Urea Daily Review: Expectation of Production Recovery, Market Atmosphere Remains Stagnant

Domestic Urea Price Index:

According to Feidoodoo data calculations, on January 11th, the urea small granule price index was 2353.00, down 13.82 from yesterday, a 0.58% decrease day-on-day, and a 15.40% decrease year-on-year.

Urea Futures Market:

Today, the urea UR405 contract opened in 2054, with a high of 2083 and a low of 2025. The settlement price was 2055, and the closing price was 2068. The closing price decreased by 1 from the previous trading day, down 0.05%, with a daily fluctuation range of 2025-2083. The Shandong region's basis for the 05 contract was 202. The 05 contract increased its positions by 6059 hands today, with a total of 169,200 hands held.

Spot Market Analysis:

Today, the domestic urea market prices continued their weak downward trend. Recently, agricultural restocking has slowed down, and market quotations are constantly exploring lower, continuing a wait-and-see atmosphere.

Specifically, prices in the Northeast region fell to 2360-2420 yuan/ton. Prices in the North China region dropped to 2090-2420 yuan/ton. Prices in the East China region decreased to 2260-2320 yuan/ton. Prices in the South China region fell to 2410-2460 yuan/ton. Prices for small and medium granules in the Central China region dropped to 2240-2450 yuan/ton, and large granules fell to 2390-2480 yuan/ton. Prices in the Northwest region fell to 2250-2260 yuan/ton. Prices in the Southwest region remained stable at 2300-2800 yuan/ton.

Market Forecast:

On the factory side, urea factories are starting to process orders for the Spring Festival period. The current factory quotations are mostly adjusted downwards, with new orders following suit in a moderate and limited manner. Although enterprise inventories have declined, market prices continue to explore lower. In the market, despite the emergence of low-end urea prices, the overall trading atmosphere remains bearish, and transactions continue to be in a stagnant state. On the supply side, the current industry supply remains low, with the operating rate continuing to decline and daily production operating at low levels. In the middle and latter part of this month, previously shut-down gas-head units will gradually restart, leading to a gradual increase in daily production, and putting pressure on the upward movement of urea prices. On the demand side, agricultural needs continue with just-in-time phased restocking, which is limited in sustainability and unlikely to benefit the market significantly; downstream factories are cautious in restocking, with just-in-time following and a predominant wait-and-see sentiment.

Overall, the current urea market is operating weakly, with an overall atmosphere of stagnation. As shut-down units gradually restart, it is expected that in the short term, urea market prices will continue to be mostly stable with minor decreases.