Urea Weekly: Export News Supports the Market, Which Awaits Delivery (2026-10-23)

01 Market Overview

1.1 FDD Price Index

This week the domestic urea market as a whole showed a pattern of stabilizing and rebounding before pulling back slightly. Mainly driven by news over the previous weekend that exports of binary fertilizer had been loosened and that a possible supplementary Indian tender might follow, market sentiment recovered. Combined with the earlier sustained price decline, improved cost-performance led to better deals in some regions; after sentiment improved, downstream inquiry enthusiasm rose, driving a modest overall recovery. However, the sustainability of real follow-through was temporarily limited; after prices rebounded, the market waited and watched for expectations to be realized, and as sentiment eased the market cooled slightly. On the supply side, although the industry operating rate slipped modestly, the overall level remained high and market supply was ample. On inventories, owing to a phase of weak demand and softening sentiment, the distribution chain's willingness to stock up was low, and enterprise inventories continued to accumulate substantially. On the demand side, agricultural rigid demand gradually faded; industrial downstream such as compound fertilizer and board processing maintained low operating rates, procurement was mostly just-in-time, wait-and-see sentiment was strong, and the willingness for bulk restocking was insufficient. On exports, the policy of actively issuing quotas provided some floor support to the market, but it has not yet formed a trend-driving force; nevertheless, given the September export surge beating expectations and the subsequent export expectation not yet disproven, the market still harbors some hope. Overall, supported by export news, sentiment remains present and the cost side offers some bottom support, but end demand has not yet formed an effective pull; with wait-and-see sentiment still lingering in the market, after the sentiment reaction the market mostly awaits the realization of export expectations. Going forward, the focus is on the export realization issue and the launch pace of winter-stocking restocking.

According to FDD data: as of this Friday, the domestic urea small-granular price index stood at 1,773.64, up 5.91 from last Friday, or +0.33% week-on-week.

In the first half of the week, the urea market was mainly stabilizing and rebounding. At the start of the week, market sentiment was boosted by the export news; after low-price deals improved in some regions over the weekend, overall market sentiment repaired, and the futures market opened higher and pushed up, then cooled slightly as sentiment eased, but the spot and futures markets showed a certain resonance of relative strength and the market atmosphere continued.

In the second half of the week, urea market sentiment eased and prices in some regions pulled back slightly. As the speculative excitement around the export news faded, the market's willingness to chase higher prices dropped, and it began to scrutinize whether the export news could be realized. After sentiment support in the futures market weakened, it pulled back slightly, driving localized spot price cuts; however, with the news not yet disproven a floor remained, and the market mostly waited and watched for the news to be realized.

1.2 Delivery-Zone Quotations

Specifically, prices in the Northeast fell to 1,760-1,800 yuan/t. Prices in East China rose to 1,720-1,750 yuan/t. In Central China, small/medium-granular prices rose to 1,730-1,920 yuan/t, while large-granular prices held steady at 2,020-2,050 yuan/t. Prices in North China rose to 1,600-1,800 yuan/t. Prices in South China rose to 1,810-1,840 yuan/t. Prices in Northwest China held steady at 1,860-1,910 yuan/t. Prices in Southwest China fell to 1,650-1,900 yuan/t.

02 Industry Chain Dynamics

2.1 Daily Output

Output: This week, domestic urea output was about 1.5016 million t, down 23,500 t from last week, or -1.54% week-on-week, and up 17.51% year-on-year; the weekly average daily output was 214,500 t, down 3,400 t from last week. Within the week, industry output fell slightly due to the impact of individual maintenance units, but daily output remained above 210,000 t, supply stayed at a high and volatile level, and the market supply side remained ample.

Operating rate: The domestic urea industry operating rate was about 88.39%, down 1.38% week-on-week and up 8.07% year-on-year; the weekly operating rate slipped modestly but overall stayed above the same period last year.

By specification, large-granular urea output was about 298,300 t, down 20,700 t from last week, or -6.49% week-on-week; up 26,600 t from the same period last year, or +9.79% year-on-year; the large-granular operating rate was about 84.55%, down 5.87% from last week and up 4.40% from the same period last year. Small/medium-granular urea output was about 1.2033 million t, down 2,800 t from last week, or -0.23% week-on-week; up 159,700 t from the same period last year, or +15.30% year-on-year; the small/medium-granular operating rate was about 89.39%, down 0.21% from last week and up 9.03% from the same period last year.

By process, coal-based urea output was about 1.2167 million t, down 18,500 t from last week and up 179,600 t from the same period last year; the operating rate was about 90.63%, down 1.38% from last week and up 9.40% from the same period last year. Gas-based urea output was about 284,900 t, down 5,000 t from last week and up 6,700 t from the same period last year; the operating rate was about 79.74%, down 1.60% from last week and up 12.18% from the same period last year.

2.2 Plant Operations

Table 1 China Urea Maintenance Loss Data

Table 2 China Urea Sample Planned-Maintenance Enterprise Data

2.3 Market Inventory

Enterprises: This week, enterprise inventories were about 1.7363 million t, up 131,800 t from last week, or +8.21% week-on-week; up 106,100 t from the same period last year, or +6.51% year-on-year. Domestic urea enterprise inventories continued to accumulate substantially this week, mainly because demand was in a phase of intermittent gap, industrial compound fertilizer was gradually winding down, the ability to consume material weakened, earlier traders had limited willingness to build positions due to weak demand, overall material circulation slowed, most plants faced pressure on order intake, and the magnitude of enterprise inventory accumulation widened.

