Urea Weekly Review: Post-Holiday Market Demand Follows, Enterprises Adjust Prices Upwards

Market Overview

Feidoodoo Price Index

This week, the urea market sentiment improved, with a more active trading atmosphere post-holiday. Enterprises have gradually increased their prices, and the availability of low-priced goods has diminished.

According to Feidoodoo data calculations, as of this Friday, the domestic small granular urea price index averaged 2306.04, an increase of 62.69 from last week, a 2.79% rise week-on-week.

After the holiday, agricultural activities entered their peak season, with strong market demand and continuous fertilizer restocking, especially for rice fertilizer. Industrial compound fertilizer factories continue to consume urea, with ongoing replenishment and high demand. During the holiday, manufacturers focused on shipping previously received orders, facing little pressure to ship new ones. Supported by pending orders, manufacturers are less willing to adjust prices downwards, and the overall market condition is good. Supply-side expectations of reduced production and tight spot supply have supported higher prices, with enterprises mostly adjusting their quotations upwards.

By the end of this week, with the gradual reduction of low-priced goods in the market, cautious sentiment emerged about undersupply and price stabilization policies. Enthusiasm for high-priced transactions was limited, with procurement slowing down, leading to a slightly less active atmosphere than earlier in the week. Enterprises, supported by pending orders, kept quotations firm and stable, maintaining a wait-and-see market attitude.

Regional Price Quotes

Specifically, prices in the Northeast region rose to 2190-2250 yuan/ton. In the East China region, prices increased to 2290-2360 yuan/ton. In the Central China region, small granular prices rose to 2300-2380 yuan/ton, and large granular prices increased to 2260-2310 yuan/ton. In the North China region, prices rose to 2180-2320 yuan/ton. In the South China region, prices increased to 2370-2480 yuan/ton. In the Northwest region, prices rose to 2320-2330 yuan/ton. In the Southwest region, prices increased to 2260-2650 yuan/ton.

Futures Warehouse Receipts

As of this Thursday, there were 2020 urea futures contracts on the Zhengzhou Commodity Exchange, a decrease of 140 contracts from the previous week.

Industry Chain Dynamics

Daily Production

Production: This week, domestic urea production was approximately 1.2963 million tons, a decrease of 12,600 tons from the previous week, a 0.96% drop week-on-week, and a 9.25% increase year-on-year. The daily production was 185,200 tons. Industry daily production decreased compared to pre-holiday levels, with ongoing maintenance of facilities, leading to a downward trend in operating rates and a tight spot supply in the short term.

Operating Rate: The domestic urea industry operating rate was approximately 85.52%, a 0.83% decrease week-on-week, and a 4.44% increase year-on-year. The weekly operating rate of the domestic urea industry slightly declined but remained above last year's levels.

By type, large granular urea production was approximately 246,600 tons, an increase of 4,700 tons from last week, a 1.94% rise week-on-week, and a 13.02% increase year-on-year. The operating rate for large granular urea was approximately 85.74%, a 1.63% increase from last week, and a 3.52% increase year-on-year. Small and medium granular urea production was approximately 1,049,700 tons, a decrease of 17,300 tons from last week, a 1.62% drop week-on-week, and an 8.41% increase year-on-year. The operating rate for small and medium granular urea was approximately 85.47%, a 1.41% decrease from last week, and a 4.64% increase year-on-year.

By production method, coal-based urea production was approximately 998,200 tons, a decrease of 15,400 tons from last week, and an 11.64% increase year-on-year. The operating rate for coal-based urea was approximately 87.24%, a 1.35% decrease from last week, and a 6.47% increase year-on-year. Gas-based urea production was approximately 298,100 tons, an increase of 2,800 tons from last week, and a decrease of 6,600 tons year-on-year. The operating rate for gas-based urea was approximately 80.22%, a 0.75% increase from last week, and a 1.78% decrease year-on-year.

Market Inventory

Enterprises: This week, enterprise inventory was approximately 502,800 tons, a decrease of 5,500 tons from last week, a 1.08% drop week-on-week, and a 51.53% decrease year-on-year.

Ports: Port inventory totaled 195,000 tons, a decrease of 6,000 tons from last week, a 2.99% drop week-on-week, and a 54.76% increase year-on-year.

Large Granular: This week, domestic large granular urea port inventory was 124,000 tons, a decrease of 2,000 tons from last week, a 1.59% drop week-on-week, and a 9.90% increase year-on-year. Large granular urea port inventory decreased during the week but remained higher than last year.

Small Granular: This week, domestic small granular urea port inventory was 71,000 tons, a decrease of 4,000 tons from last week, a 5.33% drop week-on-week, and a 3.00% decrease year-on-year. Small granular urea port inventory slightly decreased during the week and remained lower than last year.

Compound Fertilizer Industry

This week, the domestic compound fertilizer market prices remained stable with minor adjustments. The market mainly digested previous orders, with a slow follow-up of new orders. As of this Friday, the domestic 45%S price index was 2810.83; the 45%CL price index was 2375.45.

Enterprises: Enterprises focused on shipping previously received orders, with finished product inventories gradually decreasing and strengthened price support intentions.

Market: The market atmosphere was positive, with continuous order shipments. Some enterprises canceled low-end quotations and discount policies, leading to an upward shift in the overall trading focus post-holiday.

Supply: This week, the compound fertilizer market operating rate was 52.48%, a 2.96% increase from last week. The domestic compound fertilizer industry capacity utilization rate continued to rise, although some sources remained tight.

Demand: Currently, it is the peak season for summer fertilizer procurement. In some areas, sources were tight, and downstream procurement was concentrated, showing a strong demand trend.

Overall, compound fertilizer enterprises will continue to execute pending orders next week, maintaining a positive market atmosphere, with a continued reduction in low-priced goods. Compound fertilizer market prices are expected to remain stable with minor adjustments in the short term.

Melamine Industry

This week, the melamine market remained stable with slight declines in some areas.

Factories: Manufacturers mainly shipped previously received orders, facing increased shipping pressure, with some reducing quotations or suspending offers.

Market: Although there was some just-in-time purchasing, the volume was limited and dispersed. High prices faced pressure, and the trading atmosphere remained weak, with a bearish market consolidation.

Supply: Pre-holiday maintenance facilities have mostly resumed, significantly increasing melamine supply.

Demand: Downstream factories operated at low capacity, with demand remaining sluggish and mainly just-in-time purchasing. There was no improvement in demand.

Overall, the current melamine market has a loose supply-demand balance, with flat trading. Melamine market prices are expected to remain stable with minor adjustments next week.

International Market Prices

In the international market, bulk small granular urea FOB China was priced at 316-328 USD/ton, an increase of 4-12 USD/ton. FOB Baltic was priced at 245-265 USD/ton, an increase of 15-10 USD/ton.

Large granular urea FOB China was priced at 316-328 USD/ton, an increase of 1-3 USD/ton. FOB Iran large granular was priced at 255-258 USD/ton, unchanged from last week.

Market Outlook

Supply: This month, maintenance of facilities will continue, leading to a downward trend in daily production. The industry supply is expected to continue decreasing next week.

Inventory: This week, enterprise inventory continued to decrease as enterprises executed pending orders. Inventory reduction is expected to continue next week.

Demand: Agricultural activities are at their peak season, with strong market demand. Industrial compound fertilizer factories are operating at higher rates, leading to high demand for raw materials, providing strong support on the demand side.