Urea Daily Review, June 17: Policy Tailwinds Lift Urea Market, Futures and Spot Prices Rise in Tandem

Domestic Urea Price Index

According to FDD data calculations, on June 17, the domestic small-granule urea price index stood at 1,855.45, up 9.55 from the previous working day, representing a day-on-day increase of 0.52% and a year-on-year decrease of 0.03%.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,802, with an intraday high of 1,845 and a low of 1,801. The settlement price was 1,833, and the closing price was 1,836, up 68 from the previous trading day’s settlement price, representing an increase of 3.85%. The Shandong basis for the UR2609 contract was -16. Open interest decreased by 8,151 lots today, with total open interest currently standing at 286,239 lots.

Today, the urea futures market opened higher with a gap and then maintained strong fluctuations. The sharp rally was driven by multiple reinforcing factors. On the policy side, the industry association issued a notice raising the third-quarter guidance price. The market had previously expected a guidance price cut, so the adjustment exceeded expectations. In addition, rising upstream coal prices strengthened cost support, directly boosting bullish sentiment and triggering the sharp higher opening in futures.

At the same time, as the wheat harvest nears completion, corn fertilizer stocking in North China and rice topdressing in southern regions have gradually started. Agricultural demand has shown a staged recovery. Most producers in mainstream regions reported better new order transactions, ex-works prices were raised slightly, and spot prices in many regions followed higher to varying degrees, providing fundamental support for the futures rally.

Overall, today’s movement was a short-term recovery driven by policy sentiment. Costs and policy support have provided staged support, but the core bearish logic of the supply-demand imbalance has not changed. Urea producers continued to accumulate inventories this week, and high supply pressure remains. Upside room is still constrained by spot inventories. Going forward, attention should be paid to whether the strength of summer agricultural demand can sustain market optimism.

Spot Market Analysis

Today, China’s domestic urea spot market quotations remained firm, with prices in some regions rising slightly. Over the past two days, new order transactions improved at some producers, and the market stabilized after earlier declines. Supported by rising coal prices on the raw material side and news of adjustments to industry guidance prices, producers generally raised quotations, and market sentiment recovered in stages.

However, the loose fundamental structure has not seen any material improvement. Daily output on the supply side remains high, producer inventories continued to accumulate this week, and factory shipment pressure still exists. On the demand side, agricultural demand has seen some scattered release but has not yet entered a large-scale stocking phase. Industrial compound fertilizer producers are only maintaining small-volume procurement based on rigid demand, providing limited support for raw material prices.

On the export side, substantial transaction orders remain scarce, while overall domestic demand remains weak. The market lacks sustained upward momentum. Overall, spot prices may remain firm in the short term under the support of sentiment and costs, but upside room is limited, and the market is expected to remain under pressure. Going forward, close attention should be paid to 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 1,820-1,860/mt. Prices in Central China remained stable at RMB 1,790-1,920/mt. Prices in North China remained stable at RMB 1,660-1,910/mt. Prices in South China rose to RMB 1,900-1,940/mt. Prices in Northwest China fell to RMB 1,720-1,740/mt. Prices in Southwest China fell to RMB 1,800-2,100/mt.

Market Updates

On June 17, the reference receiving price for urea in the Guangzhou market, Guangdong, was RMB 1,930-1,940/mt, up from the previous working day.

On June 17, the reference receiving price for urea in the Nanning market, Guangxi, was RMB 1,900-1,910/mt, up from the previous working day.

On June 17, the reference receiving price for urea in the Shijiazhuang market, Hebei, was RMB 1,810-1,820/mt, up RMB 10/mt from the previous working day.

On June 17, the reference receiving price for urea in the Wen’an market, Hebei, was RMB 1,800-1,810/mt, up RMB 10/mt from the previous working day.

On June 17, mainstream industrial ex-works prices within Henan Province were around RMB 1,750-1,770/mt. In the Shangqiu market, mainstream reference prices for small and medium-granule urea were RMB 1,810-1,820/mt, while large-granule urea was referenced at around RMB 1,850-1,860/mt.

On June 17, 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 1,730-1,770/mt, while mainstream large-granule urea self-pickup at railway stations was RMB 1,860-1,870/mt.

On June 17, 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 17, the reference receiving price for urea in the Heze market, Shandong, was around RMB 1,820-1,830/mt, up RMB 40/mt from the previous working day.

On June 17, the reference receiving price for urea in the Linyi market, Shandong, was RMB 1,820-1,830/mt, up RMB 30/mt from the previous working day.

On June 17, mainstream prices in the Xianyang market were referenced at RMB 1,720-1,740/mt, unchanged from the previous working day.