Urea Daily Review, July 15: High Inventory Pressures Weigh on the Market, Weak Fluctuations Continue

Domestic Urea Price Index

According to FDD data, on July 15, the small-granule urea price index stood at 1,836.36, down 4.09 from the previous working day, a decrease of 0.22% month-on-month, and up 0.04% year-on-year.

Urea Futures Market

Today, the UR2609 urea futures contract opened at 1,742, with a high of 1,747, a low of 1,706, a settlement price of 1,722, and a closing price of 1,713. The closing price was down 34 from the previous trading day’s settlement price, a decrease of 1.95%. The basis for the 09 contract in Shandong was 37. Open interest increased by 21,470 lots today, with total open interest standing at 301,089 lots.

Today, the urea futures market weakened significantly, with a pronounced intraday decline. Recently, geopolitical risks pushed the chemical futures complex higher overall, but urea received limited support from the external market and moved independently weaker, underperforming in an otherwise broadly rising sector.

The core reason for the board’s weakness is the accumulation of multiple fundamental bearish factors. Current industry daily output remains high, market supply is ample, and supply-side pressure remains heavy. Yesterday’s slight increase in orders in mainstream regions only reflected a short-term and local recovery, without sustainability. Agricultural fertilizer demand is gradually weakening, industrial demand recovery is slow, and the overall supply-demand pattern remains loose.

At the same time, enterprise inventories rose sharply month-on-month and hit a new staged high. Poor shipment performance led to continued inventory accumulation, further suppressing the board’s recovery space. Export-side bullish factors have also failed to materialize. Although policy has loosened somewhat and a small number of orders have been concluded, port collection remains slow and actual volumes are insufficient. The earlier export-related bullish hype has continued to cool and cannot offset domestic loose supply-demand pressure.

Overall, urea is currently facing a four-fold bearish pattern of high supply, high inventories, weak domestic demand, and weak exports. The logic behind its relative weakness is solid, and the short-term market is likely to continue fluctuating weakly, with the possibility of repeated downside tests. Going forward, attention should be paid to the pace of summer fertilizer preparation and export policy developments.

Spot Market Analysis

Today, the domestic urea spot market operated weakly with fluctuations. Ex-factory quotations in many regions were stable to slightly softer, and trading activity remained generally light.

Supply-side pressure remains prominent. Overall industry operating rates remain high, daily output stays elevated, and market supply is abundant. Factory inventories continued to accumulate sharply this week, shipment pressure increased continuously, and most enterprises focused on lowering prices to promote transactions and quickly destocking.

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 1,750-1,810/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 fell to RMB 1,830-1,900/tonne. Prices in Northwest China remained stable at RMB 1,860-1,950/tonne. Prices in Southwest China remained stable at RMB 1,680-2,100/tonne.

Market Updates

July 15: 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 15: The reference receiving price for urea in the Nanning, Guangxi market was RMB 1,830-1,840/tonne, down from the previous working day.

July 15: The reference receiving price for urea in the Shijiazhuang, Hebei market was RMB 1,800-1,820/tonne, basically flat from the previous working day.

July 15: The reference receiving price for urea in the Wen’an, Hebei market was RMB 1,790-1,810/tonne, basically flat from the previous working day.

July 15: Mainstream references for small- and medium-granule urea in the Shangqiu market were RMB 1,770-1,780/tonne, while large-granule references were around RMB 1,780-1,790/tonne.

July 15: Today, mainstream references for small-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 15: The ex-warehouse/truck pickup price in the Tieling, Liaoning market was RMB 1,860-1,880/tonne, down from the previous working day.

July 15: The reference receiving price for urea in the Heze, Shandong market was around RMB 1,750-1,760/tonne, down RMB 20/tonne from the previous working day.

July 15: The reference receiving price for urea in the Linyi, Shandong market was RMB 1,750-1,760/tonne, down RMB 10/tonne from the previous working day.

July 15: Mainstream prices in the Xianyang market were RMB 1,840-1,860/tonne, flat from the previous working day.