Urea Weekly Report: Limited new market transactions, prices undergo downward adjustment

Market Overview:

Fertilizer Price Index:

This week, the urea market price continued to decline, with lukewarm transactions and an overall standoff between manufacturers. By this Friday, the average price index for small grain urea in the domestic market was 2468.42, a drop of 81.78 from last week, a decline of 3.21% sequentially.

In the first half of the week, many businesses dispatched orders placed before the holiday. As pending orders gradually decreased, the pressure on businesses to get new orders increased. With few new transactions, inventory for businesses grew. To attract downstream market purchases, most companies reduced their ex-factory prices. However, downstream purchasing enthusiasm remained low, with many waiting for a drop in prices to buy. In the second half of the week, due to export-related rumors, there's a high possibility of China participating in marking, and the potential for future price rises is also high. This caused a panic sentiment among downstream consumers, leading many to inquire and restock at lower prices. The overall transaction atmosphere slightly improved, but the wait-and-see sentiment continued downstream.

Urea Delivery Area Prices:

Specifically, the prices in the Northeast region dropped to 2420-2490 yuan/ton. North China prices dropped to 2220-2490 yuan/ton. Northwest region prices fell to 2410-2420 yuan/ton. Southwest prices dropped to 2330-2800 yuan/ton. East China prices dropped to 2300-2380 yuan/ton. Central China's small grain urea prices fell to 2320-2620 yuan/ton, and large grain prices fell to 2480-2530 yuan/ton. South China prices dropped to 2480-2600 yuan/ton.

Industry Chain Dynamics:

Rapid daily production recovery:

This week, the domestic urea production was approximately 1.243 million tons, a sequential increase of 1.25% and a year-on-year increase of 19.65%. Daily production was 177,600 tons, and the daily output was slightly adjusted upward, still higher than the level of 2022. The domestic urea industry's operating rate was about 82.56%, up 1.01% sequentially and up 16.06% year-on-year.

Market Inventory:

This week, the inventory of large grain urea at domestic ports was 132,000 tons, an increase of 21,000 tons from last week and 100,000 tons higher than the same period last year. The amount of large grain urea at the port increased during the week, higher than the same period last year.

The inventory of small grain urea at domestic ports was 119,000 tons, an increase of 11,000 tons from last week, but 65,000 tons less than the same period last year. The amount of small grain urea at the port increased during the week but is still lower than last year.

Company inventory for the week was about 439,900 tons, up 118,700 tons or 36.96% sequentially. The total port inventory was 252,000 tons, an increase of 15.07% sequentially.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market had a few new deals, with an overall low purchasing atmosphere. From the demand side, the market is currently in the autumn fertilizer tail and winter storage pre-collection stage. However, the overall market demand is not fully released, and the demand side is weak. Most downstream businesses adopt a wait-and-see attitude. From the supply side, the number of orders waiting to be dispatched by companies is gradually decreasing. There is an occasional increase in new orders, but they are insufficient to follow up, leading to an increase in business inventory. Many companies have stopped for maintenance, and the start-up rate has dropped. Overall, the compound fertilizer market is dominated by short-term bearishness, and prices are expected to remain stable next week.

Melamine Industry:

This week, the melamine market atmosphere was sluggish, and the overall transaction atmosphere was average. From the business side, businesses are currently mainly dispatching pre-ordered goods, and there are only a few new deals. Most businesses are forced to reduce prices to sell. From the supply side, there were a few stoppages for maintenance this week, and the overall start-up rate of the melamine market declined. From the demand side, downstream demand is sluggish, and operations are weak. Overall, the melamine market operates weakly, and prices are expected to remain stable next week with minor adjustments.

International Market Quotes:

On the international front, the FOB price of bulk small grain in China is 370-380 USD/ton, stable compared to last week. The Baltic FOB price is 340-355 USD/ton, stable compared to last week.