Urea Daily Review, June 23: Loose Supply-Demand Pattern Persists, Market Remains Under Pressure

Domestic Urea Price Index

According to FDD data, the domestic small granular urea price index stood at 1,859.09 on June 23, down 1.82 from the previous working day, representing a decrease of 0.10% month-on-month and an increase of 0.48% year-on-year.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,770, with an intraday high of 1,790 and a low of 1,762. The settlement price was 1,778, and the closing price was 1,785, down 5 from the previous trading day’s settlement price, representing a decline of 0.28%. The Shandong basis for the September contract was +35. Open interest increased by 1,163 lots today, bringing total open interest to 277,746 lots.

The urea futures market moved in a weak and volatile pattern today, while the board gradually rebounded and stabilized in the afternoon. Earlier policy-driven bullish sentiment has largely been digested, and the market focus has returned to the loose off-season fundamentals. The core supply-demand imbalance remains the main factor weighing on the board.

On the supply side, industry operating rates remained around 90%, while daily output continued to stay at a historically high level for the same period, leaving overall supply abundant. On the demand side, agricultural demand is currently in the gap period after concentrated topdressing, with grassroots procurement mainly wait-and-see and no concentrated volume release yet. In the industrial sector, operating rates at compound fertilizer and panel producers remained low, with downstream buyers only maintaining rigid replenishment and overall procurement momentum insufficient.

In terms of inventories, factory inventories continued to accumulate to high levels, creating significant destocking pressure and sustained pressure on futures prices. In the spot market, trading sentiment remained weak and deadlocked, new order transactions were sluggish, and some producers slightly lowered quotations, but the overall wait-and-see pattern has not been broken.

Overall, urea futures lack substantial positive drivers in the short term. The loose supply-demand pattern is unlikely to reverse for now, and pressure from high operating rates and high inventories is expected to continue. Going forward, attention should be paid to the start of summer fertilizer demand and the timing of an inventory turning point.

Spot Market Analysis

The domestic urea spot market continued to weaken today. Industry operating rates remained high, overall supply was sufficient, factory inventories continued to accumulate slowly, and shipment pressure gradually increased. New order transactions at producers were sluggish, market sentiment remained weak and deadlocked, downstream purchasing enthusiasm was limited, and some producers slightly lowered quotations.

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.

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 1,800-1,860/tonne. Prices in Central China remained stable at RMB 1,810-1,920/tonne. Prices in North China remained stable at RMB 1,700-1,910/tonne. Prices in South China remained stable at RMB 1,890-1,950/tonne. Prices in Northwest China remained stable at RMB 1,720-1,740/tonne. Prices in Southwest China remained stable at RMB 1,770-2,100/tonne.

Market Updates

June 23: The urea receiving price in the Guangzhou market, Guangdong, was quoted at RMB 1,920-1,930/tonne, flat from the previous working day.

June 23: The urea receiving price in the Nanning market, Guangxi, was quoted at RMB 1,890-1,900/tonne, flat from the previous working day.

June 23: 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 23: 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 23: Mainstream industrial ex-factory prices in Henan were around RMB 1,770-1,790/tonne. In the Shangqiu market, mainstream small and medium granular urea prices were quoted at RMB 1,820-1,840/tonne, while large granular urea was quoted at around RMB 1,850-1,860/tonne.

June 23: In the Jingmen market, mainstream small and medium granular urea prices were quoted at RMB 1,810-1,830/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 23: 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 23: The urea receiving price in the Heze market, Shandong, was quoted at around RMB 1,800-1,810/tonne, basically flat from the previous working day.

June 23: The urea receiving price in the Linyi market, Shandong, was quoted at RMB 1,820-1,830/tonne, basically flat from the previous working day.

June 23: Mainstream prices in the Xianyang market were quoted at RMB 1,720-1,740/tonne, flat from the previous working day.