Urea Weekly Review: Market Holds Steady with Cautious Buyer Sentiment

Market Overview:

Fertoduo Price Index：

This week, the urea market experienced oscillations, with a general trend of upward adjustment followed by minor corrections. The end of the week saw slight price declines, largely influenced by buyer procurement attitudes.

According to Feidoodoo data, as of this Friday, the average price index for domestic small granular urea was 2395.45, up by 23.81 from the previous week, representing a 1.00% increase.

Weekly Market Trends：

• Early Week: Initial price increases reduced downstream purchasing willingness, slowing new orders for manufacturers. Some enterprises lowered prices to attract orders, but improved market sentiment and strong support from pending orders led to renewed firm pricing intentions. Downstream compound fertilizer factories maintained stable operations, with limited high-priced procurement.
• Midweek: Lower prices encouraged low-end transactions, increasing market engagement. Most transactions were at lower prices, but resistance to high prices persisted, leading to narrow fluctuations.
• Late Week: New orders slowed, reducing trading enthusiasm. Agricultural demand slowed, and industrial buyers were cautious, resulting in a stalemate at high prices with minor fluctuations. Persistent pending orders maintained price stability, with slight adjustments by some enterprises.

Regional Price Quotes

• Northeast: Stable at 2300-2380 yuan/ton.
• East China: Increased to 2370-2420 yuan/ton.
• Central China: Small granular prices rose to 2340-2470 yuan/ton, large granular prices stable at 2320-2380 yuan/ton.
• North China: Increased to 2310-2380 yuan/ton.
• South China: Increased to 2450-2500 yuan/ton.
• Northwest: Stable at 2390-2400 yuan/ton.
• Southwest: Stable at 2300-2750 yuan/ton.

Futures Market

As of Thursday, the Zhengzhou Commodity Exchange recorded 2601 urea futures contracts, a decrease of 433 from the previous week.

Industry Chain Dynamics

Daily Production and Operating Rates：

• Production: This week, domestic urea production was approximately 1.2103 million tons, a decrease of 21,000 tons (1.71%) from last week but a year-on-year increase of 4.74%. Daily production was 172,900 tons, with a slight weekly decrease due to slow recovery from maintenance and unexpected equipment failures, reducing operational rates.
• Operating Rates: The operating rate for the domestic urea industry was approximately 79.85%, down 1.38% from last week but up 0.89% year-on-year. Despite the decline, rates remain higher than the same period last year.

Supply and Demand：

• Inventory:Enterprises: Inventories were about 321,200 tons, a decrease of 55,600 tons (14.76%) from last week and 837,600 tons (72.28%) from last year.Ports: Total port inventories were 178,000 tons, a decrease of 14,000 tons (7.29%) from last week but an increase of 112,000 tons (169.70%) from last year.
• Demand: Agricultural just-in-time demand persists but is slowing, and industrial buyers are cautious, leading to a general weakening in overall demand.

Compound Fertilizer Industry：

• Price and Demand: The market saw stable to slight increases in prices, with good downstream follow-up. As of this Friday, the 45% S price index was 2824.17, and the 45% CL price index was 2402.73.
• Supply: The operating rate for the compound fertilizer market was 50.47%, up 0.87% from last week. Utilization rates slightly increased, but finished product inventories continued to decline.

Melamine Industry：

• Price and Supply: The melamine market was steady with slight price declines. New orders were limited, but pending orders persisted. Utilization rates increased with some equipment resuming operations.
• Demand: Domestic demand remained weak, sustaining limited procurement, insufficient to support the market significantly.

International Market Prices

• Small Granular Urea: China FOB: $330-337/ton, up by $5-7/ton.Baltic FOB: $260-280/ton, up by $10/ton.
• Large Granular Urea: China FOB: $330-340/ton, up by $5-10/ton.Iran FOB: $264-267/ton, up by $14-15/ton from last week.

Market Outlook:

• Supply: Maintenance is gradually ending, leading to increased daily production.
• Inventory: Continued shipments maintain low inventory levels.
• Demand: High prices reduce downstream purchasing willingness, likely resulting in cautious demand follow-up next week.