Urea Daily Review, July 6: News-Driven Support Lifts Futures and Spot Slightly, but Loose Supply-Demand Pattern Remains Hard to Reverse

Domestic Urea Price Index

According to FDD data, on July 6, the small-granule urea price index stood at 1,845.00, up 6.14 from the previous working day, an increase of 0.33% month-on-month, and down 0.02% year-on-year.

Urea Futures Market

Today, the UR2609 urea futures contract opened at 1,720, with a high of 1,743, a low of 1,720, a settlement price of 1,733, and a closing price of 1,738. The closing price was up 13 from the previous trading day’s settlement price, an increase of 0.75%. The basis for the 09 contract in Shandong was 72. Open interest decreased by 11,780 lots today, with total open interest standing at 304,482 lots.

Today, the urea futures market showed a slightly firmer trend after a modest rebound. Over the weekend, market rumors emerged that a symposium of self-regulated urea export enterprises had released signals of relaxed export conditions. Although the association quickly denied the rumor, the marginal effect of policy support still prompted short-side funds to exit proactively to avoid risk. Meanwhile, some low-priced enterprises saw improved new-order transactions over the weekend, supported by partial improvement in agricultural demand. With pending orders providing support, some enterprises slightly raised quotations, and the phased stabilization of the spot market also offered some resonance support to the futures market.

From a fundamentals perspective, supply-side pressure remains unabated. The urea industry operating rate is still at an absolute historical high, daily output remains elevated, and enterprise inventories continue to accumulate. On the demand side, marginal improvement has appeared, but the strength remains limited. Agricultural shipments in mainstream regions have improved somewhat, and low-end transactions have seen some volume, but industrial demand remains mainly based on need-based procurement, with no effective centralized purchasing force yet formed. Overall, the improvement on the demand side is more reflected in phased restocking, and its sustainability remains to be seen.

In summary, current summer fertilizer demand in the urea market shows signs of recovery, but the loose supply-demand pattern is difficult to fundamentally reverse in the short term. High operating rates and high inventories will continue to exert pressure, while the main futures contract remains constrained by off-season expectations, leaving limited upside momentum on the board. Going forward, attention should be paid to the pace of summer fertilizer demand activation and the timing of an inventory inflection point.

Spot Market Analysis

Today, the domestic urea spot market operated on a firmer note. Affected by export-related news, combined with partial follow-up in agricultural demand, some enterprises have seen improved low-price new-order transactions since the weekend. Market sentiment was boosted, and supported by pending orders, quotations moved slightly higher.

However, the market currently lacks strong bullish drivers and is still unable to fundamentally reverse the loose domestic supply-demand pattern. Further price increases face resistance, and the market overall remains in a stalemate and consolidation phase, awaiting further clarity on export policy.

Overall, agricultural demand support remains limited. Terminal procurement is mainly based on phased rigid demand, with no concentrated volume formed, making it difficult to open further upside space. On the supply side, production remains high, industry operating rates are at elevated levels, overall supply is sufficient, and pressure from continued inventory accumulation persists. In terms of industrial demand, compound fertilizer enterprises continue to restock in small volumes as needed, with raw material procurement mainly conducted on a hand-to-mouth basis and no large-scale stockpiling seen.

In summary, the market lacks clear short-term drivers. The core loose supply-demand pattern remains unchanged, and high operating rates together with continued inventory accumulation will continue to weigh on prices. The market is expected to maintain a low-level, narrow-range consolidation trend in the near term. Going forward, attention should be paid to the progress of summer fertilizer preparation and export policy developments.

Overall, the domestic urea spot market is currently operating within a range-bound pattern. On the supply side, industry capacity utilization remains high, daily output stays elevated, and some enterprise maintenance has had limited impact, 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 regions. Downstream compound fertilizer, panel, melamine and other industrial sectors are operating weakly, with procurement mostly based on rigid demand, resulting in limited overall demand-side support. In terms of inventory, enterprise inventories continue to accumulate, and inventory pressure remains. On the policy side, the moderate relaxation of export quotas is only a structural adjustment during the off-season and is unlikely to change the domestic oversupply pattern. Going forward, attention should be paid to export shipment progress, summer topdressing demand release, and fluctuations in coal costs.

Specifically, prices in Northeast China remained stable at RMB 1,870-1,920/tonne. Prices in East China remained stable at RMB 1,780-1,850/tonne. Prices in Central China remained stable at RMB 1,770-1,920/tonne. Prices in North China remained stable at RMB 1,670-1,910/tonne. Prices in South China rose to RMB 1,840-1,930/tonne. Prices in Northwest China rose to RMB 1,800-1,840/tonne. Prices in Southwest China remained stable at RMB 1,700-2,140/tonne.

Market Updates

July 6: The reference receiving price for urea in the Guangzhou, Guangdong market was RMB 1,860-1,870/tonne, up from the previous working day.

July 6: The reference receiving price for urea in the Nanning, Guangxi market was RMB 1,840-1,860/tonne, down from the previous working day.

July 6: The reference receiving price for urea in the Shijiazhuang, Hebei market was RMB 1,830/tonne, basically flat from the previous working day.

July 6: The reference receiving price for urea in the Wen’an, Hebei market was RMB 1,820/tonne, basically flat from the previous working day.

July 6: Mainstream industrial ex-factory prices within the province were around RMB 1,740-1,750/tonne. Today, mainstream references for small- and medium-granule urea in the Shangqiu market were RMB 1,780-1,790/tonne, while large-granule references were around RMB 1,780-1,790/tonne.

July 6: Today, mainstream references for small- and medium-granule urea in the Jingmen market were RMB 1,770-1,780/tonne. Station self-pickup references were temporarily around RMB 1,730-1,750/tonne, while mainstream large-granule station self-pickup prices were RMB 1,800-1,810/tonne.

July 6: The ex-warehouse/truck pickup price in the Tieling, Liaoning market was RMB 1,880-1,920/tonne, flat from the previous working day.

July 6: The reference receiving price for urea in the Heze, Shandong market was around RMB 1,780/tonne, basically flat from the previous working day.

July 6: The reference receiving price for urea in the Linyi, Shandong market was RMB 1,810-1,820/tonne, up RMB 30/tonne from the previous working day.

July 6: Mainstream prices in the Xianyang market were RMB 1,820-1,840/tonne, up from the previous working day.