Urea Daily Review, July 27: Stalemate and Wait-and-See Sentiment, Urea Market Awaits Directional Guidance

Domestic Urea Price Index:

According to FDD data calculations, on July 27, the urea small-granule price index was 1,825.45, flat from the previous working day, with a month-on-month increase of 0.00% and a year-on-year increase of 0.14%.

Urea Futures Market:

Today, the opening price of the urea UR2609 contract was 1,742; the highest price was 1,757; the lowest price was 1,739; the settlement price was 1,749; and the closing price was 1,756. The closing price was down 3 from the previous trading day’s settlement price, a decrease of 0.17%. The basis for the 09 contract in Shandong was 1. Today, open interest in the 09 contract decreased by 2,144 lots, with current holdings at 256,932 lots.

Today, urea futures opened lower and then rebounded within a narrow range. Over the weekend, Middle East geopolitical tensions eased somewhat, leading the sector to open lower in tandem, but this did not break expectations for improved exports. In addition, the recovery in weekend spot prices provided some support to the futures market.

From the reality side, domestic urea daily output remains high, and supply pressure has not eased. Both industrial and agricultural demand remain weak. After spot prices were raised slightly, new order transactions at enterprises weakened, and market trading activity declined. Meanwhile, factory inventories continue to accumulate and remain at high levels. The prominent supply-demand contradiction is the main pressure currently weighing on the market.

From the expectations side, the futures market gained some support after earlier declines. In addition, market rumors regarding a second batch of export quotas heated up export expectations, providing sentiment support and helping prices stop falling.

Overall, the tug of war around export expectations will remain the core variable for the market in the near term. However, the probability of large-scale export volume in the short term is not high, and any new quotas still need time to be verified. The sustainability of market optimism remains to be assessed. Follow-up attention should focus on export policy changes, the pace of autumn fertilizer stocking, and trading opportunities brought by raw material cost fluctuations.

Spot Market Analysis:

Today, China’s domestic urea spot market operated steadily with a firm bias. Supported by export expectations, urea prices rose slightly over the weekend. However, domestic terminal demand remains generally average and is insufficient to continuously drive the market higher. After the slight price increase, market trading activity declined noticeably. Today, most enterprises kept quotations stable, and market prices showed no significant changes.

Overall, the supply side continues to operate at high levels. Industry plant operating rates remain relatively high, overall supply is ample, 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 agricultural fertilizer demand and export policy trends.

In summary, the current domestic urea spot market is generally stable. 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, 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, while expectations for later export improvement support market stabilization. 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 1,740-1,800/tonne. Prices in Central China rose to RMB 1,750-1,900/tonne. Prices in North China were stable at RMB 1,650-1,880/tonne. Prices in South China were stable at RMB 1,810-1,900/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 27: In the Guangzhou, Guangdong market, the reference receiving price for urea was RMB 1,860-1,880/tonne, unchanged from the previous working day.

July 27: In the Nanning, Guangxi market, the reference receiving price for urea was RMB 1,810-1,820/tonne, unchanged from the previous working day.

July 27: In the Shijiazhuang, Hebei market, the reference receiving price for urea was RMB 1,780-1,800/tonne, up RMB 20/tonne from the previous working day.

July 27: In the Wen’an, Hebei market, the reference receiving price for urea was RMB 1,780-1,800/tonne, up RMB 10/tonne from the previous working day.

July 27: In the Shangqiu market, mainstream reference prices for small and medium granules were RMB 1,760-1,770/tonne, while large granules were around RMB 1,790-1,800/tonne.

July 27: In the Jingmen market, mainstream reference prices for small and medium granules were RMB 1,750-1,760/tonne, station self-pickup was temporarily referenced at around RMB 1,700-1,730/tonne, and mainstream station self-pickup prices for large granules were RMB 1,800-1,810/tonne.

July 27: 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 27: In the Heze, Shandong market, the reference receiving price for urea was around RMB 1,740-1,750/tonne, down RMB 20/tonne from the previous working day.

July 27: In the Linyi, Shandong market, the reference receiving price for urea was RMB 1,750-1,760/tonne, basically unchanged from the previous working day.

July 27: In the Xianyang market, mainstream prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.