Urea Daily Review: New Order Follow-Up Slows Down, High-Price Transactions Lackluster

June 12, 2024, 9:21 AM

Feidoodoo

3094

Guide

Highlights at a glance

The domestic urea market shows a weakening trend as of March 28, with the urea small particle price index at 2,182.09, down 6.55 (–0.30%) from the previous day and 21.26% lower year-on-year. The UR405 futures contract closed at 1,971, down 21 (–1.05%), with positions reduced by 14,313. Spot prices declined slightly across regions, including drops in Northeast, North, East, and South China, while Northwest and Southwest remained stable. Factory quotations weakened after a brief rise due to reduced new orders, despite support from earlier low-price pre-orders. Supply remains high as maintenance units resume operations, leading to ample industry output. Demand is sluggish, with downstream buyers cautious amid elevated prices, preferring low-cost purchases. Overall, the market faces soft demand and sufficient supply, limiting upward price momentum. A weak consolidation with downward pressure is expected in the near term.

Domestic Urea Price Index:

According to Feidoodoo data, as of March 28, the urea small particle price index stands at 2182.09, a decrease of 6.55 from the previous day, marking a 0.30% drop and a 21.26% decrease year-on-year.

Urea Futures Market:

Today's urea UR405 contract opened in 1970, with the highest price in 1986, the lowest in 1957, and the settlement price in 1971. The closing price was 1971, down 21 from the last trading day's settlement price, a 1.05% drop, with a daily fluctuation range of 1957-1986; the Shandong area basis for the 05 contracts is 159; today, the 05 contracts reduced its positions by 14313, with current holdings at 143588.

Spot Market Analysis:

Today, the domestic urea market prices slightly adjusted downwards in a stable manner, with the market transitioning from strong to weak. After enterprise quotes were raised, market transactions significantly decreased, leading to a short-term price drop.

Specifically, prices in the Northeast region dropped to 2150-2200 yuan/ton. Prices in North China dropped to 2000-2170 yuan/ton. East China saw prices fall to 2110-2170 yuan/ton. South China experienced price drops to 2220-2330 yuan/ton. Central China's small and medium particle prices dropped to 2110-2320 yuan/ton, with large particle prices stable at 2190-2250 yuan/ton. Prices in Northwest China remained stable at 2140-2150 yuan/ton. Southwest China maintained prices at 2100-2450 yuan/ton.

Factory Aspect:

After a slight increase in factory quotations, new order transactions significantly decreased, weakening the market. Supported by low-price pre-received orders from the earlier period, quotations remained stable for the time being, focusing on handling pending shipments. Market-wise, transactions slowed, and after replenishing orders from the earlier period, new order transactions weakened, leading to a stable but shaky market situation. Supply-wise, as maintenance units gradually resumed operation, industry supply remained high, with the market mainly experiencing weak fluctuations under a relaxed supply-demand situation. Demand-wise, after a round of low-price replenishment, downstream interest in buying at current high market prices is low, with purchases mainly continuing on a buy-low basis, adopting a cautious approach.

Overall View:

Currently, the urea market exhibits a relaxed supply and demand situation, inhibiting price increases. The difficulty of a significant market price rise is considerable. It is expected that the urea market prices will stabilize with a downward trend in the short term, undergoing a weak consolidation.

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