Urea Daily Review: Factory Prices Continue to Decline, Market Transactions Remain Weak

Domestic Urea Price Index:

According to Feidoodoo data calculations, on March 18th, the urea granule price index stood at 2299.68, a decrease of 17.86 from last Friday, representing a week-on-week drop of 0.77% and a year-on-year decline of 17.27%.

Urea Futures Market:

Today, the opening price for urea UR405 contracts was 2096, with the highest price at 2096, the lowest at 2019, the settlement price at 2049, and the closing price at 2029. The closing price decreased by 94 compared to the previous trading day, down 4.43%, with the daily fluctuation range between 2019-2096. The basis in the Shandong area for May contracts was 211; May contracts saw an increase of 8158 positions today, with 184496 positions held so far.

Spot Market Analysis:

Today, domestic urea market prices continued to fall, with manufacturers lowering their quotations and downstream demand following slowly, resulting in few transactions in the market.

Specifically, prices in the Northeast region fell to 2270-2330 yuan/ton. Prices in North China fell to 2090-2380 yuan/ton. Prices in East China fell to 2230-2280 yuan/ton. Prices in South China fell to 2340-2380 yuan/ton. Prices for medium and small granules in Central China fell to 2210-2380 yuan/ton, while prices for large granules fell to 2280-2350 yuan/ton. Prices in the Northwest region remained stable at 2270-2280 yuan/ton. Prices in the Southwest region remained stable at 2280-2600 yuan/ton.

Future Market Prediction:

From the factory side, most plants’ pre-orders are maintained for around a week. The current factory ex-factory quotations continue to decline, and actual market transactions are weak, indicating a bearish market adjustment. From the market perspective, the overall transaction atmosphere is depressed, with traders lacking confidence and the market mainly in a stalemate. In terms of supply, production has increased as plants previously under maintenance resumed operation, leading to emerging supply pressures. On the demand side, demand is slowly progressing, with downstream buyers maintaining a cautious wait-and-see approach, opting for purchases when prices are low. Internationally, India has announced a new round of urea import tenders, with the bid opening scheduled for the 27th of this month and the shipping period extending until May 20th. Currently, strict export policy controls make it challenging for domestic suppliers to participate in this round of bidding to India.

In summary, the continuous decline in factory quotations for urea and the weak transaction atmosphere in the market, combined with the difficulty in finding support on the demand side, suggests that the urea market prices will likely continue their bearish adjustment in the short term.