Contents

1. Urea Market Overview
   1.1 FDD Price Index
   1.2 Delivery Region Quotations

2. Industry Chain Dynamics
   2.1 Daily Production
   2.2 Market Inventory
   2.3 Compound Fertilizer Industry
   2.4 Melamine Industry
   2.5 International Market Quotations

3. Market Outlook

01 Market Overview

1.1 FDD Price Index

This week, China’s domestic urea market generally showed a volatile and weak trend. Changes in news-driven expectations remained the core variable driving market fluctuations. Export-related positive news circulated last weekend, briefly boosting bullish sentiment. Combined with active quotation cuts by some mainstream producers to stimulate procurement, market trading activity increased notably, enterprise shipments improved in stages, and quotations were adjusted slightly higher.

However, as the news was later denied, the upward momentum lacked sustained support. High-priced cargoes faced clear transaction resistance, while downstream distributors and end-user farmers had limited actual digestion capacity and weak willingness for bulk restocking.

On the supply side, enterprise operating rates rose slightly this week, and national daily output remained at a high level above 210,000 tonnes. Enterprise inventories continued to accumulate, although the pace of accumulation narrowed. In some regions, agricultural rigid demand increased and drove part of the supply downstream, but overall demand fundamentals remained weak. Terminal acceptance capacity was limited, and inventory pressure at producers remained relatively high.

On the demand side, agricultural demand only followed up moderately and was unable to form effective support. Operating rates in industrial sectors such as compound fertilizer and panels remained low, rigid-demand procurement was limited, and overall demand support was weak.

Overall, the current urea market faces a prominent supply-demand contradiction: high operating rates, high daily output, and continued inventory accumulation coexist, while domestic demand support remains limited. The short-term loose supply-demand pattern is difficult to materially improve. Export policy remains the most important variable for the future market. If export-related positive factors are gradually implemented, they may provide phased support to the market. Before policy clarity emerges, however, the market is likely to continue stalemate consolidation. Going forward, attention should be paid to the pace of enterprise inventory digestion and potential changes in export policy.

According to FDD data, as of this Friday, the average domestic small-granule urea price index was 1,844.36, down 1.68 from last week, a decrease of 0.09% week-on-week.

In the first half of the week, the urea market operated firmly. On the spot side, export-related positive signals stimulated transaction improvement, briefly repairing industry demand expectations and policy-support sentiment. In addition, some factories had previously lowered quotations to secure orders, significantly boosting trading activity. Pre-sale orders at producers improved in stages, enterprises raised ex-factory offers accordingly, and the market saw a modest round of price increases.

On the futures side, prices strengthened in line with spot expectations. Long-side funds entered in stages, the main contract fluctuated upward, and market trading centered on expectations for incremental exports and partial recovery in agricultural demand. Short-term optimism drove a wave of rebound on the board, and speculative trading activity increased slightly.

In the second half of the week, the urea market fluctuated weakly. In the spot market, transactions remained difficult to expand after earlier price increases. High-priced cargoes faced circulation resistance, producer inventory pressure did not ease, and bullish sentiment cooled quickly. Low-priced supply gradually increased in the market, quotations in previously high-priced regions loosened and moved lower, the firm market structure broke down, and the price center continued to decline.

On the futures side, futures and spot formed negative feedback. Continued spot concessions to promote shipments dragged down board expectations. Traders became more wait-and-see, only making small restocking purchases on dips, with no concentrated stocking behavior. Contracts remained under pressure throughout the week, intraday fluctuations were mainly weak, and fund participation became more cautious.

1.2 Delivery Region Quotations

Specifically, prices in Northeast China remained stable at RMB 1,870-1,920/tonne. Prices in East China fell to RMB 1,700-1,850/tonne. Prices for small- and medium-granule urea in Central China fell to RMB 1,770-1,920/tonne, while large-granule prices fell to RMB 1,780-1,810/tonne. Prices in North China fell to RMB 1,650-1,910/tonne. Prices in South China fell to RMB 1,840-1,930/tonne. Prices in Northwest China rose to RMB 1,850-1,910/tonne. Prices in Southwest China fell to RMB 1,680-2,140/tonne.

02 Industry Chain Dynamics

2.1 Daily Production

Output

This week, domestic urea output was around 1.5107 million tonnes, up 7,100 tonnes from last week, an increase of 0.47% week-on-week and 10.55% year-on-year. Daily output was 215,800 tonnes. During the week, industry daily output stayed above 210,000 tonnes, and supply continued to fluctuate at high levels, leaving the market supply side still ample. Average daily output for the week was 215,800 tonnes, up 1,000 tonnes from last week.

During the cycle, provinces with a clear week-on-week increase in output included Jiangsu and Shandong, while provinces with a clear week-on-week decrease included Shanxi.

Operating Rate

The domestic urea industry operating rate was around 90.45%, up 0.42 percentage points week-on-week and 5.19 percentage points year-on-year. The weekly operating rate rose and remained above the same period last year. During the cycle, provinces with rising operating rates included Gansu and Jiangsu, while provinces with declining operating rates included Hebei, Liaoning, and Shanxi.

