August 17 Urea Daily Review: Marginal Valuation Repair, but Contradictions Still Weigh on the Market

Domestic Urea Price Index:

According to Feidoodoo data calculations, on August 17, the small-granule urea price index was 1766.82, up 0.45 from the previous working day, or +0.03% month on month, and down 0.56% year on year.

Urea Futures Market:

Today, the urea UR2609 contract opened at 1694, reached a high of 1705 and a low of 1690, settled at 1697, and closed at 1692. The closing price was up 15 from the previous trading day’s settlement price, or +0.89%. The Shandong basis for the 09 contract was +12. Open interest in the 09 contract increased by -25557 lots today, with current positions at 111130 lots.

The urea futures board opened higher today and then fluctuated with a firm bias. From a fundamental perspective, staged improvement in the spot market has appeared, and a few enterprises slightly raised quotations. However, urea overall remains under dual pressure from high supply and weak demand. Supply remains high, enterprise inventories continue to accumulate and are close to historical highs, agricultural demand follow-up still needs to be assessed, and industrial demand from compound fertilizer and melamine also remains weak. But after the previous continuous pullback, urea prices have moved to a relatively low level, which to some extent limits downside room on the board. On the expectation side, overseas tenders, export diversion expectations, raw material costs, and industry price-stabilization signals provide bottom support and limit room for a deep decline. The current main urea contract is approaching the delivery month, and the market is in the process of rolling positions to later contracts. The board is mainly following spot market trends. Overall, the recent rebound in urea futures is more of a technical repair after consecutive declines toward previous lows, combined with slight improvement in spot demand. It is not yet a trend reversal driven by fundamentals. The market remains in a low-level fluctuation pattern, and the short-term trend may continue to be stalemated. Follow-up attention should focus on the extent of supply-side reductions, export shipment pace, and macro policy changes as guidance for the board.

Spot Market Analysis:

The domestic urea spot market operated in stalemate today. During the weekend, new order transactions at most enterprises were average, and most enterprises maintained current quotations. Only a few enterprises slightly raised quotations with support from pending orders. Current market wait-and-see sentiment remains strong, downstream follow-up is weak, procurement is only maintained as needed, and acceptance of high-priced cargoes is limited. Fundamental supply-demand contradictions have not eased. On the supply side, industry operating rates remain high, supply is sufficient, and inventory pressure continues. On the demand side, agricultural topdressing demand is regionally differentiated and has not formed concentrated procurement support. In the industrial sector, only rigid-demand procurement continues, compound fertilizer operating rates remain low, procurement strength is average, downstream buyers are cautious, and overall transactions are limited. Overall, downstream demand is unlikely to improve significantly. However, some enterprises in mainstream regions will enter maintenance in late August, export shipments are still continuing, and some enterprises have started or plan to reduce output. Under the combined effect of these factors, whether the market is already in the bottom range still needs observation. The short-term market is expected to maintain stalemated narrow-range operation. Follow-up attention should focus on the actual implementation of supply-side reductions and changes in policy and market news.

Overall, the domestic urea spot market currently maintains weak fluctuations. On the supply side, industry operating rates remain high, market supply is sufficient, overall supply pressure remains, and enterprise inventory pressure continues to accumulate. On the demand side, agricultural topdressing demand is regionally differentiated and has not yet formed concentrated procurement support. The industrial sector only maintains rigid-demand follow-up, downstream buying attitudes are cautious, and overall transactions are limited. On inventories, overall inventory pressure has not been substantively relieved and continues to weigh on upstream quotation sentiment. Recently, policy-side price-stabilization signals have been released, showing a clear attitude toward supporting the market bottom, but fundamentals still cannot provide further upward momentum. Follow-up attention should focus on export fulfillment and the impact of the autumn fertilizer preparation schedule.

Specifically, prices in Northeast China remained stable at 1790-1820 yuan/tonne. Prices in East China remained stable at 1680-1740 yuan/tonne. Prices in Central China remained stable at 1690-1900 yuan/tonne. Prices in North China remained stable at 1570-1800 yuan/tonne. Prices in South China fell to 1790-1840 yuan/tonne. Prices in Northwest China remained stable at 1860-1910 yuan/tonne. Prices in Southwest China remained stable at 1680-2000 yuan/tonne.

Market Updates:

August 17: In Guangzhou, Guangdong, the reference receiving price for urea was 1830-1840 yuan/tonne, down from the previous working day.

August 17: In Nanning, Guangxi, the reference receiving price for urea was 1790-1800 yuan/tonne, down from the previous working day.

August 17: In Shijiazhuang, Hebei, the reference receiving price for urea was 1720-1740 yuan/tonne, basically unchanged from the previous working day.

August 17: In Wen’an, Hebei, the reference receiving price for urea was 1700-1730 yuan/tonne, basically unchanged from the previous working day.

August 17: In Shangqiu today, mainstream reference prices for small and medium granules were 1690-1710 yuan/tonne, while large granules were around 1820-1830 yuan/tonne.

August 17: In Jingmen today, mainstream reference prices for small and medium granules were 1710-1730 yuan/tonne, station self-pickup prices were temporarily around 1670-1700 yuan/tonne, and mainstream station self-pickup prices for large granules were 1800-1810 yuan/tonne.

August 17: In Tieling, Liaoning, ex-warehouse/truck pickup reference prices were 1780-1800 yuan/tonne, unchanged from the previous working day.

August 17: In Heze, Shandong, the reference receiving price for urea was around 1680-1690 yuan/tonne, basically unchanged from the previous working day.

August 17: In Linyi, Shandong, the reference receiving price for urea was 1690-1700 yuan/tonne, up 10 yuan/tonne from the previous working day.

August 17: In Xianyang, mainstream reference prices were 1800-1820 yuan/tonne, unchanged from the previous working day.