Urea Weekly Review: Favorable Supply and Demand Lead to a Slight Price Increase

Feidoodoo Price Index:

The price of urea began to decline slightly this week. However, as the favorable supply and demand became more apparent, the price of urea continued to rise. This week, the average price index for small granular urea in China was 2595.14, a decrease of 16.91 from last week, down 0.65% week-on-week.

At the beginning of the week, the market expected that the previously shut down facilities would gradually resume, and new facilities would be put into production. The capacity utilization rate might slightly increase, and the daily output would correspondingly rise. However, due to the high current prices, the market trading atmosphere was weak, leading to a slight correction in urea prices. In the latter half of the week, as the daily output recovery rate was slower than expected, and the downstream factory's raw material replenishment steadily increased, the previous export shipments continued, leading to a market supply shortage. The demand side dominated with favorable conditions, and enterprises' willingness to reduce prices weakened, with some enterprises adjusting their ex-factory prices accordingly. Moreover, although enterprise inventory increased slightly, it still remained at a low level.

Urea Delivery Area Quotation:

Specifically, the price in the Northeast region remained stable at 2500-2560 yuan/ton. The price in the North China region rose to 2440-2660 yuan/ton. The price in the Northwest region fell to 2560-2570 yuan/ton. The price in the Southwest region remained stable at 2450-2800 yuan/ton. The price in the East China region rose to 2610-2680 yuan/ton. The price of small granular urea in the Central China region rose to 2550-2700 yuan/ton, while the price of large granules remained stable at 2600-2630 yuan/ton. The price in the South China region rose to 2650-2770 yuan/ton.

Daily Production Increase Rapidly:

This week, the domestic urea production was about 110.19 thousand tons, a week-on-week increase of 1.97% and a year-on-year decrease of 1.73%. The daily output was 15.74 thousand tons, with a slight increase during the week, but it was still slightly lower than the level in 2022. The domestic urea industry's operating rate was about 73.89%, a week-on-week increase of 1.43% and a year-on-year increase of 2.15%. The operating rate of the domestic urea industry was slightly adjusted, which was still higher than the same period last year.

Looking at the production process, the production of coal-based urea was about 82.46 thousand tons, an increase of 2.25 thousand tons from last week, and a decrease of 1.52 thousand tons from the same period last year. The operating rate was about 73.61%, a week-on-week increase of 2.01%, and a year-on-year increase of 1.03%. The production of gas-based urea was about 27.77 thousand tons, a decrease of 0.12 thousand tons from last week, and a decrease of 0.42 thousand tons from the same period last year. The operating rate was about 74.75%, a week-on-week decrease of 0.32%, and a year-on-year increase of 5.36%.

Market Inventory:

This week, the inventory of large granular urea at domestic ports was 10.75 thousand tons, a decrease of 2.95 thousand tons from last week, and an increase of 1.75 thousand tons from the same period last year. The volume of large granular urea at ports decreased during the week, which was higher than the same period last year.

This week, the inventory of small granular urea at domestic ports was 29.82 thousand tons, a decrease of 12.08 thousand tons from last week, and an increase of 20.22 thousand tons from the same period last year. The volume of small granular urea at ports decreased during the week, which was much higher than the same period last year.

This week, the enterprise inventory was about 23.42 thousand tons, a week-on-week decrease of 1.07 thousand tons. The port inventory totaled 40.58 thousand tons, a week-on-week decrease of 27.07%.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market price continued to maintain a high-level consolidation operation. On the enterprise side, some enterprises are still executing previous pending orders. The number of pending orders has slightly decreased from the previous period. Most enterprise orders can be maintained until the end of this month or even the end of the month. Many enterprises are in a state of suspension of quotations and suspension of orders. On the demand side, the time for autumn fertilizer preparation has been shortened. The compound fertilizer market is mainly focused on centralized shipments. The speed of goods sinking has accelerated, and the market supply exceeds demand. On the raw material side, the recent raw material market price trend has been flat, and the price fluctuation has narrowed. Overall, the number of pending orders for enterprises is gradually decreasing, the support for raw materials is weakening, and the market demand is relatively strong. It is expected that the price of compound fertilizer will mainly remain stable in the short term.

Melamine Industry:

This week, the melamine market price change was weak, but the overall price was still at a high level. On the enterprise side, some enterprises still have pending orders, and there is support for pending orders. On the supply side, the capacity utilization rate of melamine increased slightly this week. Later this month, with the gradual restart of the previous maintenance devices, the supply is expected to be relatively sufficient. On the demand side, the downstream demand is small, the market is mostly watching, the new order transaction is at a low level, and the demand side is bearish. Overall, the melamine market has support for pending orders, the demand is small, and the overall price change range is limited.

International Market Quotation:

On the international market side, the bulk small granular China FOB price is 380-385 US dollars/ton, overall adjusted up by 10 US dollars/ton; the Baltic FOB price is 350-375 US dollars/ton, adjusted up by 25-35 US dollars/ton.

The large granular China FOB price is 390-395 US dollars/ton, adjusted up by 10-15 US dollars/ton; the Iranian large granular FOB price is 345-350 US dollars/ton, adjusted up by 5-23 US dollars/ton.

Market Outlook:

Supply: Some enterprises' previous maintenance devices are put into production, and the capacity utilization rate is slightly adjusted, but the overall recovery is slow.

Inventory: The total inventory of enterprises increased slightly from last week, but it is still at a low level.

Demand: The downstream market's just-needed demand still exists, the compound fertilizer production demand for urea is strong, but the enthusiasm for fertilizer preparation in the agricultural market is low, traders still resist high prices, and most