fundamentals, Market Softens in a Narrow Range

Domestic Urea Price Index:
According to Feidoodoo data, the domestic small-granular urea price index stood at 1,803.18 on September 9, down 5.00 from the previous working day, down 0.28% month on month and up 4.22% year on year.

Urea Futures Market:
The UR2701 urea contract opened at 1,827 today, reached a high of 1,828 and a low of 1,791, settled at 1,807 and closed at 1,802. The closing price was down 21 from the previous trading day's settlement price, or down 1.15%. The basis for the January contract in Shandong was -2. Open interest in the January contract declined by 6,451 lots today to 268,281 lots.
The urea futures market moved lower today. Spot prices fluctuated within a narrow range, with more visible softening in some regions. The sustainability of transactions after earlier price increases was constrained, and sentiment gradually weakened as futures lacked new drivers. On the supply side, plant maintenance has marginally reduced daily output, but the medium-term pattern of ample supply has not fundamentally changed and concerns about supply pressure remain. On the demand side, autumn agricultural fertilizer stocking is gradually starting, but actual purchasing is being released slowly. Downstream buyers are mainly replenishing for rigid demand, making it difficult to create sustained upward momentum. Reports of production cuts and shutdowns at compound fertilizer producers in major producing regions have further weakened urea demand support. Port consolidation and export shipments are progressing steadily and have temporarily supported sentiment, but some of these positive expectations have already been priced in. Constraints on total export volumes and profit margins have also reduced the marginal upward driver for futures. Overall, urea futures are expected to remain range-bound in the short term. Upside will depend on the extent of cost increases and demand follow-through, while downside is supported by policy expectations. Attention should focus on the pace of reserve supplies entering the market, the pace of export shipments from ports and marginal changes in industry inventories.

Spot Market Analysis:
The domestic urea spot market mainly fluctuated within a narrow range today. Trading was relatively subdued, new-order follow-through was average, and most producers still had pending orders to deliver. Short-term sales pressure was therefore limited and ex-factory quotations were broadly stable, although prices in some regions softened slightly as transaction sentiment weakened. From a supply-demand perspective, market supply remains relatively ample. Earlier destocking has already been reflected in prices, while downstream procurement slowed after prices increased. Agricultural demand is in an intermittent period, industrial buyers are maintaining low inventory strategies, actual consumption capacity is limited and the market lacks strong support from demand.
At present, market pricing is more influenced by sentiment and external news. Repeated export-related market rumors have continued to affect expectations, improving bullish sentiment and prompting some traders to make moderate replenishment purchases. Overall, the market is expected to continue a marginally firmer consolidation pattern in the short term, but the extent of gains will be constrained by the loose supply-demand balance. Market direction will depend on the subsequent start of demand and the implementation of market news.
Overall, the domestic urea spot market remains stable to firmer. On the supply side, industry operating rates remain high, overall cargo availability is ample, and producer inventory digestion has accelerated, although its sustainability remains to be assessed. Concentrated plant maintenance has marginally reduced daily output from high levels, while port consolidation has diverted part of the domestic-trade supply, easing short-term supply pressure to some extent. On the demand side, compound fertilizer producers and downstream industrial users remain constrained by high finished-product inventories and continue to operate at low rates. Procurement is mainly limited to small rigid-demand orders, with limited transaction volumes and insufficient substantive support for the market. Fundamentals remain in a stalemate between bullish expectations and bearish realities. Upward drivers mainly stem from higher valuations due to stronger coal prices and sentiment support from continuing export news, but a substantive reversal of the loose supply-demand balance will require clearer fundamental changes. Attention should focus on the implementation pace of export policies, the realization of maintenance-related output cuts and marginal changes brought by the start of autumn fertilizer stocking.
Specifically, prices in Northeast China were stable at 1,790-1,810 yuan/tonne. Prices in East China fell to 1,790-1,830 yuan/tonne. Prices in Central China fell to 1,770-1,920 yuan/tonne. Prices in North China fell to 1,620-1,890 yuan/tonne. Prices in South China fell to 1,800-1,860 yuan/tonne. Prices in Northwest China were stable at 1,860-1,910 yuan/tonne. Prices in Southwest China fell to 1,660-1,900 yuan/tonne.

Market Updates:
September 9: The reference delivered urea price in Guangzhou, Guangdong was 1,850-1,860 yuan/tonne, with the high end up from the previous working day.
September 9: The reference delivered urea price in Nanning, Guangxi was 1,800-1,810 yuan/tonne, down from the previous working day.
September 9: The reference delivered urea price in Shijiazhuang, Hebei was 1,780-1,900 yuan/tonne, broadly unchanged from the previous working day.
September 9: The reference delivered urea price in Wen'an, Hebei was 1,780-1,820 yuan/tonne, broadly unchanged from the previous working day.
September 9: The mainstream reference price for small- and medium-granular urea in Shangqiu was 1,790-1,830 yuan/tonne, while large-granular urea was quoted at around 1,880-1,900 yuan/tonne.
September 9: The mainstream reference price for small- and medium-granular urea in Jingmen was 1,790-1,800 yuan/tonne. Station self-pickup prices were temporarily referenced at around 1,740-1,750 yuan/tonne, while large-granular urea station self-pickup prices were mainly 1,880-1,920 yuan/tonne.
September 9: The ex-warehouse/truck-lift reference price in Tieling, Liaoning was 1,790-1,810 yuan/tonne, unchanged from the previous working day.
September 9: The reference delivered urea price in Heze, Shandong was around 1,800-1,810 yuan/tonne, down 20 yuan/tonne from the previous working day.
September 9: The reference delivered urea price in Linyi, Shandong was 1,800 yuan/tonne, down 20 yuan/tonne from the previous working day.
September 9: The mainstream reference price in Xianyang was 1,800-1,820 yuan/tonne, unchanged from the previous working day.