Urea Weekly: Support from Marking and Low Corporate Inventory Leads to Continued Price Increases in the Urea Market

Market Overview

Fertilizer Price Index:

This week, the urea market continued to rise, with many businesses being positively impacted by last week's good order intake. With the imminent marking bid this Friday, corporate quotations have remained strong. By this Friday, the average price index for domestic small particle urea was 2474.01, an increase of 5.59 from last week, or a 0.23% rise.

In the first half of the week, due to the continuous decline in prices last week, the delivery of low-end goods improved, and the sales pressure of most businesses was alleviated. Moreover, with the slight relaxation of export policies and the continuous growth of port inventories, the bullish market atmosphere strengthened. In the second half of the week, influenced by the continuous price increase, the market had fewer new orders, and the trading atmosphere slowed down. However, due to the large volume of goods awaiting shipment by enterprises and the support of marking export news, most enterprises were willing to keep prices firm.

Urea Delivery Area Quotes:

Specifically, the price in the Northeast region rose to 2450-2490 yuan/ton. The North China region increased to 2330-2490 yuan/ton. The Northwest region remained stable at 2410-2420 yuan/ton. The Southwest region rose to 2380-2800 yuan/ton. The price in the East China region rose to 2430-2490 yuan/ton. Central China's small particle price increased to 2440-2640 yuan/ton, and large particle prices rose to 2530-2610 yuan/ton. The price in the South China region rose to 2560-2610 yuan/ton.

Futures Warehouse Receipt Distribution:

As of this Thursday, there were 527 urea futures on the Zhengzhou Commodity Exchange, an increase of 56 from last week.

Industry Chain Dynamics

Rapid Recovery in Daily Production:

This week, the domestic urea output was approximately 1.2405 million tons, a 0.20% decrease from the previous week but a 22.68% increase year-on-year. The daily production of 177,200 tons was slightly adjusted downwards this week but is still higher than the same period in 2022. The startup rate of the domestic urea industry was approximately 80.45%, a 2.09% decrease from the previous week, but a 15.74% increase year-on-year.

Market Inventory:

This week, the inventory of large particle urea at domestic ports was 134,000 tons, an increase of 2,000 tons from the previous week and an increase of 82,000 tons year-on-year.

Compound Fertilizer Industry:

This week, the domestic compound fertilizer market saw insufficient follow-up demand for winter storage, with a decrease in enterprise operating rates and a general downward adjustment in prices.

Melamine Industry:

This week, the overall trading atmosphere in the melamine market was good, with a slight exploration of price increases.

International Market Quotes

Internationally, the FOB price of bulk small particles in China was 365-370 USD/ton, a decrease of 5-10 USD/ton from last week.

Market Outlook

Supply: Daily production remains at a high level. Due to environmental protection restrictions on factories in Shanxi, the supply of large particles is currently slightly tight.

Maintenance: Many companies have maintenance plans for the later period, and some devices have already started maintenance.

Inventory: Influenced by good orders last week, corporate inventory is on a downward trend.

Demand: The Northeast market still has winter storage, and many have just-in-time procurement. Other regions have more reserve purchases.