Urea Daily Review: High Daily Production Maintains, Market Prices Weakly Adjust

Domestic Urea Price Index:

According to Feidoodoo data, the urea small particle price index on April 1 stood at 2157.09, a decrease of 18.05 from the previous Friday, representing a 0.83% drop week-over-week and a 21.37% fall year-over-year.

Urea Futures Market:

Today, the UR409 urea contract opened in 1851, with a high of 1876, a low of 1818, a settlement price of 1844, and a closing price of 1873. This closing price marks a 7-point increase from the previous trading day's settlement, a 0.38% rise, with fluctuations ranging from 1818 to 1876 throughout the day. The May contract in the Shandong area had a basis of 227; there was an increase of 19699 contracts in open interest for the May contract, reaching a total of 17.11 contracts held.

Spot Market Analysis:

Today, domestic urea market prices continued to decrease, with supply remaining at a high level and a cautious follow-up mentality from the downstream, leading to a weak market performance.

Specifically, prices in the Northeast dropped to 2100-2210 RMB/ton. In the East, prices fell to 2070-2140 RMB/ton. Central China saw small and large particle prices drop to 2090-2320 RMB/ton and 2100-2250 RMB/ton, respectively. Prices in the North dropped to 1930-2130 RMB/ton. In the South, prices decreased to 2210-2290 RMB/ton. The Northwest region saw a decline to 2090-2100 RMB/ton. Prices in the Southwest remained stable at 2100-2450 RMB/ton.

Factory Perspective:

After initially lowering prices to attract orders, resulting in a slight inventory decrease, factories are now fulfilling pre-received orders, with some continuing to lower prices to attract business. However, shipments are still under pressure. Market-wise, the level of trading activity has decreased compared to earlier periods, with no significant improvement in transactions, mainly focusing on lower-end sales. The market lacks substantive positive support for price increases, with a cautious and pessimistic sentiment among operators. Supply-wise, with the gradual resumption of previously shut-down units, daily production continues at a high level, maintaining a relaxed supply state. From a demand perspective, the agricultural sector is experiencing a minor lull, with a phased weakening in demand; industrial downstream factories maintain minimal on-demand restocking, with a pessimistic sentiment, offering limited support for prices.

Overall Outlook:

The current urea market is characterized by a weak supply-demand relationship. Given the high daily production, the market is more prone to price drops than increases, with prices expected to continue downward adjustments in the short term.