Urea Daily Review, July 20: International Sentiment Offers Limited Support, Fundamentals Still Dominate the Weak Pattern

Domestic Urea Price Index

According to FDD data calculations, on July 20, the urea small-granule price index was 1,822.27, down 4.09 from the previous working day, a decrease of 0.22% month on month and an increase of 0.11% year on year.

Urea Futures Market

Today, the opening price of the urea UR2609 contract was 1,693; the highest price was 1,731; the lowest price was 1,692; the settlement price was 1,717; and the closing price was 1,720. The closing price was up 36 from the previous trading day’s settlement price, an increase of 2.14%. The basis for the 09 contract in Shandong was 30. Today, open interest in the 09 contract decreased by 38,303 lots, with current holdings at 291,007 lots.

Today, urea futures rebounded and then fluctuated with a firm bias. Recently, the escalation of the U.S.-Iran conflict, obstruction to passage through the Strait of Hormuz, and stronger expectations of tighter international supply have driven continued overseas price rebounds, providing a temporary boost to domestic sentiment.

In addition, export policy showed marginal adjustment: guidance prices are now dynamically adjusted, restrictions have eased somewhat, export advantages have opened up to a degree, and the market is trading on expectations of improved exports. On the spot side, the recent rebound in international prices has increased export orders month on month, but the volume is still insufficient to effectively ease domestic supply-demand pressure, leaving market drivers relatively weak.

Overall, urea today was still shaped by weak fundamentals and external sentiment. Strong supply, weak demand, high inventory, and insufficient demand support continue to weigh on the market, and the price center still tends to move lower. Although energy-chemical market resonance from geopolitical conflict and marginal export policy changes have provided a temporary rebound driver, the impact remains relatively limited.

In the short term, futures are still expected to follow spot fundamentals and are likely to maintain low-level, weak fluctuations. Follow-up attention should focus on export policy changes, the pace of autumn fertilizer stocking, and trading opportunities created by raw material cost fluctuations.

Spot Market Analysis

Today, China’s domestic urea spot market operated weakly. Over the weekend, transaction prices in mainstream regions declined. Current mainstream small- and medium-granule market prices have fallen to a level where they are stabilizing, and the pace of continued short-term decline has temporarily slowed, with the market’s downward trend gradually moderating.

Influenced by the rise and surge in international urea prices, domestic export orders have increased, but their pull on the market is not yet strong and they are temporarily unable to effectively ease domestic spot supply-demand pressure.

Overall, supply remains high. Industry plant operating rates are at elevated levels, overall cargo availability is sufficient, and pressure from continued inventory accumulation at producers remains. On the demand side, agricultural demand support is still limited. Terminal procurement is mainly phased rigid-demand follow-up and has not yet formed concentrated volume, making it difficult to open upside room. The industrial side only maintains rigid-demand replenishment, with cautious purchasing sentiment and light overall transactions.

Overall, the fundamentals of the urea market are unlikely to improve significantly in the short term. The market remains under pressure in a stalemate, and prices are more likely to loosen slightly. Without sustained and substantive positive support such as large export orders, overall upside room for market prices is limited, and the market is likely to continue fluctuating weakly. Follow-up attention should focus on the progress of summer fertilizer stocking and export policy trends.

In summary, the current domestic urea spot market is generally operating weakly. On the supply side, industry capacity utilization remains high, daily output stays elevated, and the impact of maintenance at some enterprises is limited, 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 areas. Downstream industrial sectors such as compound fertilizer, panel boards, and melamine are operating weakly, procurement is mostly for rigid demand, and overall demand-side driving force is limited. In terms of inventory, enterprise inventories continue to accumulate, and inventory pressure remains. At the policy level, export benefits have been realized only to a limited extent. Going forward, attention should focus on the pace of autumn fertilizer stocking and the impact of export policy changes.

By region, prices in Northeast China were stable at RMB 1,860-1,880/tonne. Prices in East China fell to RMB 1,740-1,790/tonne. Prices in Central China fell to RMB 1,740-1,900/tonne. Prices in North China were stable at RMB 1,650-1,880/tonne. Prices in South China fell to RMB 1,800-1,900/tonne. Prices in Northwest China were stable at RMB 1,860-1,950/tonne. Prices in Southwest China were stable at RMB 1,680-2,080/tonne.

Market Updates

July 20: In the Guangzhou, Guangdong market, the reference receiving price for urea was RMB 1,850-1,860/tonne, unchanged from the previous working day.

July 20: In the Nanning, Guangxi market, the reference receiving price for urea was RMB 1,800-1,820/tonne, down from the previous working day.

July 20: In the Shijiazhuang, Hebei market, the reference receiving price for urea was RMB 1,750-1,790/tonne, down RMB 10/tonne from the previous working day.

July 20: In the Wen’an, Hebei market, the reference receiving price for urea was RMB 1,750-1,790/tonne, basically unchanged from the previous working day.

July 20: In the Shangqiu market, mainstream reference prices for small and medium granules were RMB 1,750-1,760/tonne, while large granules were around RMB 1,780-1,790/tonne.

July 20: In the Jingmen market, mainstream reference prices for small and medium granules were RMB 1,760-1,770/tonne. Station self-pickup was temporarily referenced at around RMB 1,730-1,750/tonne, while mainstream station self-pickup prices for large granules were RMB 1,800-1,810/tonne.

July 20: In the Tieling, Liaoning market, ex-warehouse/truck pickup prices were referenced at RMB 1,860-1,880/tonne, unchanged from the previous working day.

July 20: In the Heze, Shandong market, the reference receiving price for urea was around RMB 1,740-1,750/tonne, down RMB 10/tonne from the previous working day.

July 20: In the Linyi, Shandong market, the reference receiving price for urea was RMB 1,750/tonne, basically unchanged from the previous working day.

July 20: In the Xianyang market, mainstream prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.