Urea Daily Review, June 29: Signs of Demand Improvement, Market Stable to Slightly Stronger

Domestic Urea Price Index

According to FDD data, the domestic small granular urea price index stood at 1,849.09 on June 29, up 4.55 from the previous working day, representing an increase of 0.25% from the previous working day and a decrease of 0.17% year-on-year.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,751, with an intraday high of 1,759 and a low of 1,737. The settlement price was 1,745, and the closing price was 1,741, up 6 from the previous trading day’s settlement price, representing an increase of 0.35%. The Shandong basis for the September contract was +69. Open interest increased by 1,541 lots today, bringing total open interest to 289,283 lots.

The urea futures market opened higher with a gap today and then fluctuated narrowly with a slightly stronger trend. The market was mainly supported by two factors: medium- to long-term export expectations and raw material costs. On the one hand, export-related policies have been clearly relaxed, and India is expected to launch a new round of procurement tenders in July-August. If export orders are fulfilled in a concentrated manner later, this may temporarily ease factory inventory accumulation pressure. On the other hand, upstream coal prices moved strongly today, providing solid bottom support to production costs.

At the same time, some producers saw good new order transactions over the weekend, spot prices in some regions stabilized and rebounded, and market trading sentiment improved, jointly boosting the futures board. However, from a fundamental perspective, the current supply-demand imbalance in the urea market remains prominent. On the supply side, industry operating rates remain around 90%, while daily output continues to stay at a historically high level for the same period, and the loose supply pattern has not changed materially. On the demand side, although agricultural demand has been released in some regions, it has not yet formed concentrated volume. In the industrial sector, operating loads at compound fertilizer and panel producers remain low, with downstream buyers only maintaining rigid replenishment and insufficient procurement momentum.

Overall, the urea market is currently in the off-season for fertilizer use. The loose supply-demand pattern is difficult 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 operated steadily to slightly stronger today. Mainstream regional price centers were basically stable, while some areas showed slight rebound signs driven by improved transactions. Market trading sentiment improved compared with last week. After the previous continuous price decline, the effects of price cuts and promotional sales by some producers gradually became evident. Since the weekend, new order transactions in mainstream regions have improved noticeably, factory order-taking pressure has eased, and some quotations rose slightly accordingly.

At the same time, agricultural demand was released in some areas, and the approaching summer fertilizer season provided some support to market sentiment. Downstream inquiry activity increased slightly compared with the previous period. However, overall agricultural demand support remains limited. End-user procurement is mainly driven by phased rigid demand and has not yet formed concentrated volume, making it difficult to provide sustained upward momentum for prices.

On the supply side, supply remained at a high level. Industry operating rates stayed relatively high, overall cargo availability was sufficient, and pressure from continued producer inventory accumulation remained. In terms of industrial demand, compound fertilizer producers maintained a strategy of small-volume replenishment based on demand, mainly purchasing raw materials on a hand-to-mouth basis, 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 narrow fluctuation pattern. Going forward, attention should be paid to the progress of summer fertilizer demand and changes in export policy.

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, leaving overall demand support limited.

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 rose to RMB 1,790-1,860/tonne. Prices in Central China remained stable at RMB 1,780-1,920/tonne. Prices in North China rose to RMB 1,680-1,910/tonne. Prices in South China remained stable at RMB 1,870-1,920/tonne. Prices in Northwest China rose to RMB 1,760-1,780/tonne. Prices in Southwest China remained stable at RMB 1,770-2,100/tonne.

Market Updates

June 29: The urea receiving price in the Guangzhou market, Guangdong, was quoted at RMB 1,870-1,890/tonne, flat from the previous working day.

June 29: The urea receiving price in the Nanning market, Guangxi, was quoted at RMB 1,870-1,880/tonne, up from the previous working day.

June 29: The urea receiving price in the Shijiazhuang market, Hebei, was quoted at RMB 1,830-1,840/tonne, up RMB 20/tonne from the previous working day.

June 29: The urea receiving price in the Wen’an market, Hebei, was quoted at RMB 1,820-1,830/tonne, up RMB 20/tonne from the previous working day.

June 29: Mainstream industrial ex-factory prices in Henan were around RMB 1,740-1,750/tonne. In the Shangqiu market, mainstream small and medium granular urea prices were quoted at RMB 1,790-1,810/tonne, while large granular urea was quoted at around RMB 1,800-1,810/tonne.

June 29: In the Jingmen market, mainstream small and medium granular urea prices were quoted at RMB 1,770-1,790/tonne. Self-pickup prices at railway platforms were temporarily quoted at around RMB 1,730-1,750/tonne, while mainstream large granular urea self-pickup prices at railway platforms were RMB 1,860-1,870/tonne.

June 29: 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 29: The urea receiving price in the Heze market, Shandong, was quoted at around RMB 1,790/tonne, basically flat from the previous working day.

June 29: The urea receiving price in the Linyi market, Shandong, was quoted at RMB 1,800-1,810/tonne, basically flat from the previous working day.

June 29: Mainstream prices in the Xianyang market were quoted at RMB 1,720-1,740/tonne, flat from the previous working day.