Urea Weekly: Prices Weaken Within the Week, Market Transactions Improve at Lower Prices

Market Overview:

According to the Feidoodoo Price Index:

This week, the urea market saw a weakening in the price drop trend, with an improvement in market transactions at lower prices, some companies raised their quotations, and the price drop trend slowed.

Based on data from the Fertilizer Price Index, as of this Friday, the average price index for domestic urea small particles was 2188.16, a decrease of 74.02 from last week, down 3.27% on a week-on-week basis.

At the beginning of the week, domestic urea prices continued to fall from last week, the market operated weakly, transactions continued to focus on low-end goods, and high-price transactions were sluggish. The industry was generally pessimistic due to unclear export news and continued high supply, lacking substantial positive support, leading to weak market operations and low-price transactions not supporting a price rise.

Mid-week, as low-end market transactions increased, the trading atmosphere began to warm up, boosting traders' confidence. Downstream market entry increased, improving market sentiment compared to earlier in the week. After some mainstream companies received orders, they began to slightly increase their quotations, pulling the market prices up and stabilizing the price drop.

At the end of the week, market transactions slowed down. After downstream replenishment earlier in the week, there was a lack of follow-up at high prices, leading to a stalemate in the market atmosphere. New transactions began to weaken, and the market situation returned to stable fluctuations. Given the still-loose supply and demand in the market, this somewhat suppressed the potential for further price increases, with factories' quotations mostly stable or slightly reduced to stimulate sales, leading to a fallback in market prices, and a shift from strong to weak.

Delivery Area Quotations:

Specifically, prices in the Northeast region fell to 2140-2210 yuan/ton. In the East China, prices fell to 2100-2170 yuan/ton. In Central China, prices for small and medium-sized particles fell to 2110-2320 yuan/ton, and for large particles to 2180-2250 yuan/ton. In the North China, prices fell to 1960-2170 yuan/ton. In the South China, prices fell to 2220-2310 yuan/ton. In the Northwest region, prices fell to 2140-2150 yuan/ton. In the Southwest region, prices fell to 2100-2450 yuan/ton.

Future Warehouse Receipt Distribution:

As of this Friday, Zhengzhou Commodity Exchange urea futures were at 2036, a decrease of 108 from last week.

Industry Chain Dynamics:

Daily Production:

This week, domestic urea production was about 1.2847 million tons, an increase of 1.64 from last week, up 1.29% week-on-week, and 14.19% year-on-year; daily production was 183,500 tons. The industry's supply continued at high levels with the recovery of previously shut-down units.

The operating rate of the domestic urea industry was about 84.75%, up 1.08% week-on-week, and 7.87% year-on-year; the industry's operating rate increased week-on-week, continuing to exceed last year's levels.

By type, large particle urea production was about 243,900 tons, a decrease of 800 tons from last week, down 0.33% week-on-week; an increase of 37,600 tons from last year, up 18.23% year-on-year. The operating rate for large particles was about 84.81%, down 0.27% from last week, and up 11.68% year-on-year. Small and medium-sized particle urea production was about 1.0408 million tons, an increase of 17,200 tons from last week, up 1.68% week-on-week; an increase of 45,000 tons from last year, up 4.52% year-on-year. The operating rate for small and medium-sized particles was about 84.74%, up 1.40% from last week, and up 7.03% year-on-year.

By production process, coal-based urea production was about 986,700 tons, an increase of 10,700 tons from last week, and an increase of 126,900 tons from last year. The operating rate was about 86.23%, up 0.93% from last week, and up 7.48% year-on-year. Gas-based urea production was about 298,000 tons, an increase of 5,700 tons from last week and 32,700 tons from last year. The operating rate was about 80.19%, up 1.53% from last week, and up 8.80% year-on-year.

Market Inventory:

Enterprises: This week, enterprise inventory was about 757,400 tons, a decrease of 2,700 tons from last week, down 0.36% week-on-week; an increase of 105,400 tons from last year, up 16.17% year-on-year.

Ports: Port inventory was 196,000 tons, an increase of 2,500 tons from last week, up 1.29% week-on-week; an increase of 116,000 tons from last year, up 145.00% year-on-year.

Large Particles: This week, domestic large particle urea port inventory was 120,000 tons, a decrease of 1,000 tons from last week, down 0.83% week-on-week; an increase of 69,000 tons from last year, with large particle urea port volume decreasing week-on-week, continuing to exceed last year's levels.

Small Particles: This week, domestic small particle urea port inventory was 76,000 tons, an increase of 3,500 tons from last week, up 4.83% week-on-week; an increase of 47,000 tons from last year, with small particle urea port volume increasing week-on-week, continuing to exceed last year's levels.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market slowed, the transaction focus declined, and prices continued to fall. As of this Friday, the domestic 45%S price index was 2870.83; the 45%CL price index was 2480.00.

On the enterprise side, shipments slowed down. To promote spring fertilizer shipments, more new discount policies were added, maintaining negotiations, with price centers moving downward. On the market side, the market operated at a low level, with continuous adjustments in upstream raw material prices, leading to a decline in compound fertilizer transaction prices and narrowing industry profits. On the supply side, this week's compound fertilizer market operating rate was 47.27%, a decrease of 3.43% from last week, with the industry's capacity utilization rate continuing to slide. On the demand side, agriculture's spring fertilizer is entering the final replenishment phase, with replenishment progressing as needed; downstream factories' purchasing attitudes are unstable, and a wait-and-see attitude continues. Overall, the current compound fertilizer market continues to be weak, with insufficient market trading confidence, and it is expected that the compound fertilizer market will continue to decline in the short term, with transactions continuing flexible negotiations.

Melamine Industry:

This week, the melamine market continued to operate flatly, with prices stabilizing after rising due to cost support.

On the factory side, affected by the continuous decline in market prices in the previous period, reaching cost prices, manufacturers' willingness to hold prices strengthened, quotations were adjusted upwards, and prices rose from the previous period. On the market side, the market continued to operate weakly, with market follow-up remaining weak after factory quotations were adjusted upwards, transactions were average, and the market lacked positive news to support price increases, leading to weak market adjustments. On the supply side, this week's melamine industry operating rate rebounded, continuing to maintain a high level, with an operating rate of 74.84%, up 2.60% from last week, with high operating levels negatively impacting supply. On the demand side, downstream demand remained sluggish, with purchasing attitudes still cautious, mainly following up on immediate needs with small orders, and a wait-and-see attitude continuing. Overall, the current melamine market supply-demand relationship remains weak, with no positive support, but with cost support, it is expected that the melamine market will remain weakly stable next week, with narrow fluctuations.

International Market Quotations:

Internationally, the bulk small particle China FOB price was 305-310 USD/ton, down 18-29 USD/ton; the Baltic FOB price was 280-290 USD/ton, the high-end down 15 USD/ton.

The large particle China FOB price was 330 USD/ton, remaining stable from last week; the Iran large particle FOB price was 290-310 USD/ton, down 15-25 USD/ton.

Future Outlook:

Supply: This week, the industry's supply remains high, with few enterprise equipment overhauls expected next week, and daily production expected to exceed the current 180,000 tons, predicting that next week's industry supply will continue to operate at high levels.

Inventory: This week, market transactions improved at lower prices, and enterprises showed a slight de-stocking phenomenon, with enterprises continuing shipments next week, predicting a decrease in inventory.

Demand: After the last wave of green fertilizer replenishment, agricultural demand enters a gap period; industrial downstream factory demand remains weak, with demand support weak in the short term.