By product type, large-granule urea output was around 290,600 tonnes, down 17,700 tonnes from last week, a decrease of 5.74% week-on-week, and up 15,600 tonnes from the same period last year, an increase of 5.67% year-on-year. The large-granule operating rate was around 83.89%, down 0.97 percentage points from last week and up 0.68 percentage points from the same period last year.

Small- and medium-granule urea output was around 1.2201 million tonnes, up 24,800 tonnes from last week, an increase of 2.07% week-on-week, and up 113,300 tonnes from the same period last year, an increase of 10.24% year-on-year. The small- and medium-granule operating rate was around 92.17%, up 0.71 percentage points from last week and up 6.38 percentage points from the same period last year.

By process, coal-based urea output was around 1.2382 million tonnes, up 7,100 tonnes from last week and up 168,100 tonnes from the same period last year. The operating rate was around 94.98%, up 0.74 percentage points from last week and up 8.03 percentage points year-on-year.

Gas-based urea output was around 265,400 tonnes, down 12,100 tonnes from last week and down 31,000 tonnes from the same period last year. The operating rate was around 73.74%, down 0.73 percentage points from last week and down 2.63 percentage points year-on-year.

2.2 Market Inventory

Enterprise Inventory

This week, enterprise inventory was around 1.2003 million tonnes, up 66,700 tonnes from last week, an increase of 5.88% week-on-week, and up 64,300 tonnes from the same period last year, an increase of 5.66% year-on-year.

During this cycle, domestic urea enterprise inventories continued to accumulate, but the overall pace slowed. First, phased news boosted market sentiment, and with some regional factories actively lowering prices, transactions improved somewhat, driving part of the supply downstream. Second, increased rainfall slightly improved agricultural fertilizer consumption, and agricultural shipments increased in parts of northern China.

However, the overall inventory accumulation trend remains, and clearer positive drivers are still needed. Provinces where enterprise inventories increased included Anhui, Gansu, Hainan, Hebei, Hubei, Inner Mongolia, and Sichuan. Provinces where enterprise inventories decreased included Henan, Heilongjiang, Jiangsu, Jiangxi, Qinghai, Shandong, Shanxi, Shaanxi, and Xinjiang.

Port Inventory

Total port inventory was 152,900 tonnes, up 3,000 tonnes from last week, with a week-on-week change of 0.00%; it was down 92,100 tonnes from the same period last year, a year-on-year decrease of 37.59%.

During this cycle, port inventories increased noticeably, mainly because export work has been gradually advancing and market participants have begun moving cargoes to ports. The main change occurred in small-granule cargoes, with port collection seen at Huanghua Port, Tianjin Port, Zhenjiang Port, and Longkou Port. No clear changes were seen at other ports.

Large-Granule Urea

This week, domestic large-granule urea port inventory was 103,900 tonnes, up 8,000 tonnes from last week, an increase of 8.34% week-on-week, and down 181,100 tonnes from the same period last year. Large-granule urea port volumes increased slightly during the week and remained below the same period last year.

Small-Granule Urea

This week, domestic small-granule urea port inventory was 49,000 tonnes, flat from last week, with a week-on-week change of -0.00%, and down 47,000 tonnes from the same period last year. Small-granule urea port inventory showed no significant change during the week and remained below the same period last year.

2.3 Compound Fertilizer Industry

This week, China’s domestic compound fertilizer market generally showed firm cost support, slight quotation increases, and differentiated market performance. The overall market was stable to firm, low-end low-priced supply was basically cleared, and the market price system was gradually repaired and unified.

As of this Friday, the domestic 45%S price index was 3,400.82, and the 45%CL price index was 2,898.18.

On the cost side, raw materials were the core support for this week’s market. Prices of key raw materials such as phosphate fertilizer and sulfur continued to operate at high levels, while potassium fertilizer and urea fluctuated within narrow ranges. Overall production cost pressure remained high, forcing compound fertilizer enterprises to maintain a strong willingness to hold and raise prices. Most enterprises successively raised ex-factory quotations and cancelled earlier low listed prices.

On the supply side, the compound fertilizer market operating rate this week was 29.80%, down 1.96 percentage points from last week. Industry operating rates declined slightly during the week. Overall industry operating rates remained low, with most enterprises producing based on demand and pre-sale orders. Inventory pressure was generally controllable. Some enterprises with raw material resource advantages maintained relatively stable production, while producers without external raw material procurement pressure had stronger confidence in holding prices firm. Quotation differentiation within the industry remained clear.

On the demand side, the market showed clear structural divergence. The current market focus is on autumn fertilizer preparation demand, and high-phosphorus compound fertilizer formulas have become the mainstream traded category, with strong terminal suitability and relatively smooth shipments. By contrast, transactions of conventional general-purpose compound fertilizers were slower. Downstream distributors and end-user farmers remained strongly wait-and-see, with cautious stocking sentiment. Procurement was mainly hand-to-mouth and small-volume replenishment, while large-scale stocking has not yet started. Overall market transaction volume remained limited.

