Urea Daily Review: Overall Market Atmosphere Bearish, Weak Supply Offers Slight Support

Domestic Urea Price Index:
According to Feidoodoo data, on December 27, the small particle urea price index was at 2409.82, a decrease of 20.45 from the previous day, down 0.84% from the previous day, and a 13.20% decrease from the same period last year.

Urea Futures Market:

Today, the urea UR405 contract opened at 2080, with a high of 2100 and a low of 2070, settling at 2089, and closing at 2084, up 4 from the previous trading day's settlement price, an increase of 0.19%, with a daily fluctuation range of 2070-2100. The 05 contracts in the Shandong region had a basis of 236; today, the 05 contracts increased its holdings by 2645 hands, with a current total holding of 185,900 hands.

Spot Market Analysis:

Today, the domestic urea market continued its downward trend, operating weakly with limited demand. Factory quotations were pressured downwards, with actual transaction prices continuing to decline.

Specifically, prices in the Northeast region fell to 2390-2470 yuan/ton. Prices in North China decreased to 2200-2450 yuan/ton. Prices in Northwest China remained stable at 2340-2350 yuan/ton. Prices in Southwest China fell to 2350-2800 yuan/ton. Prices in East China decreased to 2300-2380 yuan/ton. Prices for medium and small granules in Central China fell to 2310-2550 yuan/ton, while prices for large granules remained stable at 2410-2480 yuan/ton. Prices in South China fell to 2450-2550 yuan/ton.

Market Forecast:

From the factory perspective, the pending orders continue to decrease, with limited follow-up on new orders. Factories are generally accepting lower bids for new orders. Currently, factories' pre-sale orders are maintained at around 4.76 days, a slight increase from the previous period, putting pressure on factory quotations. In the market, the trading atmosphere continues to be weak, with lower-end prices emerging continuously, and the price center continues to probe lower, creating an overall bearish market atmosphere. Regarding supply, the market continues to operate weakly, with daily production dropping to a low, providing some slight positive support to the market. In terms of demand, there is limited immediate need from the downstream sector, with purchasing mostly for reserves, following up slowly. The market mindset remains cautious, primarily watchful; compound fertilizer production costs are under pressure, leading to a decrease in operating rates, which in turn reduces the enthusiasm for urea purchases, resulting in poor market transactions and a gloomy atmosphere.

Overall, the current urea market is supported by weak positive factors in supply, but the downstream sector has not responded significantly to this, and the overall market atmosphere remains bearish. The urea market prices are expected to continue a steady yet downward adjustment in the short term.