Urea Weekly: Market Conditions Improved by Low Inventory Impact, Prices Adjust Upwards After Initial Drop

Market Overview

FertilePlus Price Index

This week, the urea market saw active trading, and the atmosphere in the market received a boost before the week ended, with prices adjusting upwards after an initial decline.

According to Feidoodoo data: As of this Friday, the domestic urea small particle price index averaged 2243.35, an increase of 10.35, up 0.46% compared to last week.

In the first half of the week, market prices were adjusted downwards. The positive export news weakened, leading to a stalemate in market sentiment and declining quotes. Although export news continued to ferment, the low international prices limited the arbitrage opportunities for domestic companies, which kept most companies focused on fulfilling domestic pre-orders and stabilizing shipments. Expectations of increased operations throughout the week kept the market sentiment cautious, leading to stiff market operations with prices adjusting downward.

In the second half of the week, an increase in low-price transactions led to a rebound in urea prices. Improved low-price order collections in the main production and sales regions warmed up the market atmosphere again, reduced low-priced supplies, and lowered corporate inventories. The easing of order collection pressure ahead of the May 1st holiday led some factories to raise their quotes, and some stopped collecting orders altogether, boosting the market atmosphere. Downstream, the demand began to follow up with necessities, leading many factories to adjust their prices upward in line with the trend.

Delivery Area Quotes

Specifically, prices in the Northeast region dropped to 2160-2230 yuan/ton. Prices in the East China region rose to 2240-2280 yuan/ton. In the Central China region, small and medium particle prices stabilized at 2230-2350 yuan/ton, while large particle prices dropped to 2220-2250 yuan/ton. North China prices rose to 2120-2230 yuan/ton. South China prices increased to 2320-2400 yuan/ton. Northwest prices dropped to 2030-2120 yuan/ton. Southwest prices rose to 2180-2550 yuan/ton.

Futures Warehouse Receipt Distribution

As of this Thursday, there were 2290 urea futures receipts on the Zhengzhou Commodity Exchange, a decrease of 289 from last week.

Industry Chain Dynamics

Daily Production

Production: This week, domestic urea production was about 123.84 thousand tons, down 2.56 or 2.03% from last week, and up 1.63% year-on-year; the daily production was 17.69 thousand tons. Industry daily production continued to decline this week, with some facilities under maintenance, but many previously halted facilities resumed production in the second half of the week, limiting the overall decline in daily production.

Operational Rate: The domestic urea industry's operational rate was about 81.70%, down 1.69% from last week and 1.56% year-on-year; the industry's operational rate declined this week, below the same period last year.

Market Inventory

Enterprises: This week, corporate inventory was about 523.6 thousand tons, down 16.9 thousand tons or 3.13% from last week, and down 556.8 thousand tons or 51.54% year-on-year.

Ports: Port inventories totaled 199.0 thousand tons, down 3.0 thousand tons or 1.49% from last week, and up 39.5 thousand tons or 24.76% year-on-year.

Market Outlook

Supply: Before the end of this week, facilities under previous maintenance gradually resumed, and daily production increased, but corporate inventories slightly decreased. With further maintenance planned for some enterprises, it is expected that next week's industry supply will continue to adjust downward steadily.

Inventory: Many companies shipped pre-received orders this week, and by the end of the week, order collection was good, so it is expected that next week companies will continue to reduce inventory.

Demand: There is an ongoing need for stockpiling the downstream, and with the market trading atmosphere improving this week, downstream factories and traders are following up timely and adequately with restocking.