Urea Weekly: Gradual Recovery of Maintenance Units, Market Purchasing Attitude Cautious

Market Overview:

Fertile Much Price Index:

This week, the urea market saw significant price drops and minor rises, with a weak demand side and prices showing resistance.

According to Feidoodoo data calculations: As of this Friday, the domestic urea small granules price index average was 2327.74, down by 38.43, a 1.62% decrease compared to last week.

At the beginning of the week, with the gradual decrease in pending orders, many manufacturers lowered their quotes. Due to expectations of increased supply, business purchasing followed slowly. Agricultural needs mostly sought lower prices for restocking, showing low enthusiasm for purchasing. Downstream compound fertilizer operations ran at a low level, showing weak enthusiasm for raw material procurement, leading to a pessimistic overall demand side and a continued cautious market atmosphere, with many traders adopting a wait-and-see approach.
Midweek, some regions showed signs of agricultural demand starting up, with factory prices adjusting upwards regionally, indicating a slight market rebound. Businesses followed up moderately, with a slight increase in transactions, and the market atmosphere improved compared to earlier. However, due to snowy weather, factory shipments were obstructed, slowing down the agricultural demand follow-up and maintaining a wait-and-see attitude.

At the end of the week, industry supply slowly increased. The previously shut-down plants in the Southwest region are expected to resume by the end of this month, leading to an expected ample supply. With daily production steadily increasing, downstream follow-up slowed down, maintaining a cautious attitude, and traders mostly kept to minimal necessary restocking, contributing to a strong bearish market sentiment.

Delivery Area Quotations:

Specifically, prices in the Northeast region fell to 2300-2330 RMB/ton. In the North China region, prices fell to 2050-2360 RMB/ton. In the East China region, prices fell to 2230-2290 RMB/ton. In the South China region, prices fell to 2380-2420 RMB/ton. In the Central China region, small and medium granule prices fell to 2190-2420 RMB/ton, and large granule prices fell to 2380-2400 RMB/ton. In the Northwest region, prices fell to 2230-2240 RMB/ton. In the Southwest region, prices remained stable at 2300-2800 RMB/ton.

Futures Warehouse Receipt Distribution:

As of this Thursday, Zhengzhou Commodity Exchange urea futures had 10,645 receipts, a decrease of 176 compared to last week.

Industry Chain Dynamics:

Daily Production:

Production: This week, domestic urea production was about 1,123,800 tons, an increase of 5,610, a 5.25% rise week-on-week, and a 10.41% increase year-on-year. The daily production was 160,500 tons, with previously under-maintenance units recovering, leading to an increase in daily production, continuing to be higher than the same period in 2023.

Operating Rate: The domestic urea industry operating rate was about 74.14%, a 3.70% rise week-on-week, and a 4.59% increase year-on-year. The domestic urea industry operating rate increased, continuing to be higher than last year.

Looking at different types, large granule urea production was about 219,600 tons, an increase of 47,500 tons, a 27.60% rise week-on-week, and a 17.94% increase year-on-year. The large granule operating rate was about 76.36%, up by 16.52% week-on-week, and 6.20% higher than last year. Small and medium granule urea production was about 904,200 tons, an increase of 8,600 tons, a 0.96% rise week-on-week, and an 8.73% increase year-on-year. The small and medium granule operating rate was about 73.62%, up by 0.70% week-on-week, and 4.20% higher than last year.

Looking at the production process, coal-based urea production was about 976,100 tons, an increase of 41,700 tons compared to last year. The operating rate was about 85.31%, up by 3.65% week-on-week, and 3.45% higher than last year. Gas-based urea production was about 147,700 tons, an increase of 14,400 tons year-on-year. The operating rate was about 39.75%, up by 3.88% week-on-week, and 6.38% higher than last year.

Market Inventory:

Enterprises: This week, enterprise inventory was about 542,000 tons, an increase of 24,100 tons, a 4.65% rise week-on-week; a decrease of 245,700 tons, a 31.19% fall year-on-year.

Ports: Port inventory totaled 170,000 tons, a decrease of 10,000 tons, a 5.56% fall week-on-week; a decrease of 38,000 tons, an 18.27% fall year-on-year.
Large Granules: This week, domestic large granule urea port inventory was 89,000 tons, a decrease of 9,000 tons, a 9.18% fall week-on-week; an increase of 49,000 tons year-on-year. Large granule urea port inventory slightly decreased this week but remained higher than last year.
Small Granules: This week, domestic small granule urea port inventory was 81,000 tons, a decrease of 1,000 tons, a 1.22% fall week-on-week; a decrease of 87,000 tons, a continued fall compared to last year.