Urea Weekly: Market Supply is Tight and Prices Remain High

Market Overview

Feidoodoo Price Index

This week, the domestic urea market price continued to rise. The average price of domestic small granular urea was 2547.42, up by 17.1 from last week, a week-on-week increase of 1.56%. Influenced by the price increase marked last week, the urea market price has reached a high point. This week, there was a slight adjustment in the market trend, with the price index lower than last Friday. On Wednesday, due to a coal accident and environmental protection factors, production in Jincheng, Shanxi was reduced, causing the urea market supply to tighten. In addition, most companies concentrated on maintenance this week, which resulted in a decrease in market supplies. On the downstream side, the compound fertilizer market has a high start-up rate. With the autumnal fertilizer needs for some crops, the overall market demand remains considerable.

Urea Delivery Area Quotes

Specifically, prices in the Northeast region rose to 2450-2520 yuan/ton. North China prices rose to 2440-2630 yuan/ton. Northwest region prices fell to 2540-2550 yuan/ton. The Southwest region's price rose to 2450-2800 yuan/ton. East China prices rose to 2570-2620 yuan/ton. Central China's small granular price rose to 2480-2700 yuan/ton, while large granular prices fell to 2550-2580 yuan/ton. South China prices rose to 2630-2750 yuan/ton.

Industry Chain Dynamics

The daily production increased rapidly. This week, the domestic urea production was about 1.155 million tons, down 2.4% from the previous month and up 20.35% year-on-year. The daily production was 165,000 tons, and the daily production continued to decline slightly within the week. The domestic urea industry's start-up rate was about 77.9%, with a month-on-month decrease of 1.91%, and a year-on-year increase of 16.5%.

From a production process perspective, coal-based urea production was about 865,500 tons, down 26,600 tons from last week and up 154,600 tons year-on-year. The start-up rate was about 77.9%, down 2.39% from last week and up 16.43% year-on-year. Gas-based urea production was about 290,000 tons, down 1,800 tons from last week and up 40,700 tons year-on-year, with a start-up rate of about 78%, down 0.49% from last week and up 16.68% year-on-year.

Market Inventory

This week, the domestic large granular urea port inventory was 164,000 tons, an increase of 20,000 tons from last week and an increase of 92,000 tons year-on-year.

This week, the domestic small granular urea port inventory was 440,000 tons, an increase of 151,500 tons from last week and an increase of 320,000 tons year-on-year.

This week, the company inventory was about 280,000 tons, a week-on-week increase of 15,000 tons; the port inventory totaled 604,000 tons, a month-on-month increase of 39.65%.

Compound Fertilizer Industry

This week, the domestic compound fertilizer market price continued to rise steadily. In terms of raw materials, the high prices of upstream raw materials have provided some support for compound fertilizer prices. In terms of companies, they mainly focused on shipping earlier orders. Some devices were shut down for maintenance. Company stocks are at a low level, and supplies are slightly tight. In terms of demand, the autumn fertilizer season is approaching. Downstream dealers are more eager to pick up goods, and the speed of goods circulation is faster. In addition, as the winter storage in the northeast and some southern regions follows, the market atmosphere is improving. It is expected that the domestic compound fertilizer market will remain strong in the short term.

Melamine Industry

This week, the domestic melamine market performed well. In terms of demand, current downstream demand is flat, causing companies to be cautious about price adjustments and having difficulty in quoting. In terms of companies, some companies have sufficient pending orders, and the overall sales pressure is not high. Also, most companies have maintenance plans. It is expected that the start-up rate will be low in the coming week, and the market's arrival volume will begin to decline. The willingness of companies to support prices is beginning to show. Overall, the melamine market price will continue to operate at a high level, with a higher likelihood of increases than decreases.

International Market Quotes

On the international market, the FOB price for bulk small granules in China is 372-380 USD/ton, up 2-4 USD/ton; the Baltic FOB price is 315-355 USD/ton, down 15-27 USD/ton.

The FOB price for large granules in China is 380-385 USD/ton, down 10 USD/ton; the FOB price for large granules in Iran is 330-340 USD/ton, down 20 USD/ton.

Market Outlook

Supply: The Jincheng area is limited in production for a week due to environmental factors. Local device maintenance has increased, market supply has decreased, and spot goods are tight.

Inventory: The total inventory of domestic urea companies is 280,000 tons, an increase of 15,000 tons from the previous statistical period, a month-on-month increase of 5.67%, and company inventory has increased slightly.

Demand: The agricultural market demand follows slowly, and the release of orders from compound fertilizer factories and exports has slowed down.