Urea Weekly: Market Supported by Multiple Positives, Trading Atmosphere Active

Market Overview:

Feidoodoo Price Index：

This week, the market price of urea continued to rise, with most manufacturers seeing good order intake, and downstream procurement gradually following suit, making for an active trading atmosphere. As of this Friday, the average price index of domestic urea in small particles was 2556.63, up by 44.93, a week-on-week increase of 1.79%.

Over the weekend, due to the reduction in Egypt's natural gas supply, some factories in Egypt faced production cuts or even shutdowns, which led to a decrease in urea production and an increase in international urea prices, thereby affecting the rise in domestic market prices. In addition, this week saw an increase in the volume of fertilizers prepared for agriculture, while the industrial demand maintained a small amount of restocking, enhancing the trading atmosphere compared to the previous period. Manufacturers received a large number of orders, taking the opportunity to raise their factory prices, with a strong mindset to hold prices. However, as prices continued to rise, downstream transactions began to level off, and the pace of restocking slowed compared to the previous two days. The reserve mentality turned to wait-and-see, with manufacturers seeing average new order transactions. But based on the support of a large number of orders from factories in the earlier period, the prices still operated robustly. Additionally, with some factories undergoing maintenance, daily production began to show a downward trend, reducing supply and supporting high prices.

Urea Delivery Regional Quotation:

Specifically, the price in the Northeast region rose to 2570-2620 yuan/ton. In North China, the price increased to 2390-2620 yuan/ton. The price in the Northwest region increased to 2540-2550 yuan/ton. In Southwest China, the price rose to 2480-2800 yuan/ton. The price in East China increased to 2490-2470 yuan/ton. In Central China, the price of small particles rose to 2520-2640 yuan/ton, and the price of large particles increased to 2550-2680 yuan/ton. In South China, the price rose to 2620-2690 yuan/ton.

Industry Chain Dynamics:

Daily Production Rapidly Rebounding：

This week, domestic urea production was about 1.2616 million tons, a week-on-week increase of 0.79% and a year-on-year increase of 20.84%; the daily output was 0.1802 million tons, continuing to rise slightly within the week and still higher than the same period last year. The operating rate of the domestic urea industry was about 81.82%, a week-on-week increase of 0.64% and a year-on-year increase of 15.01%; the operating rate continued to rise slightly, still higher than the same period last year.

Looking at the production process, the production of coal-based urea was about 0.9502 million tons, an increase of 0.0106 million tons from the previous week and 0.1893 million tons from the same period last year, with an operating rate of about 81.19%, up by 0.90% from the previous week and up by 15.39% from the same period last year. The production of gas-based urea was about 0.3114 million tons, a decrease of 0.0007 million tons from the previous week and an increase of 0.0283 million tons from the same period last year, with an operating rate of about 83.80%, down by 0.19% from the previous week and up by 14.14% year-on-year.

Market Inventory:

This week, the port inventory of domestic large-particle urea was 0.132 million tons, a decrease of 0.013 million tons from the previous week, and an increase of 0.105 million tons from the same period last year. The port inventory of large-particle urea decreased slightly within the week but was still higher than the same period last year.

This week, the port inventory of domestic small-particle urea was 0.1502 million tons, an increase of 0.0267 million tons from the previous week and a decrease of 0.0308 million tons from the same period last year. The port inventory of small-particle urea continued to increase within the week but was still lower than the same period last year.

This week, the enterprise inventory volume was about 0.3219 million tons, a week-on-week decrease of 0.0096 million tons, with a decrease rate of 2.90%; the port inventory was a total of 0.2822 million tons, a week-on-week increase of 5.10%.

Compound Fertilizer Industry:

This week, the operation rate of domestic compound fertilizer factories has slightly declined, with the winter storage in the pre-collection phase and finished product inventory continuing to maintain a low level. On the enterprise side, it is currently the winter storage phase, and the new prices of enterprises are mostly in the brewing process, with pricing not yet clear, mostly focusing on calculating interest. The main compound fertilizer enterprises continue to wait and see, with some new prices obviously adjusted upward, and the market trading focus subsequently moving up. On the market side, downstream distributors have a strong wait-and-see attitude, low enthusiasm for operation, and often operate in batches, waiting for later market indications. In general, the market for compound fertilizer winter storage is gradually following up, and it is expected that the domestic compound fertilizer market will continue to adjust narrowly in the short term, with the possibility of a reduction in low-end price sources.

Melamine Industry:

This week, the market price of melamine rose first and then stabilized, with enterprises having sufficient pre-received orders and a strong will to maintain prices. On the factory side, most factories are executing previous orders to be dispatched, with a relatively stable supply of goods, and the factory prices remain firm supported by pending orders. In terms of supply, the capacity utilization rate of melamine decreased slightly this week, tightening supply. On the demand side, downstream demand continued to be flat, mainly driven by just-in-time purchasing. In general, the melamine market continued its weak operation, with factory quotations still primarily maintaining prices, and downstream demand fluctuations were not significant. It is expected that next week's melamine prices will fluctuate steadily with minor adjustments.

International Market Quotations:

On the international market, the FOB price of bulk small-particle urea from China is 375-380 USD/ton, with the low end adjusted up by 10 USD/ton; the Baltic FOB price is 318-328 USD/ton, stable compared to last week.

The FOB price of large-particle urea from China is 380-390 USD/ton, with the low end adjusted down by 5 USD/ton; the Iranian large-particle FOB price is 340-350 USD/ton, stable compared to last week.

Market Outlook:

Supply: This week, an increase in enterprise failures and shutdowns has reduced supply, and this month, gas-based urea production is expected to decline gradually due to the impact of natural gas restrictions, reducing the future supply of gas-based urea.

Inventory: Currently, enterprise inventory continues to decline. With enterprises executing pre-received orders, it is expected that inventory will continue to be low.

Demand: Next week, the operating rate of the downstream compound fertilizer market will increase, industrial demand for urea will rebound slightly, and agricultural demand will continue to operate weakly.