Urea Weekly: Post-holiday low prices lead to better sales, market prices slightly increase

Market Overview:

According to the Feidoodoo Price Index:

This week, the urea market prices have continuously adjusted upwards, with an overall small increase, as companies make minor adjustments while keeping prices largely stable.

According to data from the Feidoodoo Price Index: As of this Friday, the average price index for domestic small granular urea is 2399.66, a decrease of 16.11 from last week, falling by 0.67% compared to the previous week.

In the first half of the week, due to the positive impact of the market demand following the New Year's Day holiday, some companies with better orders slightly raised their quotes, controlled order acceptance, and regional differences in market price rise and fall emerged. The overall sales situation improved significantly compared to before the holiday, with transactions beginning to rebound slightly and order volume increasing. As supply continues to operate at a low level and there is no expectation of an increase in industry startups in the short term, the market has some positive support. Additionally, as production restrictions end, market demand begins to show, and overall demand maintains a need to follow.

In the second half of the week, as transactions of lower-end market goods improved, quotes from businesses mostly remained stable. Manufacturers executed pre-received orders, and some stopped receiving payments and raised their quotes. Prices are steadily rising amidst ample order receipt, and despite a slowdown in new orders compared to earlier, manufacturers remain steadfast. With daily production continuing at low levels and market demand maintaining low-volume purchases at low prices, the agricultural market's replenishment has significantly increased.

Delivery Area Quotes:

Specifically, prices in the Northeast region rose to 2380-2420 yuan/ton. North China region rose to 2190-2420 yuan/ton. Northwest region rose to 2350-2360 yuan/ton. Southwest region rose to 2350-2800 yuan/ton. East China region rose to 2320-2390 yuan/ton. Central China region's small granular price rose to 2320-2550 yuan/ton, and large granular price rose to 2480-2500 yuan/ton. South China region prices rose to 2460-2520 yuan/ton.

Futures Warehouse Receipt Distribution:

As of this Thursday, the Zhengzhou Commodity Exchange urea futures had 10,846 receipts, an increase of 591 from last week.

Industry Dynamics:

Daily Production:

Production: This week, domestic urea production is approximately 1.1079 million tons, an increase of 1.39 over the previous week, rising by 1.27%, and a year-on-year increase of 9.85%. Daily production is 158,300 tons, with an increase in weekly production, continuing to be higher than the same period in 2023.

Operating rate: The domestic urea industry operating rate is about 73.09%, up 2.14% week-on-week, and up 4.17% year-on-year. The domestic urea industry's operating rate is rising, still higher than last year's level.

Looking at different types, large granular urea production is about 203,400 tons, down 38,000 tons from last week, a 1.83% decrease week-on-week, and a 40,000 tons increase compared to the same period last year, a 2.01% increase year-on-year. The large granular operating rate is about 70.72%, down 0.70% from last week and down 4.41% from the same period last year. The production of medium and small granular urea is about 904,500 tons, an increase of 17,700 tons from last week, up 2.00% week-on-week, and an increase of 95,300 tons from the same period last year, up 11.78% year-on-year. The operating rate of medium and small granules is about 73.64%, up 2.80 from last week and up 6.09% from the same period last year.

Looking at production processes, coal-based urea production is about 976,700 tons, an increase of 5,000 tons from last week, and an increase of 101,900 tons from the same period last year. The operating rate is about 85.36%, up 2.33% from last week and up 5.24% from the same period last year. Gas-based urea production is about 131,200 tons, an increase of 8,900 tons from last week, and a decrease of 2,600 tons from the same period last year. The operating rate is about 35.31%, up 2.40% from last week and down 0.70% from the same period last year.

Market Inventory:

Enterprises: This week, the enterprise inventory is about 599,300 tons, a decrease of 40,600 tons from last week, a 6.34% decrease week-on-week, and a decrease of 292,500 tons from the same period last year, a 32.80% year-on-year decrease.

Ports: Port inventories are 182,000 tons, a decrease of 1,000 tons from last week, a 0.55% decrease week-on-week, and a decrease of 17,000 tons from the same period last year, an 8.54% year-on-year decrease.

Large granular: This week, domestic large granular urea port inventory is 103,000 tons, an increase of 3,000 tons from last week, a 3.00% increase week-on-week, and an increase of 68,000 tons from the same period last year.

Small granular: This week, domestic small granular urea port inventory is 79,000 tons, a decrease of 4,000 tons from last week, a 4.82% decrease week-on-week, and a decrease of 85,000 tons from the same period last year. The port inventory of small granular urea continues to decline this week, still lower than the same period last year.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market prices continue to stabilize with a slight downward adjustment, and market sales are still slow, with some areas having prices without market. As of this Friday, the domestic price of 45%S is 3030.83; 45%CL is 2651.82. On the enterprise side, some enterprises have introduced regional policy discounts or limited-time pick-up policies, and the market continues to maintain flexible transactions on a case-by-case basis, with the current transaction price center loosening. On the market side, the market atmosphere remains depressed, and the overall market continues to adjust weakly. On the supply side, the compound fertilizer market's operating rate this week is 38.14%, a decrease of 0.28% from last week, and the operating rate continues to decline slightly. On the demand side, winter storage continues to progress, but new orders are still small in number, and the overall pace is slow. In summary, the current compound fertilizer market is experiencing a decline in operation, with businesses gradually selling goods, and it is expected that the compound fertilizer market prices will continue to be largely stable with minor adjustments in the short term.

Melamine Industry:

This week, the melamine market price is steady with a slight downward trend, and the market performance is relatively stable. On the factory side, manufacturers mainly execute pending orders, and orderly shipments, and as pending orders gradually decrease, some manufacturers face pressure in shipments, and prices begin to slightly loosen and adjust downwards. On the market side, the market transaction atmosphere is not good, and the overall operation is weak. On the supply side, some devices that were previously shut down have gradually resumed, and the market supply has increased. On the demand side, demand slows down, and businesses mostly enter the market at low prices to purchase goods. In summary, the post-holiday melamine market atmosphere has turned bland, with businesses mostly executing previous pending orders, and it is expected that next week's melamine market prices will continue to remain stable with slight fluctuations and adjustments.

International Market Quotes:

Internationally, the FOB price of bulk small granular urea from China is 339-343 USD/ton, down 11-12 USD/ton from last week; the Baltic FOB price is 230-250 USD/ton, down 10 USD/ton.

The FOB price of large granular urea from China is 355-360 USD/ton, down 10 USD/ton from last week; the Iranian large granular FOB price is 290 USD/ton, the low end up 10 USD/ton.

Future Outlook:

Supply: Supply will fluctuate narrowly, and it is expected that next week's daily production will continue to operate at a low level.

Inventory: As various local environmental warnings are lifted, the market's sales atmosphere improves, and it is expected that next week's inventory will continue to decrease.

Demand: Post-holiday agricultural demand increases, while industrial demand is weak. The market demand mostly involves low-price sales, and it is expected that the demand side will continue to maintain low-price replenishment as needed.