[Chart] Urea Enterprise Inventory Trend

Ports: Port inventories totaled 695,200 t, up 116,800 t from last week, or +20.19% week-on-week; up 485,200 t from the same period last year, or +231.05% year-on-year. Within this cycle port inventories accumulated substantially, with both departure and arrival phenomena coexisting. With insufficient internal-demand flows, players still held positive port-arrival expectations; although Indian tender participation was inadequate due to price reasons, export still offered an arbitrage space, and combined with the considerable September export volume, the new round of export expectation has not been disproven, actively driving port-arrival enthusiasm.

Large-granular: This week, the domestic large-granular urea port inventory was 455,200 t, up 56,800 t from last week, or +14.26% week-on-week; up 233,200 t from the same period last year. Large-granular urea port volume rebounded within the week, above the same period last year's level.

Small-granular: This week, the domestic small-granular urea port inventory was 240,000 t, up 60,000 t from last week, or +33.33% week-on-week; up 16,000 t from the same period last year. Small-granular urea port inventory continued to rise within the week, roughly in line with the same period last year.

2.4 Compound Fertilizer Industry

This week the domestic compound fertilizer market as a whole remained weak, with autumn fertilizer entering its closing stage, limited incremental demand, and an overall slowdown in trading rhythm. As of this Friday, the domestic 45%S price index was 3,295.00; the 45%CL price index was 2,769.09.

On the cost side, most raw materials remained weak, cost support continued to collapse; among them urea prices showed some signs of stopping the decline and stabilizing, but sulfur, sulfuric acid, and MAP kept falling; potash also loosened repeatedly due to ample supply, and the weak trend of raw materials continued to drag down market sentiment, aggravating downstream caution in purchasing. On the demand side, with autumn fertilizer entering its closing stage, enterprises' core task now is inventory clearance, the market negotiates deal by deal, flexible concession deals are common, and continuous low-priced material further lowers the average market price. However, as application season approaches, local shipments have accelerated and are expected to continue until early November. On winter storage, although there are policies such as price guarantees, distributors remain wait-and-see and the market is still unclear. Overall, in the gap between autumn fertilizer winding down and winter-storage expectations not yet landing, compound fertilizer may run with weak oscillation; going forward the focus is on the trend of single-nutrient fertilizer raw materials, the progress of remaining autumn fertilizer shipments at the grassroots, and the implementation of winter-storage policies.

2.5 Melamine Industry

This week the domestic melamine market continued its downward trend, with high prices gradually converging toward low prices and a thin trading atmosphere. On the supply side, production units of various enterprises ran stably within the week, the industry operating rate remained above 60%, and market supply was plentiful. Demand remained sluggish, players held a bearish view of the future, and influenced by a "buy on rises, not on falls" mentality, overall market-entry enthusiasm dropped to a freezing point, with only sporadic rigid-demand deals. On the raw-material side, urea was firmed by sentiment support and rose modestly, periodically bolstering melamine producers' confidence in holding prices. Overall, the market's supply-demand mismatch pattern continued. Although the raw-material side brought some price-supporting support, it could not offset the dual pressure of weak demand and ample supply; enterprises' new-order deals were thin and inventory pressure kept increasing; pressed by order-intake needs, enterprises continued to concede profits to attract orders, and the concession space widened further. Looking to next week, the supply side still has incremental expectations, enterprises' shipment pressure will not ease, and the market still faces downside risk of further declines.

2.6 International Market Quotations

China bulk small-granular FOB was $345.01-352.01/t, up $2-10/t; Black Sea small-granular FOB was $375.01-400.01/t, down $5-20/t; Baltic small-granular FOB was $370.01-395.01/t, down $5-20/t; Middle East small-granular FOB was $430.01-445.01/t, up $5-10/t; Brazil small-granular CFR was $430.01-450.01/t, down $10/t; India CIF was $352.01-356.01/t, flat versus last week.

Iran large-granular FOB was $350.01/t, with the high end down $1/t; Egypt (Europe) large-granular FOB was $515.01-535.01/t, up $8-50/t. Brazil large-granular CFR was $470.01-485.01/t, with the low end up $10/t; Southeast Asia large-granular CFR was $460.01-485.01/t, up $5/t; China large-granular FOB was $425.01-435.01/t, with the low end up $10/t and the high end down $5/t.

03 Outlook

Supply: The industry's units overall maintained flexible production; the short-term operating level was largely stable with minor moves. Next week's overall daily output is expected to remain volatile at a high level around 210,000 t, and supply remains fairly ample. The market's focus may be on the relatively concentrated maintenance issue next month.

Inventory: Affected by the earlier demand-gap issue, enterprise inventories have accumulated substantially for consecutive weeks, and the overall inventory in social circulation channels still bears pressure; however, after this week's market deal improvement, next week's enterprise accumulation pressure is expected to ease somewhat, but the absolute inventory value remains at a year-on-year high and the market's pressure is hard to reduce.

Demand: At this stage agricultural direct application is gradually fading; downstream compound fertilizer enterprises' operating rates are overall low and keep declining, and raw-material procurement remains just-in-time; the pace and scale of export shipments determine whether excess capacity can be effectively digested. The market awaits whether the export news can be realized as expected to divert domestic pressure, and also watches whether reserve and other demand gradually build positions on dips.