Urea Daily Review, July 7: Export Benefits Remain Unclear, Urea Market Awaits Demand Breakthrough

Domestic Urea Price Index

According to FDD data, on July 7, the small-granule urea price index stood at 1,845.00, up 0.00 from the previous working day, an increase of 0.00% month-on-month, and down 0.15% year-on-year.

Urea Futures Market

Today, the UR2609 urea futures contract opened at 1,732, with a high of 1,752, a low of 1,727, a settlement price of 1,740, and a closing price of 1,744. The closing price was up 11 from the previous trading day’s settlement price, an increase of 0.63%. The basis for the 09 contract in Shandong was 66. Open interest decreased by 16,923 lots today, with total open interest standing at 287,559 lots.

Today, the urea futures market showed a narrow-range, slightly firmer trend, while the overall trading atmosphere remained relatively cautious. The export-related bullish news expected by the market remains unclear, and most participants are staying on the sidelines, with limited willingness to enter the market. Although new-order transactions in the spot market have improved, performance remains average, providing limited driving force for the futures board.

From a fundamentals perspective, supply-side pressure remains unabated. The urea industry operating rate continues to run at historical highs, daily output remains elevated, and enterprise inventories are also accumulating, keeping the supply side loose. On the demand side, signs of marginal improvement have emerged, but the strength remains relatively limited. Agricultural shipments in mainstream regions have improved somewhat, and low-end transactions have increased compared with the previous period, but industrial demand remains mainly based on need-based procurement, with no concentrated restocking force yet formed. Overall, the current demand improvement is more reflected in phased restocking, and its sustainability still needs further verification.

In summary, summer fertilizer demand currently has some expectation of recovery, but the loose supply-demand fundamentals are difficult to fundamentally reverse in the short term. High operating rates and high inventories will continue to weigh on the market, while the main futures contract remains constrained by off-season expectations, leaving relatively limited upside momentum. Going forward, close attention should be paid to the pace of summer fertilizer demand and the impact of expectation changes such as export policy.

Spot Market Analysis

Today, the domestic urea spot market remained stable. The export-related bullish signals expected by the market are still unclear, and the sentiment boost from previous meeting-related news is gradually weakening. Downstream procurement has returned to caution, with buyers mainly following up in small volumes as needed. The overall spot trading atmosphere is average. Market prices showed no significant changes today, and most enterprises maintained their quotations.

The market currently lacks strong bullish drivers and is still unable to fundamentally reverse the loose domestic supply-demand pattern. Overall, the market remains in a stalemate and consolidation phase, waiting for 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 enterprise 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 remained stable at RMB 1,840-1,930/tonne. Prices in Northwest China remained stable at RMB 1,800-1,840/tonne. Prices in Southwest China remained stable at RMB 1,700-2,140/tonne.

Market Updates

July 7: The reference receiving price for urea in the Guangzhou, Guangdong market was RMB 1,860-1,870/tonne, flat from the previous working day.

July 7: The reference receiving price for urea in the Nanning, Guangxi market was RMB 1,840-1,860/tonne, flat from the previous working day.

July 7: The reference receiving price for urea in the Shijiazhuang, Hebei market was RMB 1,840/tonne, up RMB 10/tonne from the previous working day.

July 7: The reference receiving price for urea in the Wen’an, Hebei market was RMB 1,830/tonne, up RMB 10/tonne from the previous working day.

July 7: 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 1,780-1,800/tonne, while large-granule references were around RMB 1,780-1,790/tonne.

July 7: 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 7: 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 7: 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 7: The reference receiving price for urea in the Linyi, Shandong market was RMB 1,800-1,810/tonne, basically flat from the previous working day.

July 7: Mainstream prices in the Xianyang market were RMB 1,840-1,860/tonne, up from the previous working day.