Urea Daily Review, June 22: Loose Supply-Demand Pattern Remains, Spot and Futures Both Under Pressure

Domestic Urea Price Index

According to FDD data, the domestic small granular urea price index stood at 1,860.91 on June 22, down 2.27 from the previous working day, representing a decrease of 0.12% month-on-month and 0.66% year-on-year.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,814, with an intraday high of 1,814 and a low of 1,769. The settlement price was 1,790, and the closing price was 1,775, down 39 from the previous trading day’s settlement price, representing a decline of 2.15%. The Shandong basis for the September contract was +45. Open interest increased by 21,291 lots today, bringing total open interest to 276,583 lots.

The urea futures market moved lower in a volatile pattern today, with the board remaining weak throughout the session and losses widening further in the afternoon. In terms of market drivers, the core contradiction of loose supply and demand remained the fundamental factor weighing on futures prices.

On the supply side, industry operating rates remained at a high level of around 90%, while daily output continued to run at a historically high level for the same period, leaving overall supply abundant. On the demand side, agricultural demand is currently in a gap period before concentrated topdressing, with strong wait-and-see sentiment at the grassroots level and a lack of concentrated procurement. Industrial demand also remained weak, as compound fertilizer and panel producers continued to operate at low rates, with downstream buyers only maintaining need-based procurement.

At the same time, factory inventories continued to accumulate to high levels, creating significant destocking pressure and exerting sustained pressure on the futures market. In the spot market, as earlier holiday orders were gradually digested, new order transactions weakened, and most producers slightly lowered their quotations.

Overall, the short-term urea futures market lacks clear directional drivers. The core pattern of loose supply and demand has not changed materially, while high inventories and high operating rates continue to weigh on prices. Going forward, attention should be paid to the progress of summer fertilizer demand and the pace of inventory digestion.

Spot Market Analysis

The domestic urea spot market weakened today. Industry operating rates remained high, overall supply was sufficient, factory inventories continued to accumulate slowly, and shipment pressure gradually increased. As earlier holiday orders were gradually digested, new order transactions weakened, leading most producers to slightly reduce quotations.

However, the loose fundamental structure has not changed materially. On the supply side, daily output remained high, factory inventories continued to rise this week, and producers still faced significant destocking pressure. On the demand side, overall rigid demand remained weak. The agricultural market has not yet entered the concentrated topdressing window, with only sporadic replenishment in some regions, leaving agricultural follow-up demand very limited. Compound fertilizer producers continued to purchase small volumes on demand, mainly adopting a hand-to-mouth procurement strategy, with no large-scale restocking observed.

On the export side, although some earlier orders remain to be fulfilled, actual shipment progress has been slow, and the incremental diversion from exports has fallen short of expectations. As a result, exports have not provided substantial support to the domestic spot market.

Overall, the short-term market lacks clear driving factors. The core pattern of loose supply and demand remains unchanged, while high operating rates and continued inventory accumulation continue to pressure prices. Without new positive factors, the spot market is expected to maintain a broad and weak fluctuation pattern. Going forward, attention should be paid to the progress of summer fertilizer demand and the actual implementation of export policies.

Overall, the domestic urea spot market is currently operating in a range-bound pattern. On the supply side, industry capacity utilization remains high, daily output continues to run at elevated levels, and the impact of maintenance at some producers remains limited, leaving overall supply pressure relatively high. On the demand side, summer fertilizer demand has not yet recovered on a large scale, with only sporadic topdressing demand in some areas. Downstream industrial sectors such as compound fertilizer, panels and melamine remain weak in operating rates, with procurement mainly driven by rigid demand.

In terms of inventories, softer market demand has slowed shipments, resulting in continued rapid inventory accumulation at producers. Inventory pressure remains in place. 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, 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/tonne. Prices in East China fell to RMB 1,810-1,860/tonne. Prices in Central China rose to RMB 1,810-1,920/tonne. Prices in North China remained stable at RMB 1,700-1,910/tonne. Prices in South China fell to RMB 1,890-1,950/tonne. Prices in Northwest China remained stable at RMB 1,720-1,740/tonne. Prices in Southwest China fell to RMB 1,770-2,100/tonne.

Market Updates

June 22: The urea receiving price in the Guangzhou market, Guangdong, was quoted at RMB 1,920-1,930/tonne, down from the previous working day.

June 22: The urea receiving price in the Nanning market, Guangxi, was quoted at RMB 1,890-1,900/tonne, down from the previous working day.

June 22: The urea receiving price in the Shijiazhuang market, Hebei, was quoted at RMB 1,830-1,840/tonne, basically flat from the previous working day.

June 22: The urea receiving price in the Wen’an market, Hebei, was quoted at RMB 1,830-1,840/tonne, basically flat from the previous working day.

June 22: Mainstream industrial ex-factory prices in Henan were around RMB 1,790/tonne. In the Shangqiu market, mainstream small and medium granular urea prices were quoted at RMB 1,830-1,850/tonne, while large granular urea was quoted at around RMB 1,880-1,890/tonne.

June 22: In the Jingmen market, mainstream small and medium granular urea prices were quoted at RMB 1,820-1,840/tonne. Self-pickup prices at railway platforms were temporarily quoted at around RMB 1,760-1,780/tonne, while mainstream large granular urea self-pickup prices at railway platforms were RMB 1,860-1,870/tonne.

June 22: Ex-warehouse / truck pickup prices in the Tieling market, Liaoning, were quoted at RMB 1,880-1,920/tonne, flat from the previous working day.

June 22: The urea receiving price in the Heze market, Shandong, was quoted at around RMB 1,810-1,820/tonne, down RMB 20/tonne from the previous working day.

June 22: The urea receiving price in the Linyi market, Shandong, was quoted at RMB 1,820-1,830/tonne, down RMB 30/tonne from the previous working day.

June 22: Mainstream prices in the Xianyang market were quoted at RMB 1,720-1,740/tonne, flat from the previous working day.