Urea Daily Review, July 22: Expectations and Reality Compete, Upside in the Urea Market Remains Limited

Domestic Urea Price Index

According to FDD data calculations, on July 22, the urea small-granule price index was 1,821.82, up 1.36 from the previous working day, an increase of 0.07% month on month and a decrease of 0.73% year on year.

Urea Futures Market

Today, the opening price of the urea UR2609 contract was 1,732; the highest price was 1,744; the lowest price was 1,726; the settlement price was 1,737; and the closing price was 1,741. The closing price was up 22 from the previous trading day’s settlement price, an increase of 1.28%. The basis for the 09 contract in Shandong was 19. Today, open interest in the 09 contract decreased by 6,619 lots, with current holdings at 269,920 lots.

Today, urea futures fluctuated slightly with a firm bias. Affected by news of improved exports and expectations of incremental export volume, market sentiment was lifted, while the policy effect helped ease pessimism somewhat.

However, from a fundamental perspective, the “strong supply and weak demand” pattern in urea has not changed materially. On the supply side, industry operating loads remain high, daily output continues to run at elevated levels, and enterprise inventories continued to accumulate this week. On the demand side, overall demand remains weak, while terminal procurement sentiment is cautious, putting clear pressure on the futures market. The loose supply structure has not fundamentally changed.

Overall, the tug of war around export expectations will remain the core variable for the market in the near term, but the probability of large-scale export volume in the short term is not high. The market should not be overly optimistic about export expectations. 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 fluctuated with a firm bias. Export expectations have heated up again, providing some short-term support to the market. However, the trading atmosphere has turned cautious. Traders are mainly watching from the sidelines, and procurement is mostly cautious and wait-and-see.

Enterprises are flexibly adjusting quotations to promote shipments, with slight tentative increases in some regions. However, domestic demand remains weak, supply is still ample, and price rebound momentum is insufficient. Cost-side support still provides a floor, limiting room for a deep decline.

Overall, supply remains high. Industry plant operating rates are at elevated levels, overall cargo availability is sufficient, and enterprise inventories continued to accumulate this week, leaving market pressure in place. On the demand side, agricultural demand support remains 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 in consolidation with a wait-and-see tone. 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 were stable at 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 were stable at 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 22: In the Guangzhou, Guangdong market, the reference receiving price for urea was RMB 1,860-1,870/tonne, up from the previous working day.

July 22: In the Nanning, Guangxi market, the reference receiving price for urea was RMB 1,800-1,810/tonne, unchanged from the previous working day.

July 22: In the Shijiazhuang, Hebei market, the reference receiving price for urea was RMB 1,750-1,790/tonne, basically unchanged from the previous working day.

July 22: 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 22: 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 22: 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 22: 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 22: In the Heze, Shandong market, the reference receiving price for urea was around RMB 1,730-1,740/tonne, up RMB 10/tonne from the previous working day.

July 22: In the Linyi, Shandong market, the reference receiving price for urea was RMB 1,750-1,760/tonne, up RMB 10/tonne from the previous working day.

July 22: In the Xianyang market, mainstream prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.