Urea Daily Review: Policy-Driven Supply and Price Stabilization Leads to Downward Price Adjustments by Manufacturers

Domestic Urea Price Index:

• According to Feidoodoo data, as of November 20th, the small granular urea price index stood at 2554.68, a decrease of 26.82 from last Friday, down 1.04% week-over-week, and a 3.99% year-over-year decline.

Urea Futures Market:

• Today's opening price for the urea UR2401 contract was 2265, with a high of 2304, a low of 2250, a settlement price of 2276, and a closing price of 2291. The closing price fell by 25 compared to the previous trading day's settlement price, down 1.08%, fluctuating between 2250-2304 throughout the day. The Shandong region's basis for the 01 contract was 139; the 01 contract saw a decrease of 5973 hands in positions today, with current positions totaling 255554 hands.

Spot Market Analysis:

• Today, domestic urea prices trended downward, influenced by policy-related news. The market trading atmosphere was muted, with many adopting a wait-and-see stance, forcing manufacturers to reduce their factory prices. Currently, prices are weak but stable.
• Specifically, prices in the Northeast region fell to 2590-2640 CNY/ton. In North China, prices decreased to 2370-2650 CNY/ton. Northwest region prices remained stable at 2550-2560 CNY/ton. Southwest region prices stabilized at 2550-2800 CNY/ton. East China prices dropped to 2410-2470 CNY/ton. In Central China, prices for small and medium granules fell to 2430-2640 CNY/ton, and large granules to 2560-2700 CNY/ton. South China prices decreased to 2650-2700 CNY/ton.

Future Market Forecast:

• Supply-wise, some enterprises have started to increase production or resume operations, with new capacity gradually coming online. Alongside the existing capacity maintaining high operational levels, current enterprise inventories have slightly increased, making the supply side relatively relaxed. In the market, twelve fertilizer companies jointly advocated for supply and price stabilization, resulting in downward pressure on spot prices. Additionally, the Nitrogen Fertilizer Association, focusing on supply efforts, requested urea gas head enterprises not to stop production in winter and spring unless necessary, and to increase production as much as possible to ensure domestic market supply, indicating that domestic market supply is expected to remain high. On the demand side, influenced by supply and price stabilization, order transactions are average, with many holding a wait-and-see attitude, awaiting further declines in urea prices. Agricultural needs continue with ongoing winter and slack storage, and industrial demand is expected to grow with the economic recovery, indicating a steady increase in market demand.
• Overall, the current urea market is influenced by policy, with unstable sentiment and no positive price support. The urea market prices are expected to undergo a weak adjustment in the short term.