Urea Daily Review: Daily Production Remains Low, Limited Downward Price Movement

June 12, 2024, 9:21 AM

Feidoodoo

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Guide

Highlights at a glance

The domestic urea market remains weak, with prices continuing to decline amid sluggish demand and low sentiment. On January 9, the urea small granule price index stood at 2372.86, down 0.65% from the previous day and 14.78% year-on-year. The UR405 futures contract closed at 2075, down 0.72%, with a notable drop in open interest. Spot prices declined across most regions, including North, East, South, and Central China, while Northeast and Northwest remained stable. Supply remains tight as daily production stays low, though gradual recovery is expected with gas-based plant restarts later this month. Downstream demand is limited, with agricultural buyers adopting just-in-time restocking and compound fertilizer plants delaying purchases. Despite ongoing price corrections, the pace of decline is restrained by constrained output. Overall, urea prices are expected to remain largely stable with minor fluctuations in the near term.

Domestic Urea Price Index:

According to Feidoodoo data, on January 9th, the urea small granule price index was 2372.86, down by 15.45 from the previous day, a 0.65% decrease day-on-day, and a 14.78% decrease year-on-year.

Urea Futures Market:

Today, the urea UR405 contract opened in 2048, reaching a high of 2083 and a low of 2041. The settlement price was 2062, and the closing price was 2075. The closing price decreased by 15 from the previous trading day, down 0.72%, with a daily fluctuation range of 2041-2083. The Shandong region's basis for the 05 contract was 215. The 05 contract decreased its positions by 12,901 hands today, with a total of 160,400 hands held.

Spot Market Analysis:

Today, the domestic urea market prices continued their downward trend, with a still sluggish trading atmosphere. However, the decrease was small due to the slow recovery of supply.

Specifically, prices in the Northeast region were stable at 2380-2420 yuan/ton. Prices in the North China region fell to 2120-2420 yuan/ton. Prices in the East China region dropped to 2290-2350 yuan/ton. Prices in the South China region decreased to 2430-2470 yuan/ton. Prices for small and medium granules in the Central China region dropped to 2250-2450 yuan/ton, and large granules fell to 2440-2480 yuan/ton. Prices in the Northwest region remained stable at 2350-2360 yuan/ton. Prices in the Southwest region fell to 2300-2800 yuan/ton.

Market Forecast:

On the factory side, most manufacturers still have a moderate amount of pending orders. The current quotes are stable, trending downwards, with tight supplies. The market is normal, maintaining a case-by-case basis. In the market, the Indian tender news has exacerbated the concern for the domestic market, leading to a weaker industry operation and low market sentiment, with a continued lackluster trading atmosphere. Regarding supply, the industry's daily production remains at a lower level, with no signs of increased startup in the short term. With the gradual startup of gas-head enterprises in the middle and latter part of the month, daily production is expected to recover gradually. On the demand side, agricultural needs are mostly just-in-time phased restocking, with limited sustainability; the startup recovery of downstream compound fertilizer factories remains slow, continuing a wait-and-see approach for restocking.

Overall, as urea enterprises execute pending orders, prices continue to decline. However, due to the current low level of daily production, the downward movement in prices is limited. It is expected that in the short term, urea market prices will continue to be mostly stable with minor adjustments.

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