Urea Daily Review, July 8: High Operating Rates and Continued Inventory Accumulation Keep Urea Market in Stalemate

Domestic Urea Price Index

According to FDD data, on July 8, 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 generally maintained a narrow-range consolidation trend. The market’s core focus remained on expectations around export-related policies. At this stage, substantive export benefits have not yet materialized, industry participants remain strongly wait-and-see, and funds show limited willingness to enter the market proactively. New-order transactions in the spot market were generally light, and the spot side lacked strong support, making it difficult to provide effective support to the futures board.

From a fundamentals perspective, supply-side pressure remains prominent. Industry operating rates continue to run within historical high ranges, overall supply is sufficient, and factory inventories continued to accumulate slightly this week, leaving the loose supply pattern unchanged. On the demand side, the pace of seasonal agricultural shipments in major producing regions has slowed. Downstream compound fertilizer producers, chemical deep-processing enterprises and other industrial users continue to purchase on a hand-to-mouth basis, with no concentrated restocking released. Only longer-term expectations for summer topdressing demand can provide phased support to market sentiment, but this is unlikely to reverse the currently weak spot reality in the short term.

Overall, although the market still has medium-term expectations for marginal recovery in summer fertilizer demand, the loose supply-demand pattern is difficult to materially improve in the short term. High operating rates, combined with continuously accumulating inventories, will continue to suppress upside space on the board. Meanwhile, constrained by off-season trading expectations, the main futures contract lacks clear upward momentum. Going forward, attention should be paid to the pace of summer agricultural demand release, as well as expectation-side disruptions brought by export policy implementation and incremental export orders.

Spot Market Analysis

Today, the domestic urea spot market operated steadily to weakly. The export-related positive signals expected by the market remain unclear, downstream procurement sentiment has returned to caution, and both industrial and agricultural purchases have slowed. Buyers are mostly following up in small volumes as needed, the overall spot trading atmosphere is light, and new-order transactions at enterprises are limited. However, current shipment pressure is not significant, 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 stalemate and 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, export-related benefits remain unclear. Going forward, attention should be paid to the release of summer topdressing demand and the impact of export policy and other factors.

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 rose to RMB 1,820-1,860/tonne. Prices in Southwest China remained stable at RMB 1,700-2,140/tonne.

Market Updates

July 8: 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 8: 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 8: The reference receiving price for urea in the Shijiazhuang, Hebei market was RMB 1,840/tonne, basically flat from the previous working day.

July 8: The reference receiving price for urea in the Wen’an, Hebei market was RMB 1,830/tonne, basically flat from the previous working day.

July 8: 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 8: 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 8: 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 8: 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 8: The reference receiving price for urea in the Linyi, Shandong market was RMB 1,800-1,810/tonne, down RMB 10/tonne from the previous working day.

July 8: Mainstream prices in the Xianyang market were RMB 1,840-1,860/tonne, flat from the previous working day.