Urea Daily Review, June 30: Agricultural Demand Provides Support but Remains Limited, Market Stays in a Stalemate

Domestic Urea Price Index

According to FDD data, the domestic small granular urea price index stood at 1,847.73 on June 30, down 1.36 from the previous working day, representing a decline of 0.07% from the previous working day and an increase of 0.05% year-on-year.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,736, with an intraday high of 1,749 and a low of 1,729. The settlement price was 1,740, and the closing price was 1,736, down 9 from the previous trading day’s settlement price, representing a decline of 0.52%. The Shandong basis for the September contract was +74. Open interest increased by 449 lots today, bringing total open interest to 289,732 lots.

The urea futures market showed a weak and volatile trend today. From the board’s performance, the market lacked a clear directional driver, and the current trend in urea futures was mainly suppressed by both “weak reality” and “weak expectations.”

Supply-side pressure remained the core factor weighing on the market. At present, urea industry operating rates continue to stay at historically absolute highs, daily output remains elevated, and the successive release of new capacity further reinforces the loose supply pattern.

On the demand side, conditions showed marginal improvement but only limited strength. Agricultural shipments in mainstream regions improved, and low-end transactions saw some increase in volume, but industrial demand remained mainly based on need-only procurement and has not yet formed an effective wave of concentrated buying. Overall, the demand-side improvement is more reflected in phased replenishment, and sustainability still needs to be observed.

Overall, the urea market is showing signs of recovery in summer fertilizer demand, but the loose supply-demand pattern is difficult to reverse in the short term. Pressure from high operating rates and high inventories is expected to continue, and the seasonal off-season expectation on the main contract remains unchanged, leaving limited upward momentum for the board. Going forward, attention should be paid to the pace of summer fertilizer demand and the timing of an inventory turning point.

Spot Market Analysis

The domestic urea spot market remained stable today. The price center has stabilized for the time being, and the overall price level has not shown further significant downside. Low-end transactions in mainstream regions saw some volume improvement. Supported by some release in local agricultural demand, the approaching summer fertilizer season provided some lift to market sentiment, and downstream inquiry activity increased slightly compared with the previous period. Some producers saw better new order shipments, indicating some bottom support.

However, overall agricultural demand support remains limited. End-user procurement is still mainly driven by phased rigid demand and has not formed concentrated volume, making it difficult to provide sustained upward momentum for prices.

On the supply side, production remains at a high level. Industry operating rates are still elevated, overall supply remains abundant, and pressure from continued inventory accumulation persists. In terms of industrial demand, compound fertilizer producers continue to purchase only small volumes based on need, mainly buying 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 loose supply-demand pattern has not changed, 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 range of fluctuations. 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. Overall demand support remains 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 fell to RMB 1,780-1,860/tonne. Prices in Central China remained stable at RMB 1,780-1,920/tonne. Prices in North China fell to RMB 1,670-1,910/tonne. Prices in South China fell to RMB 1,860-1,930/tonne. Prices in Northwest China remained stable at RMB 1,760-1,780/tonne. Prices in Southwest China fell to RMB 1,720-2,100/tonne.

Market Updates

June 30: The urea receiving price in the Guangzhou market, Guangdong, was quoted at RMB 1,860-1,880/tonne, down from the previous working day.

June 30: The urea receiving price in the Nanning market, Guangxi, was quoted at RMB 1,870-1,880/tonne, flat from the previous working day.

June 30: 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 30: The urea receiving price in the Wen’an market, Hebei, was quoted at RMB 1,820-1,830/tonne, basically flat from the previous working day.

June 30: 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 1,780-1,790/tonne.

June 30: 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 30: 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 30: The urea receiving price in the Heze market, Shandong, was quoted at around RMB 1,780-1,790/tonne, basically flat from the previous working day.

June 30: 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 30: Mainstream prices in the Xianyang market were quoted at RMB 1,760-1,780/tonne, flat from the previous working day.