Urea Daily Review, July 14: Sentiment Support and Fundamental Pressure Compete, Market Continues Narrow-Range Fluctuations

Domestic Urea Price Index

According to FDD data, on July 14, the small-granule urea price index stood at 1,840.45, down 0.91 from the previous working day, a decrease of 0.05% month-on-month, and down 0.89% year-on-year.

Urea Futures Market

Today, the UR2609 urea futures contract opened at 1,746, with a high of 1,756, a low of 1,738, a settlement price of 1,747, and a closing price of 1,746. The closing price was up 9 from the previous trading day’s settlement price, an increase of 0.52%. The basis for the 09 contract in Shandong was 14. Open interest decreased by 5,088 lots today, with total open interest standing at 279,619 lots.

Today, the urea futures market showed a slightly firmer and volatile trend. Recently, Middle East geopolitical risks have increased, the U.S.-Iran conflict has continued, and news around Strait blockages and paid navigation has supported higher international trade costs. The recovery in international urea prices has boosted domestic market sentiment and export profit margins. At the same time, policy signals again showed signs of support, stabilizing board sentiment. Combined with recent rainfall bringing some recovery in agricultural demand, these factors temporarily supported the market.

However, as the implementation pace of positive factors remains slow and actual export shipment volume is limited, these factors are still unable to fully reverse the current weak fundamental pattern. As a result, upside momentum in futures remains limited, and the market lacks a core driver for sustained gains. In addition, domestic spot demand remains flat and overall market transactions are average, so spot-futures linkage continues to limit the rebound height.

From a fundamentals perspective, supply-side pressure remains prominent. Industry operating loads remain high, and daily output continues to run at elevated levels. Demand-side sentiment has weakened somewhat, with industrial and agricultural demand following up slowly. Enterprise inventories continue to accumulate, and the loose supply pattern has not fundamentally changed.

Overall, urea futures are expected to continue a stalemate pattern in which positive sentiment provides downside support while fundamentals cap upside. The board is likely to maintain narrow-range fluctuations. Going forward, attention should be paid to the progress of summer fertilizer preparation and export policy developments.

Spot Market Analysis

Today, the domestic urea spot market operated weakly with fluctuations. Overall market trading was muted, and the market temporarily remained in a stalemate. At this stage, export-related positive news has landed, and both the market and producers have certain expectations for improvement. However, dragged down by ordinary domestic trade demand, the market is unlikely to strengthen quickly. In the short term, it is likely to maintain a stalemate and volatile trend. Meanwhile, market pressure remains unchanged, prices still have the possibility of loosening and moving lower, and overall price stabilization faces relatively strong resistance.

Overall, the supply side remains at high levels. Industry operating rates are elevated, overall supply is sufficient, and pressure from continued inventory accumulation persists. On the demand side, agricultural demand support remains limited. Terminal procurement is mainly based on phased rigid demand, with no concentrated volume formed, making it difficult to open further upside space. Industrial demand only maintains rigid-demand replenishment, with cautious procurement sentiment and generally light transactions.

In summary, urea market fundamentals are unlikely to improve significantly in the short term. The market is expected to remain stalemated and under pressure, with a relatively high probability of slight price loosening. Without sustained and substantive positive support such as large export orders, overall upside room for market prices remains limited, and the market is likely to continue operating in a weak and volatile pattern. Going forward, attention should be paid to the progress of summer fertilizer preparation and export policy developments.

Overall, the domestic urea spot market is currently operating within a range-bound pattern. On the supply side, industry capacity utilization remains high, daily output stays elevated, and some enterprise maintenance has had limited impact, leaving overall supply pressure relatively heavy. On the demand side, summer fertilizer demand has not yet recovered on a large scale, with only scattered topdressing demand in some regions. Downstream compound fertilizer, panel, melamine and other industrial sectors are operating weakly, with procurement mostly based on rigid demand, resulting in limited overall demand-side support. In terms of inventory, enterprise inventories continue to accumulate, and inventory pressure remains. On the policy side, realization of export-related benefits remains limited. Going forward, attention should be paid to the release of summer fertilizer demand and the impact of export policy changes.

Specifically, prices in Northeast China remained stable at RMB 1,870-1,920/tonne. Prices in East China fell to RMB 1,760-1,830/tonne. Prices in Central China remained stable at RMB 1,760-1,920/tonne. Prices in North China remained stable at RMB 1,650-1,910/tonne. Prices in South China remained stable at RMB 1,840-1,910/tonne. Prices in Northwest China remained stable at RMB 1,860-1,950/tonne. Prices in Southwest China remained stable at RMB 1,680-2,140/tonne.

Market Updates

July 14: The reference receiving price for urea in the Guangzhou, Guangdong market was RMB 1,860-1,870/tonne, flat from the previous working day.

July 14: The reference receiving price for urea in the Nanning, Guangxi market was RMB 1,840-1,850/tonne, down from the previous working day.

July 14: The reference receiving price for urea in the Shijiazhuang, Hebei market was RMB 1,810-1,820/tonne, basically flat from the previous working day.

July 14: The reference receiving price for urea in the Wen’an, Hebei market was RMB 1,800-1,810/tonne, basically flat from the previous working day.

July 14: Today, mainstream references for small- and medium-granule urea in the Shangqiu, Henan market were RMB 1,770-1,780/tonne, while large-granule references were around RMB 1,780-1,790/tonne.

July 14: Today, mainstream references for small- and medium-granule urea in the Jingmen market were RMB 1,760-1,770/tonne. Station self-pickup references were temporarily around RMB 1,730-1,750/tonne, while mainstream large-granule station self-pickup prices were RMB 1,800-1,810/tonne.

July 14: The ex-warehouse/truck pickup price in the Tieling, Liaoning market was RMB 1,880-1,920/tonne, flat from the previous working day.

July 14: The reference receiving price for urea in the Heze, Shandong market was around RMB 1,760-1,770/tonne, basically flat from the previous working day.

July 14: The reference receiving price for urea in the Linyi, Shandong market was RMB 1,760-1,770/tonne, down RMB 10/tonne from the previous working day.

July 14: Mainstream prices in the Xianyang market were RMB 1,840-1,860/tonne, flat from the previous working day.