Urea Weekly: Market Prices Fluctuate Under Supply and Stockpiling Impacts

Market Overview

Feidoodoo Price Index:

This week, the urea market prices first fell and then rose. Influenced by the supply and price stabilization policy and low enterprise inventory levels, companies adjusted their factory prices based on their own inventory and order situations. By the end of this week, the average price index of domestic small particle urea was 2549.19, a decrease of 40.22 from last week, a 1.55% drop.

At the beginning of the week, the urea market continued to maintain a high operating rate, with a slight increase in enterprise inventory. Under the guidance of the supply and price stabilization policy, urea enterprises lowered their prices according to their own situations, with many businesses entering the market for inquiries and purchases. Demand slightly increased, and low-end transactions rose, leading to good order receipts for companies, with prices showing regional growth and adjustments across different areas. In the latter half of the week, with a large volume of previous orders and some enterprises planning maintenance, there was an intent to stockpile, leading to an increase in factory prices by most enterprises. Downstream purchasing became relatively cautious, with actual transactions mostly following demand.

Urea Delivery Area Prices

Specifically, prices in the Northeast region fell to 2550-2600 RMB/ton. In North China, prices fell to 2340-2610 RMB/ton. In Northwest China, prices fell to 2510-2520 RMB/ton. In Southwest China, prices stabilized after falling to 2520-2800 RMB/ton. In East China, prices fell to 2440-2500 RMB/ton. In Central China, small and medium particle prices fell to 2450-2650 RMB/ton, and large particle prices fell to 2580-2660 RMB/ton. In South China, prices fell to 2650-2700 RMB/ton.

Industry Chain Dynamics

Rapid Daily Production Increase

This week, domestic urea production was about 1.2406 million tons, a decrease of 0.49, a 0.39% drop from last week, and a 15.97% increase year-over-year; daily production was 177,200 tons, a slight decline throughout the week, but still higher than the same period in 2022. The domestic urea industry's operating rate was about 80.46%, a 0.32% drop from last week, but a 12.00% increase year-over-year.

Looking at the process, coal-based urea production was about 959,900 tons, an increase of 15,500 tons from last week and 177,800 tons year-over-year, with an operating rate of about 82.02%, a 1.32% increase from last week and a 14.38% increase year-over-year. Gas-based urea production was about 280,700 tons, a decrease of 20,400 tons from last week and 7,000 tons year-over-year, with an operating rate of about 75.54%, a 5.49% drop from last week, but a 4.75% increase year-over-year.

Market Inventory:

This week, domestic large particle urea port inventory was 123,000 tons, a decrease of 4,000 tons from last week, a 3.15% drop, and a 102,000-ton increase year-over-year. The large particle urea port volume continued to decrease slightly this week, but still higher than last year.

This week, domestic small particle urea port inventory was 196,000 tons, an increase of 6,000 tons from last week, a 3.16% rise, and a 7,000-ton decrease year-over-year. The small particle urea port volume continued to increase slightly this week, but still lower than last year.

This week, enterprise inventory was about 436,300 tons, an increase of 77,000 tons from last week, a 21.43% rise; a 604,700-ton decrease year-over-year, a 58.09% drop. Port inventory totaled 319,000 tons, an increase of 2,000 tons from last week, a 0.63% rise; a 70,000-ton increase year-over-year, a 28.11% rise.

Compound Fertilizer Industry

This week, the domestic compound fertilizer market prices operated with narrow fluctuations. On the enterprise side, companies mainly shipped previous orders. With the gradual reduction in previous orders and insufficient new orders, most companies have lowered their factory prices to attract orders, with some regions seeing an increase in shipments in the latter half of the week. In terms of supply, the capacity utilization rate continued to increase, with the operating rate rising to 42.87%, and enterprise finished product inventory also slightly increased, currently providing a relatively relaxed supply side. In terms of demand, businesses remain cautious with new orders, but with weakening prices, market resistance has decreased, and many are replenishing according to their own situations. Overall, the current compound fertilizer market is largely influenced by raw material urea prices, and short-term compound fertilizer prices are expected to continue high-level narrow adjustments.

Melamine Industry

This week, the melamine market first stabilized and then fell, with prices in East and Southwest China showing significant declines. Influenced by significant fluctuations in raw materials this week, the market atmosphere was largely cautious. On the enterprise side, some companies reduced prices to receive orders, with actual transactions mainly being negotiated individually. Some companies had average domestic order receipts, with stable export orders. In terms of supply, this week's national average operating rate was 65.12%, a slight drop from last week but still maintaining a high level. With production units resuming next week, the operating rate is expected to increase again. In terms of demand, downstream demand was flat, mainly following immediate needs and entering the market at low prices, with a cautious mentality. Overall, the melamine market's cautious atmosphere is expected to continue, and next week's melamine market is expected to maintain stability with narrow fluctuations.