Urea Daily Review, July 21: Insufficient Fundamental Support, Market Remains Under Pressure in a Stalemate

Domestic Urea Price Index

According to FDD data calculations, on July 21, the urea small-granule price index was 1,820.45, down 1.82 from the previous working day, a decrease of 0.10% month on month and a decrease of 0.63% year on year.

Urea Futures Market

Today, the opening price of the urea UR2609 contract was 1,726; the highest price was 1,728; the lowest price was 1,710; the settlement price was 1,719; and the closing price was 1,725. The closing price was up 8 from the previous trading day’s settlement price, an increase of 0.47%. The basis for the 09 contract in Shandong was 25. Today, open interest in the 09 contract decreased by 14,468 lots, with current holdings at 276,539 lots.

Today, urea futures dipped slightly before recovering. Driven by improved low-end spot transactions yesterday, the futures market saw a phased repair rebound. However, follow-through was clearly insufficient today, and the market moved lower. In the afternoon, prices recovered somewhat on rumors of incremental exports, but given the unclear actual situation, sentiment repair remained restrained.

The core pattern of “strong supply and weak demand” in the urea market has not changed materially. Supply remains high, while overall domestic demand is weak. Terminal procurement sentiment is cautious, putting clear pressure on the futures market. At the same time, repeated fluctuations in macro and commodity market sentiment further weakened rebound momentum, and the market gradually returned to a rangebound consolidation pattern.

Overall, futures and spot trends remain closely linked, while trading sentiment has turned cautious. Both upside and downside room are constrained, and the market is expected to remain in a stalemate with volatile consolidation in the short term.

Looking ahead, urea futures are likely to continue fluctuating in a low range with weak consolidation. The loose supply-demand fundamentals are unlikely to improve materially in the short term. High-load operation on the supply side is expected to continue, while agricultural off-season demand remains weak and downstream industrial rigid-demand replenishment is slow, making it difficult to form a sustained bullish driver. 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 steadily to weakly. Based on the increase in new orders at low-end prices yesterday, some enterprises raised quotations slightly today. However, demand remains weak, market trading activity is light, and this continues to weigh on spot transactions. New order transactions today were weaker than yesterday, and the market is likely to remain in a stalemate.

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 1,730-1,790/tonne. Prices in Central China were stable at 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 21: 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 21: In the Nanning, Guangxi market, the reference receiving price for urea was RMB 1,800-1,810/tonne, down from the previous working day.

July 21: In the Shijiazhuang, Hebei market, the reference receiving price for urea was RMB 1,750-1,790/tonne, down RMB 20/tonne from the previous working day.

July 21: In the Wen’an, Hebei market, the reference receiving price for urea was RMB 1,750-1,790/tonne, down RMB 20/tonne from the previous working day.

July 21: In the Shangqiu market, mainstream reference prices for small and medium granules were RMB 1,740-1,750/tonne, while large granules were around RMB 1,770-1,780/tonne.

July 21: In the Jingmen market, mainstream reference prices for small and medium granules were RMB 1,740-1,750/tonne. Station self-pickup was temporarily referenced at around RMB 1,700-1,710/tonne, while mainstream station self-pickup prices for large granules were RMB 1,800-1,810/tonne.

July 21: 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 21: In the Heze, Shandong market, the reference receiving price for urea was around RMB 1,730-1,740/tonne, down RMB 10/tonne from the previous working day.

July 21: In the Linyi, Shandong market, the reference receiving price for urea was RMB 1,750/tonne, basically unchanged from the previous working day.

July 21: In the Xianyang market, mainstream prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.