Overall, the compound fertilizer market is expected to continue a structural trend, with product differentiation persisting. High-phosphorus formula products are expected to perform relatively strongly, while conventional fertilizer prices are expected to consolidate steadily. Going forward, the core market focus will remain on raw material price fluctuations, downstream autumn fertilizer preparation progress, and quotation adjustment policies of mainstream enterprises. In the short term, the overall market is expected to operate steadily to firmly, with small fluctuations.

2.4 Melamine Industry

This week, China’s domestic melamine market generally remained low, weak, and narrowly volatile. Long-short competition continued in the market, the price center moved slightly lower, and the overall trading atmosphere was light.

On the cost side, support continued to weaken. The core raw material, urea, loosened and moved lower in tandem, reducing enterprise production costs. Producers lacked confidence to hold prices firm, and room for concessions to promote shipments opened up, making it difficult to form upward momentum.

On the supply side, the melamine market operating rate this week was 60.63%, up 3.00 percentage points from last week. Overall supply was sufficient, and mainstream industry units maintained relatively high operating levels. Only a small number of units underwent short-term maintenance in some areas, which was insufficient to change the overall loose supply pattern. As shipments remained poor, factory inventories gradually accumulated. Some producers proactively lowered spot quotations and relaxed settlement discounts to accelerate cash turnover and inventory digestion, further weighing on market prices.

On the demand side, the market remained in the traditional off-season. Downstream industries such as wood-based panels, impregnated paper, and molding compounds operated weakly. Orders related to furniture and home decoration were limited. Downstream factories generally focused on consuming their own inventories, with only scattered rigid-demand procurement and very few bulk stockpiling activities. Traders showed a strong “buy up, not down” mentality and maintained a heavy wait-and-see attitude, only restocking in small volumes as needed. The market lacked support from concentrated volume. On the export side, overseas procurement demand was stable, but its ability to divert domestic surplus supply was limited and could not offset pressure from weak domestic demand.

Overall, the weak short-term operating pattern in the melamine market is unlikely to reverse significantly. The market is likely to continue low-level narrow-range fluctuations with slight pressure, and there is currently no driver for a sharp rebound.

2.5 International Market Quotations

China: Bulk small-granule FOB prices were USD 380.01-390.01/tonne, with the high end down USD 10/tonne.

Black Sea: Small-granule port FOB prices were USD 365.01-375.01/tonne, with the low end up USD 5/tonne and the high end down USD 5/tonne.

Baltic Sea: Small-granule port FOB prices were USD 360.01-370.01/tonne, with the low end up USD 5/tonne and the high end down USD 5/tonne.

Middle East: Small-granule port FOB prices were USD 365.01-385.01/tonne, with the low end down USD 5/tonne and the high end up USD 15/tonne.

Brazil: Small-granule CFR prices were USD 395.01-415.01/tonne, with the low end up USD 5/tonne.

India: CFR prices were USD 444.91-449.31/tonne, flat from last week.

Iran: Large-granule port FOB prices were USD 340.01-346.01/tonne, with the high end up USD 6/tonne.

Egypt (Europe): Large-granule port FOB prices were USD 415.01-448.01/tonne, up USD 10-28/tonne.

Brazil: Large-granule CFR prices were USD 405.01-425.01/tonne, with the low end up USD 5/tonne.

Southeast Asia: Large-granule port CFR prices were USD 420.01-440.01/tonne, down USD 10-20/tonne.

China: Large-granule port FOB prices were USD 390.01-410.01/tonne, with the low end down USD 5/tonne.

03 Market Outlook

Supply: In the short term, overall industry output is expected to remain in a high range. Although some enterprises have successively arranged phased unit maintenance, the maintenance coverage is scattered and concentrated production cuts are limited, making it difficult to fundamentally reduce overall supply. Over the next three weeks, 2-3 enterprises are expected to undergo planned maintenance, while around 6 enterprises are expected to restart production. In terms of the supply trend, with limited maintenance, some restarts, and short-term faults, daily output is likely to fluctuate at high levels.

Inventory: The current accumulation trend in enterprise inventories has not yet stopped, and pressure from in-plant cargo accumulation remains prominent. Port diversion channels are releasing slowly, and inventory digestion lacks stable export-channel support. In the short term, if there is no concentrated high-volume procurement or large-scale export order implementation, the inventory accumulation trend will continue. Producers are likely to keep offering concessions to promote shipments and accelerate cash turnover.

Demand: Market demand shows clear structural differentiation. In the short term, agricultural rigid demand only provides scattered support from topdressing in some regions. Nationwide agricultural demand is largely in a phased gap period, and farmers and grassroots distributors are slow in stocking, mainly purchasing as needed. Industrial demand is generally flat. Downstream operating rates in compound fertilizer and melamine remain low, willingness for bulk raw material procurement is insufficient, and it is difficult to form sustained incremental consumption.