Urea Daily Review: Market Follows Low Prices Well, Urea Prices Rise Again

Domestic Urea Price Index:

According to Feidoodoo data, on May 21, the small granular urea price index was 2397.59, an increase of 13.18 from the previous day, reflecting a 0.55% day-on-day rise and a 6.62% year-on-year increase.

Urea Futures Market:

Today, the opening price for the UR409 urea futures contract was 2236 yuan/ton, with a high of 2250 yuan/ton, a low of 2167 yuan/ton, a settlement price of 2201 yuan/ton, and a closing price of 2186 yuan/ton. The closing price increased by 24 yuan from the previous trading day’s settlement price, reflecting a 1.11% rise. The price fluctuation range for the day was 2167-2250 yuan/ton. The basis for the 09 contract in the Shandong region was 194 yuan/ton. The 09 contract saw a decrease of 15,048 lots in open interest today, bringing the total to 239,351 lots.

After a significant rise in urea futures prices yesterday, there was positive feedback in the spot market. However, the high prices are still under pressure from various factors, limiting upward space. Today, the market opened high but then declined. Under the overall framework of ensuring supply and stabilizing prices, it is difficult to see strong drivers for urea price increases. Most of the positive fundamental factors are already reflected in the prices, so there is a risk that market sentiment might weaken, leading to a potential early retreat in futures prices.

Spot Market Analysis:

Today, domestic urea market prices rose again. After lowering their quotes, enterprises saw good follow-up at low prices, leading to a short-term firm market.

• Northeast: Prices stable at 2300-2380 yuan/ton.
• East China: Prices increased to 2360-2420 yuan/ton.
• Central China: Small and medium granular prices rose to 2360-2470 yuan/ton, and large granular prices rose to 2320-2380 yuan/ton.
• North China: Prices rose to 2200-2380 yuan/ton.
• South China: Prices increased to 2460-2520 yuan/ton.
• Northwest: Prices stable at 2390-2400 yuan/ton.
• Southwest: Prices stable at 2300-2750 yuan/ton.

Factory Side: After lowering prices to secure orders, there were good signs of low-end transactions in the market. Today, manufacturers' quotations saw slight adjustments.

Market Side: After a slight adjustment, market prices were more attractive, leading to stronger follow-up willingness from traders, with most transactions occurring at lower prices. Downstream traders followed up appropriately, though some resistance to high prices remained, resulting in a short-term firm market.

Supply Side: Previous maintenance units have not fully resumed operations, resulting in a continued tight supply of spot goods in the short term.

Demand Side: Just-in-time demand remains in the market. Downstream traders are cautious about high prices, with slowed enthusiasm for buying at high prices, maintaining a cautious attitude towards procurement.

Overall: After a high-level adjustment, urea market prices have risen again. Although just-in-time demand remains, traders are reluctant to follow high prices, preferring to buy at lower prices. In the short term, urea prices are expected to fluctuate at high levels.