Urea Daily Review, July 28: Stalemate and Consolidation, Awaiting a Breakthrough

Domestic Urea Price Index:

According to FDD data calculations, on July 28, the urea small-granule price index was 1,824.09, down 1.36 from the previous working day, a decrease of 0.07% month on month and an increase of 0.61% year on year.

Urea Futures Market:

Today, the opening price of the urea UR2609 contract was 1,746; the highest price was 1,747; the lowest price was 1,722; the settlement price was 1,734; and the closing price was 1,740. The closing price was down 9 from the previous trading day’s settlement price, a decrease of 0.51%. The basis for the 09 contract in Shandong was -9. Today, open interest in the 09 contract decreased by 6,781 lots, with current holdings at 250,151 lots.

Today, urea futures showed narrow-range weak fluctuations, generally following the weaker sentiment in the broader commodity market. Declines in related products further weighed on the trading atmosphere in the urea market. In addition, in some spot market regions, quotations were lowered again after transactions cooled, creating some pressure on futures pricing.

From the reality side, domestic urea daily output remains high, and supply pressure continues to be released. Both industrial and agricultural demand appear weak, new spot orders at enterprises are scarce, market trading activity is low, and the stalemate is obvious. Meanwhile, factory inventories continue to accumulate and remain at high levels. The increasingly prominent supply-demand contradiction is the core factor currently weighing on the futures market.

On the expectations side, expectations for improved exports still provide some support to market sentiment. Strong international urea prices, together with rumors of a second batch of export quotas, provide a degree of bottom support to the futures market. However, the probability of large-scale export volume in the short term remains low, and the actual effect of any new quota implementation still needs time to be verified.

Overall, the tug of war around export expectations will remain the core theme in near-term market trading. Whether optimism can continue to build will still depend on the pace of policy implementation and actual export progress. Follow-up attention should focus on export policy changes, the pace of autumn fertilizer stocking, and phased trading opportunities brought by raw material cost fluctuations.

Spot Market Analysis:

Today, China’s domestic urea spot market operated in a weak stalemate. New order transactions at some enterprises were scarce today, and the market trading atmosphere was relatively light. Earlier rumors of increased export quotas briefly lifted market sentiment, but the positive effect lasted only a short time, triggering only a short-lived pulse-style move and failing to form sustained upward momentum. As the impact of news faded, the market focus returned to a weak balance dominated by supply-demand fundamentals.

Overall, the supply side continues to operate at high levels. Industry plant operating rates remain relatively high, overall supply is ample, and enterprise inventory pressure remains. On the demand side, agricultural topdressing demand shows clear regional divergence and has not formed concentrated procurement support, 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 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 28: In the Guangzhou, Guangdong market, the reference receiving price for urea was RMB 1,860-1,870/tonne, down from the previous working day’s high-end price.

July 28: 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 28: In the Shijiazhuang, Hebei market, the reference receiving price for urea was RMB 1,780-1,800/tonne, basically unchanged from the previous working day.

July 28: In the Wen’an, Hebei market, the reference receiving price for urea was RMB 1,780-1,800/tonne, basically unchanged from the previous working day.

July 28: 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 28: 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 28: 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 28: In the Heze, Shandong market, the reference receiving price for urea was around RMB 1,740-1,750/tonne, basically unchanged from the previous working day.

July 28: In the Linyi, Shandong market, the reference receiving price for urea was RMB 1,750-1,760/tonne, down RMB 10/tonne from the previous working day.

July 28: In the Xianyang market, mainstream prices were referenced at RMB 1,840-1,860/tonne, unchanged from the previous working day.