Urea Weekly: Market Focus Shifts to Industry Conference, Muted Trading Activity

Market Overview:

• Feidoodoo Price Index: This week, the urea market experienced significant price drops and minor increases. With the ongoing phosphate compound fertilizer conference, market transaction activity decreased. As of this Friday, the domestic price index for small granular urea averaged 2589.41, a drop of 23.18 or 0.89% compared to last week.
• Early Week: At the start of the week, major urea manufacturers reduced their factory prices to attract new orders, leading to downstream buyers entering the market for low-cost replenishments. The factories saw good order intake, followed by peripheral factories lowering their prices in response, also witnessing good order intake, which improved market trading activity. Mid-week, companies controlled order intake and inventory by slightly raising their factory prices. However, due to the imminent Wuhan phosphate compound fertilizer industry conference, many manufacturers attended the event, leading to a decrease in market trading activity. Factories maintained steady price adjustments, limiting orders, and resulting in weaker spot transactions, with many awaiting further guidance from the conference. In the latter part of the week, downstream purchasing urgency declined due to policy support for stable prices and futures market news, along with expectations of delayed stocking, leading to a wait-and-see approach in the downstream market.

Urea Delivery Area Pricing:

• Northeast Region: Prices fell to 2590-2660 CNY/ton.
• North China: Prices dropped to 2380-2680 CNY/ton.
• Northwest Region: Prices declined to 2550-2560 CNY/ton.
• Southwest Region: Prices remained stable at 2550-2800 CNY/ton.
• East China: Prices decreased to 2460-2540 CNY/ton.
• Central China: Prices for small and medium granules fell to 2520-2660 CNY/ton, and large granules to 2620-2730 CNY/ton.
• South China: Prices dropped to 2650-2730 CNY/ton.

Futures Warehouse Receipt Distribution:

• As of this Thursday, Zhengzhou Commodity Exchange urea futures stood at 6063 sheets, an increase of 3313 from last week.

Industry Chain Dynamics:

• Rapid Increase in Daily Production: This week, domestic urea production was approximately 1.2455 million tons, a 1.11% increase from last week and a 14.93% year-over-year increase. The daily production of 177,900 tons began to rebound slightly within the week, still above the levels of 2022. The domestic urea industry's operating rate was about 80.78%, up 0.89% from last week and 11.43% year-over-year.
• By Process: Coal-based urea production was about 944,400 tons, an increase of 23,000 tons from last week and 170,800 tons year-over-year, with an operating rate of about 80.70%, up 1.97% from last week and 13.80% year-over-year. Gas-based urea production was about 301,100 tons, a decrease of 9,300 tons from last week and 9,000 tons year-over-year, with an operating rate of about 81.03%, down 2.50% from last week but up 4.73% year-over-year.

Market Inventory:

• This Week:
  Domestic large granular urea port inventory was 127,000 tons, down 3,000 tons from last week but up 107,000 tons year-over-year. Small granular urea port inventory was 190,000 tons, an increase of 24,000 tons from last week but down 29,000 tons year-over-year.
  Corporate inventory was about 359,300 tons, an increase of 17,900 tons, up 5.24%. Port inventory totaled 317,000 tons, an increase of 21,000 tons, up 7.09%, and up 78,000 tons year-over-year, an increase of 32.64%.

Compound Fertilizer Industry:

• This Week:
  Domestic compound fertilizer market prices remained stable. During the phosphate compound fertilizer conference, operations turned sluggish, awaiting further guidance from the conference news. Companies mainly fulfilled earlier orders with limited new pricing and few new deals. Capacity utilization continued to increase, and the company's finished product inventory slightly rose, with a utilization rate of 37.59%, up 4.15 percentage points from last week. The market observed a relatively heavy wait-and-see atmosphere with general market shipments as winter storage continued to advance. Overall, the market remained flat this week, and the domestic compound fertilizer market is expected to continue its weak performance in the short term.

Melamine Industry:

• This Week:
  The melamine market operated weakly, with stable prices and local fluctuations. Most factories focused on fulfilling pre-received orders, with limited new deals and narrow price fluctuations. The domestic average operating rate was 65.66%, reaching a high point for the year, with ample supply and factory price increases under pressure. Downstream demand was flat, primarily just-in-time purchases, leading to a poor market trading atmosphere. Overall, the recent melamine market is expected to continue with narrow fluctuations next week.

International Market Pricing:

• Bulk Small Granules China FOB Price: 360-370 USD/ton, stable compared to last week.
• Baltic Sea FOB Price: 290-295 USD/ton, down 20-35 USD/ton.
• Large Granules China FOB Price: 350-360 USD/ton, down 25 USD/ton.
• Iran Large Granules FOB Price: 320-330 USD/ton, down 16-25 USD/ton.