Urea Daily Review: Market Impact Minimal Under Policy-Controlled Supply Reduction

Domestic Urea Price Index:

According to Feidoodoo Index data, on December 11, the price index for small particle urea was 2522.86, a decrease of 5.45 from last Friday, down 0.22% week-on-week, and down 9.37% year-on-year.

Urea Futures Market:

Today, the opening price for the urea UR405 contract was 2244, with a high of 2278 and a low of 2223. The settlement price was 2248, and the closing price was 2240, down 38 from the previous trading day's settlement price, a decrease of 1.67%. The day's fluctuation range was 2223-2278. The 05 contract had a basis of 220 in the Shandong area. The 05 contract increased its positions by 7091 hands today, with total positions now at 125,000 hands.

Spot Market Analysis:

Today, domestic urea prices adjusted downward. Most companies held steady in their factory quotations, with a few reducing prices for closing deals, but overall price changes were small, leading to a somewhat stagnant market atmosphere.

Specifically, prices in the Northeast region remained stable at 2500-2530 yuan/ton. In North China, prices stabilized at 2350-2540 yuan/ton. In the Northwest, prices were stable at 2500-2510 yuan/ton. In the Southwest, prices remained at 2480-2800 yuan/ton. In East China, prices dropped to 2450-2500 yuan/ton. In Central China, small and medium particle prices dropped to 2450-2650 yuan/ton, while large particle prices remained stable at 2580-2660 yuan/ton. In South China, prices dropped to 2620-2660 yuan/ton.

Market Forecast:

From the factory perspective, the focus is currently on fulfilling earlier orders, with general new order transactions and manageable shipping pressure for manufacturers. Traders' enthusiasm is not high, and factories are expected to slightly accumulate inventory in the short term, continuing to control order acceptance. In the market, influenced by news, the overall atmosphere is weak. Factory prices are firm, traders' enthusiasm is reduced, businesses trade cautiously, and the sentiment is to wait and see. On the supply side, with gas-based enterprises undergoing maintenance, daily production is slightly decreasing. Short-term maintenance of devices is expected to increase, gradually tightening supply. Demand-wise, there is still a significant gap in industrial and agricultural needs. Local areas have started preparing fertilizers for agriculture, with an increase in agricultural reserve replenishment. However, due to high current prices and policy controls, downstream purchasing enthusiasm has slowed, and traders are becoming increasingly cautious and observant, currently following a rhythm of making small and frequent purchases based on immediate needs.

In summary, although there is an expectation of reduced supply in the urea market, prices are mostly stable in response to policies to ensure supply and stabilize prices. With upward pressure, the urea market prices are expected to remain stable and undergo minor adjustments in the short term.