Urea Daily Review, June 16: Domestic Weakness Pressures the Market, External Support Remains Limited

Domestic Urea Price Index

According to FDD data calculations, on June 16, the domestic small-granule urea price index stood at 1,845.91, down 2.73 from the previous working day, representing a day-on-day decrease of 0.15% and a year-on-year increase of 0.29%.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,786, with an intraday high of 1,786 and a low of 1,760. The settlement price was 1,768, and the closing price was 1,768, down 8 from the previous trading day’s settlement price, representing a decline of 0.45%. The Shandong basis for the UR2609 contract was +22. Open interest increased by 9,286 lots today, with total open interest currently standing at 294,390 lots.

Today, the urea futures market fluctuated with a weak bias. Continued weakness in spot fundamentals remains the key factor weighing on the futures market. Although the decline in the spot market has slowed and agricultural shipments have improved marginally in some regions, the overall loose supply-demand structure has not been materially reversed, providing only limited support to futures prices.

The positive expectations brought by earlier export tenders have been fully priced in, and export-side support for the domestic market has weakened significantly. Recent export-related news has repeatedly disturbed the market and temporarily lifted sentiment, but most export positives remain at the expectation level. Actual port collection and order volumes have not increased significantly. Market pricing logic has returned to domestic supply-demand fundamentals.

On the supply side, high industry operating rates and continued accumulation of producer inventories are still pressuring the market. Meanwhile, concentrated agricultural fertilizer stocking has not officially started, and industrial demand remains weak, making it difficult to provide sustained rebound momentum. The market is still digesting earlier bearish expectations.

Overall, urea futures are likely to continue fluctuating weakly in the short term. There is still no clear signal of a reversal in the downward trend, and futures prices will continue to be anchored by changes in spot fundamentals. Going forward, attention should be paid to the strength of summer agricultural demand and whether macro policy signals create a broader sentiment resonance.

Spot Market Analysis

Today, China’s domestic urea spot market fluctuated with a weak bias. Supported by new order transactions at low-end prices in mainstream regions yesterday, the pace of continuous market decline slowed somewhat. Both bullish and bearish participants have entered a wait-and-see phase and are waiting for more positive signals. However, the overall loose supply-demand structure remains unchanged. Prices in some regions continued to decline slightly, and producers with poor order intake made modest quotation cuts.

From a fundamentals perspective, daily output on the supply side remains high, producer inventories remain elevated, and factory shipment pressure has not eased. Agricultural demand has seen some scattered release, but has not yet started on a large scale. On the industrial side, compound fertilizer producers are only maintaining small-volume restocking based on rigid demand, providing limited support for urea raw material prices.

Overall, positive support for the market remains limited. Substantial export orders remain scarce, domestic demand is weak, market confidence is insufficient, and producer shipment pressure continues to increase. The market is likely to remain weak in the short term. Going forward, attention should focus on the pace of summer fertilizer stocking and the actual implementation progress of export policies.

In summary, China’s domestic urea spot market is currently fluctuating within a range. On the supply side, industry capacity utilization remains high, daily output is elevated, and maintenance at some producers has had only 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 industrial sectors such as compound fertilizer, panels, and melamine are operating weakly, and procurement is mainly based on rigid demand. Overall demand momentum remains limited.

On the inventory side, weaker market demand has slowed shipments, and producer inventories continue to accumulate rapidly, leaving inventory pressure in place. On the policy side, a 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, close attention should be paid to export shipment progress, the release of summer topdressing demand, and fluctuations in coal costs.

By region, prices in Northeast China remained stable at RMB 1,870-1,920/mt. Prices in East China rose to RMB 1,790-1,840/mt. Prices in Central China remained stable at RMB 1,780-1,920/mt. Prices in North China remained stable at RMB 1,660-1,910/mt. Prices in South China fell to RMB 1,880-1,930/mt. Prices in Northwest China fell to RMB 1,730-1,740/mt. Prices in Southwest China remained stable at RMB 1,800-2,150/mt.

Market Updates

On June 16, the reference receiving price for urea in the Guangzhou market, Guangdong, was RMB 1,900-1,920/mt, down from the previous working day.

On June 16, the reference receiving price for urea in the Nanning market, Guangxi, was RMB 1,880-1,890/mt, down from the previous working day.

On June 16, the reference receiving price for urea in the Shijiazhuang market, Hebei, was RMB 1,800-1,810/mt, up RMB 10/mt from the previous working day.

On June 16, the reference receiving price for urea in the Wen’an market, Hebei, was RMB 1,790-1,800/mt, up RMB 10/mt from the previous working day.

On June 16, mainstream industrial ex-works prices within Henan Province were around RMB 1,730-1,760/mt. In the Shangqiu market, mainstream reference prices for small and medium-granule urea were RMB 1,780-1,790/mt, while large-granule urea was referenced at around RMB 1,830-1,850/mt.

On June 16, mainstream reference prices for small and medium-granule urea in the Jingmen market were RMB 1,780-1,800/mt. Self-pickup at railway stations was temporarily referenced at around RMB 1,740-1,750/mt, while mainstream large-granule urea self-pickup at railway stations was RMB 1,860-1,870/mt.

On June 16, ex-warehouse/truck pickup prices in the Tieling market, Liaoning, were referenced at RMB 1,880-1,920/mt, unchanged from the previous working day.

On June 16, the reference receiving price for urea in the Heze market, Shandong, was around RMB 1,770-1,780/mt, basically unchanged from the previous working day.

On June 16, the reference receiving price for urea in the Linyi market, Shandong, was RMB 1,790-1,800/mt, up RMB 10/mt from the previous working day.

On June 16, mainstream prices in the Xianyang market were referenced at RMB 1,720-1,740/mt, down from the previous working day.