Urea Weekly: Halving of Indian Standards Affects Domestic Trading Sentiment; Market Atmosphere Stalemates with a Wait-and-See Approach

Market Overview:

FeiDuoDuo Price Index:

This week, the urea market prices rose and then stabilized. During the Qingming holiday, there was an increase in low-priced transactions, and companies slightly increased their quotes after receiving orders at lower prices. As new orders weakened, companies mostly maintained their prices for reorganization.

According to Feidoodoo data: As of this Friday, the average price index for small granule urea in China was 2146.05, a decrease of 42.12 from last week, down 1.92% week-on-week.

The market situation was stable at the beginning of the week with a slight uptrend. After the holiday, the low-end market transactions increased, some factory quotes slightly explored higher prices, and the market price trend adjusted upwards. The demand side is mainly replenished at lower prices. During the holiday, the market made some progress in agricultural fertilization, but continued progress was difficult, with a persistent pessimistic sentiment. The situation was largely stable with minor adjustments, as manufacturers adjusted their quotes based on their order intake.

Mid-week, the market remained stable. The market was affected by the halving of international Indian standard quantities, loosening trading sentiment, weakening international market trends, and affecting the domestic market simultaneously, showing a stalemate atmosphere. Market players lacked motivation to follow the rise, maintaining a cautious wait-and-see attitude. Supported by pending orders, manufacturers maintained firm and stable quotes, with some companies continuing to raise their quotes slightly.

At the end of the week, the market situation fluctuated slightly downwards. The market continued to lack the motivation to chase higher prices, showing a weak downward trend. New factory orders decreased, and the situation returned to a sluggish state. In the short term, supported by pending shipments, the mentality was mostly to maintain prices, with quotes stabilizing. Agricultural demand followed up, and downstream factories proceeded as needed, providing some support to the market, with limited reductions in market prices.

Delivery Area Quotes:

Specifically, prices in the Northeast region fell to 2120-2210 yuan/ton. Prices in the East China region fell to 2050-2120 yuan/ton. Prices for small and medium granules in the Central China region fell to 2060-2300 yuan/ton, and for large granules to 2080-2170 yuan/ton. Prices in the North China region fell to 1950-2160 yuan/ton. Prices in the South China region fell to 2200-2260 yuan/ton. Prices in the Northwest region fell to 2070-2080 yuan/ton. Prices in the Southwest region fell to 2070-2450 yuan/ton.

Futures Warehouse Receipt Distribution:

As of this Thursday, Zhengzhou Commodity Exchange urea futures stood at 2738 sheets, an increase of 665 sheets week-on-week.

Industry Chain Dynamics:

Daily Production:

This week, domestic urea production was about 128.52 thousand tons, a decrease of 1.62 thousand tons from last week, down 1.24% week-on-week, and up 7.01% year-on-year. Daily production was 18.36 thousand tons, slightly down this week, with several units entering maintenance this month, anticipating a decline in daily industry production.

Operational Rate:

The operational rate for the domestic urea industry was about 84.79%, down 1.07% week-on-week, and up 2.72% year-on-year. The weekly operational rate in the domestic urea industry decreased but remained higher than in the same period last year.

By Model:

Large granule urea production was about 25.23 thousand tons, a decrease of 0.51 thousand tons week-on-week, down 1.98%, but an increase of 5.48 thousand tons year-on-year, up 27.75%. The operational rate for large granules was about 87.73%, down 1.77% week-on-week, up 12.94% year-on-year. Small and medium granule urea production was about 103.29 thousand tons, down 1.11 thousand tons week-on-week, down 1.06%, but up 3.04 thousand tons year-on-year, up 3.03%. The operational rate for small and medium granules was about 84.10%, down 0.90% week-on-week, and up 0.42% year-on-year.

By Production Method:

Coal-based urea production was about 98.93 thousand tons, down 1.12 thousand tons week-on-week, up 7.47 thousand tons year-on-year. The operational rate was about 86.46%, down 0.98% week-on-week, and up 2.69% year-on-year. Gas-based urea production was about 29.59 thousand tons, down 0.50 thousand tons week-on-week, and up 0.95 thousand tons year-on-year. The operational rate was about 79.63%, down 1.34% week-on-week, and up 2.56% year-on-year.

Market Inventory:

Companies:

This week, company inventory amounted to about 63.43 thousand tons, down 5.36 thousand tons week-on-week, down 7.79%; down 20.43 year-on-year, down 24.36%.

Ports:

Port inventory totaled 19.50 thousand tons, down 0.50 thousand tons week-on-week, down 2.50%; up 13.80 thousand tons year-on-year, up 242.11%.

Large Granules:

This week, domestic large granule urea port inventory was 11.90 thousand tons, down 0.30 thousand tons week-on-week, down 2.46%; up 7.40 thousand tons year-on-year, continuing to be higher than the same period last year.

Small Granules:

This week, domestic small granule urea port inventory was 7.60 thousand tons, down 0.20 thousand tons week-on-week, down 2.56%; up 6.40 thousand tons year-on-year, continuing to be higher than the same period last year.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market prices continued to show a weak downtrend, with the market operating weakly. As of this Friday, the domestic 45%S price index was 2842.50; the 45%CL price index was 2426.36.

Enterprises:

Enterprises extended their guarantee periods, with few new prices introduced. Some enterprises reduced their spring fertilizer inventory by adjusting their quotes downward. From a market perspective, lower-end goods sold better, with more flexible transaction negotiations. On the supply side, the compound fertilizer market's operational rate was 41.70% this week, down 0.93%, with industry capacity utilization continuing to decline, and industry inventory slightly decreasing.

Demand Side:

Currently, purchases are mainly for end-of-spring orders, with some summer fertilizers following up. In the short term, the market still has essential needs. In summary, at this stage, the compound fertilizer market is undergoing a weak consolidation, with market prices expected to continue to adjust downward in the short term.

Melamine Industry:

This week, the melamine market transactions were flat, with prices still falling.

Factory Side:

Manufacturers received fewer orders, and despite continuous price reductions, transactions remained pessimistic, with the market situation weakly consolidating. From a market perspective, the overall trading atmosphere was weak, continuing the weak trend, with a short-term lack of positive support. On the supply side, this week's melamine industry operational rate decreased but remained relatively high, at 62.77%, down 7.81% week-on-week, with many devices undergoing short stops, having a small impact on supply, but supply pressure remained. On the demand side, downstream demand was sluggish, with insufficient follow-up, and poor new order transactions. In summary, the current supply-demand relationship in the melamine market remains weak, with no positive support in the market, and the situation is expected to remain weakly stable, with melamine market prices expected to remain weakly adjusted next week.

International Market Quotes:

Internationally, bulk small granule Chinese FOB prices were 295-299 USD/ton, up 4-5 USD/ton; Baltic FOB prices were 245-285 USD/ton, down 10-30 USD/ton.

Large granule Chinese FOB prices were 327-329 USD/ton, up 15 USD/ton from last week; Iranian large granule FOB prices were 255-285 USD/ton, down 7-30 USD/ton.

Market Outlook:

Supply:

This week, more enterprise equipment failures occurred, slightly reducing industry supply. Next week, some enterprises are expected to continue maintenance, anticipating a slight decrease in industry supply.

Inventory:

This week, after the holiday, low-price order intake was good, leading to a slight de-stocking by companies. Next week, as companies continue to ship, inventory is expected to decrease.

Demand:

Agriculture is in a fertilization preparation period, with essential purchases following up; industrial downstream compound fertilizer factories are affected by slowing sales, with a tepid purchasing intent for raw materials, maintaining minimal essential orders, with limited follow-up.