Urea Weekly: Increased Transactions at Lower Market End, Weak Market Downtrend

Market Overview:
Feidoodoo Price Index:
This week, the urea market saw an increase in transactions at the lower end, amidst high supply levels, leading to decreased trading confidence and a weak market downtrend.

According to Feidoodoo Data, by the end of this Friday, the domestic small particle urea price index averaged 2333.19, down by 11.33 from last week, marking a 0.48% decrease.

At the beginning of the week, with unclear export news, the market maintained a stalemate. Most manufacturers focused on shipping pre-received orders, with sufficient pending shipments stabilizing factory prices with minor adjustments. Despite existing downstream restocking demand, purchases were mainly at low prices, showing significant resistance to high prices. The overall demand progressed slowly, with a cautious and wait-and-see attitude. Some mainstream areas saw increased transactions after price loosening, with the market mainly closing deals at the lower end, and prices adjusting downward instability.

In the latter half of the week, as market prices loosened and decreased, new order transactions increased, manufacturers' pending shipments gradually reduced, and the pressure to ship goods became apparent. Quotations continued to adjust steadily downward. Furthermore, with no positive export news in the market and continued high supply levels in the industry, the market's wait-and-see sentiment intensified, with downstream making sporadic small orders, leading to a downward adjustment in market prices.

Delivery Area Quotations:

Specifically, prices in the Northeast region fell to 2300-2360 yuan/ton. In the North China region, prices fell to 2110-2390 yuan/ton. In the East China region, prices dropped to 2250-2290 yuan/ton. Prices in the South China region decreased to 2350-2390 yuan/ton. In the Central China region, small to medium particle prices fell to 2240-2400 yuan/ton, while large particle prices dropped to 2290-2380 yuan/ton. In the Northwest region, prices decreased to 2270-2280 yuan/ton. The Southwest region's prices fell to 2280-2600 yuan/ton.

Futures Warehouse Receipt Distribution:

As of this Friday, the Zhengzhou Commodity Exchange urea futures had 1055 receipts, an increase of 929 from last week.

Industry Chain Dynamics:

Daily Production:

Production: This week, domestic urea production was approximately 1.2967 million tons, an increase of 2.46 from last week, a 1.93% week-on-week increase, and a 9.56% year-on-year increase. Daily production was 185,200 tons, with minor maintenance in the industry leading to a slight recovery in production and continued high supply levels.

Operational Rate: The operational rate of the domestic urea industry was approximately 85.55%, a 1.63% increase week-on-week and a 4.68% increase year-on-year, continuing to exceed the level of the same period last year.

By type, large particle urea production was approximately 246,100 tons, an increase of 6,500 tons from last week, a 2.71% week-on-week increase, and a 21.05% year-on-year increase. The operational rate for large particles was about 85.57%, a 2.26% increase from last week and an 8.97% increase from the same period last year. Small to medium particle urea production was about 1.0506 million tons, an increase of 18,100 tons from last week, a 1.75% week-on-week increase, and a 7.18% year-on-year increase. The operational rate for small to medium particles was about 85.54%, a 1.47% increase from last week and a 3.72% increase from the same period last year.

By production method, coal-based urea production was about 1.0083 million tons, an increase of 24,400 tons from last week and an increase of 100,800 tons year-on-year. The operational rate was about 88.12%, a 2.13% increase from last week and a 5.00% increase year-on-year. Gas-based urea production was about 288,400 tons, an increase of 200 tons from last week and an increase of 12,400 tons year-on-year. The operational rate was about 77.61%, a 0.05% increase from last week and a 3.34% increase year-on-year.

Market Inventory:

Enterprises: This week, enterprise inventory levels were about 617,200 tons, a decrease of 43,600 tons from last week, a 6.60% week-on-week decrease, and a 16.37% decrease compared to the same period last year.

Ports: Port inventories totaled 194,000 tons, a decrease of 400 tons from last week, a 2.02% week-on-week decrease, and a 57.72% year-on-year increase.

Large Particles: This week, domestic large particle urea port inventory was 121,000 tons, a decrease of 3,000 tons from last week, a 2.42% week-on-week decrease, but still higher than the same period last year.

Small Particles: This week, domestic small particle urea port inventory was 73,000 tons, a decrease of 1,000 tons from last week, a 1.35% week-on-week decrease, but still lower than the same period last year.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market followed with active transactions, and prices remained stable.

As of this Friday, the domestic 45%S price index was 2905.83; the 45%CL price index was 2541.82. From the enterprise perspective, companies were actively shipping goods, mainly dispatching pre-received orders, with prices adjusting slightly within stability, and low willingness to change prices. With the onset of seasonal demand in the market, goods shipping increased significantly compared to the previous period, leading to an active market and a slight decrease in finished product inventory among companies, creating a positive atmosphere overall. On the supply side, the compound fertilizer market's operational rate was 51.48% this week, an increase of 1.98% from last week, continuing a slight increase in industry capacity utilization. On the demand side, as spring plowing and fertilizer preparation began, concentrated shipments started, with demand gradually following. Overall, the compound fertilizer market currently has active transactions and a positive atmosphere, with prices expected to maintain stability with minor adjustments in the short term.

Melamine Industry:

This week, the melamine market showed weak fluctuations, with prices remaining stable.

From the factory perspective, manufacturers received few orders, faced shipping pressures, and were forced to lower prices to attract orders, leading to downward price adjustments. In the market, the transaction atmosphere was poor, downstream demand was weak, and new order transactions were average. On the supply side, the melamine industry's operational rate slightly decreased this week. Still, it continued at high levels, with an operational rate of 74.47%, indicating continuous high operational levels in the domestic industry and sufficient market supply, limiting price increases. On the demand side, downstream demand was weak, with a strong wait-and-see atmosphere and low purchasing enthusiasm. Overall, the current melamine market continues with high supply levels, weak demand, and a dismal atmosphere, with the market expected to continue weak adjustments mainly in the next week.

International Market Quotations:

Internationally, bulk small particle China FOB prices were 337-342 USD/ton, with the lower end increasing by 1 USD/ton; Baltic Sea FOB prices were 280-305 USD/ton, decreasing by 5-8 USD/ton.

Large particle China FOB prices were 344 USD/ton, decreasing by 6 USD/ton; Iran large particle FOB prices were 320-330 USD/ton, decreasing by 5-10 USD/ton.

Market Outlook:

Supply: This week, daily industry production continued to slightly decrease, with individual facilities planning maintenance next week, expecting market supply to slightly decrease from this week but overall maintaining high operational levels.

Inventory: This week, with continuous shipments from enterprises, enterprise inventory levels continued to decrease, with next week's trend expected to remain the same.

Demand: Agricultural demand temporarily slowed, with overall demand being unstable; industrial downstream factories' operational levels continued to steadily recover, maintaining low-price purchases, with demand continuously following, leading to stable demand dynamics.