Urea Daily Review, June 15: Renewed Rumors Slow the Decline

Domestic Urea Price Index

According to FDD data calculations, on June 15, the domestic small-granule urea price index stood at 1,848.64, down 14.09 from the previous working day, representing a day-on-day decrease of 0.76% and a year-on-year increase of 1.11%.

Urea Futures Market

Today, the urea UR2609 contract opened at 1,767, with an intraday high of 1,792 and a low of 1,753. The settlement price was 1,776, and the closing price was 1,786, down 2 from the previous trading day’s settlement price, representing a decline of 0.11%. The Shandong basis for the UR2609 contract was -6. Open interest decreased by 1,537 lots today, with total open interest currently standing at 285,096 lots.

Today, the urea futures market opened sharply lower and then recovered within a narrow range. In early trading, prices opened lower due to easing geopolitical sentiment, before rebounding somewhat on rumors of adjustments to domestic guidance prices.

However, continued weakness in spot fundamentals remains the key factor weighing on the futures market. On the supply side, the market remains well supplied at high levels. On the demand side, both agricultural and industrial demand remain weak. Producer inventories continue to accumulate, spot prices remain on a downward trend, and bearish fundamentals are increasingly being transmitted to the futures market. Meanwhile, raw material prices on the cost side have remained weak, providing limited effective support to futures prices.

Specifically, the high-supply and weak-demand pattern has not been materially reversed by export-related news. Industry operating rates remain high, daily output is stable at a relatively high level compared with the same period historically, producer inventories continue to rise, and supply remains sufficient. Agricultural fertilizer demand has recovered only modestly, while compound fertilizer producers are maintaining only small-volume restocking based on rigid demand. Overall new order transactions remain thin.

Overall, urea futures are likely to continue fluctuating weakly in the short term. There is still no clear signal of a reversal in the downward trend, and futures prices will continue to be anchored by changes in spot fundamentals. Going forward, close attention should be paid to the actual implementation pace of export policies and the strength of summer agricultural demand, in order to assess whether supply pressure may ease in stages.

Spot Market Analysis

Today, China’s domestic urea spot market continued to weaken. Over the weekend, domestic urea prices continued to decline, with factory prices in some regions falling significantly. Prices have now dropped back to lows seen before the implementation of export-related policies.

However, market news this morning regarding potential adjustments to domestic guidance prices provided some support to sentiment, helping improve new order transactions at some low-end prices to a certain extent.

From a fundamentals perspective, daily output on the supply side remains high, producer inventories remain elevated, and factory shipment pressure has not eased. Agricultural demand has seen some scattered release, but has not yet started on a large scale. On the industrial side, compound fertilizer producers are only maintaining small-volume restocking based on rigid demand, providing limited support for urea raw material prices.

Overall, positive support for the market remains limited. Substantial export orders remain scarce, domestic demand is weak, market confidence is insufficient, and producer shipment pressure continues to increase. The market is likely to remain weak in the short term. Going forward, attention should focus on the pace of summer fertilizer stocking and the actual implementation of export policies.

In summary, China’s domestic urea spot market is currently fluctuating within a range. On the supply side, industry capacity utilization remains high, daily output is elevated, and maintenance at some producers has had only a limited impact, leaving overall supply pressure relatively heavy.

On the demand side, summer fertilizer demand has not yet recovered on a large scale, with only scattered topdressing demand in some regions. Downstream industrial sectors such as compound fertilizer, panels, and melamine are operating weakly, and procurement is mainly based on rigid demand. Overall demand momentum remains limited.

On the inventory side, weaker market demand has slowed shipments, and producer inventories continue to accumulate rapidly, leaving inventory pressure in place. On the policy side, a moderate relaxation of export quotas is only a structural adjustment during the off-season and is unlikely to change the domestic oversupply pattern.

Going forward, close attention should be paid to export shipment progress, the release of summer topdressing demand, and fluctuations in coal costs.

By region, prices in Northeast China remained stable at RMB 1,870-1,920/mt. Prices in East China fell to RMB 1,780-1,840/mt. Prices in Central China fell to RMB 1,780-1,920/mt. Prices in North China fell to RMB 1,660-1,910/mt. Prices in South China fell to RMB 1,890-1,940/mt. Prices in Northwest China fell to RMB 1,770-1,780/mt. Prices in Southwest China fell to RMB 1,800-2,150/mt.

Market Updates

On June 15, the reference receiving price for urea in the Guangzhou market, Guangdong, was RMB 1,920-1,930/mt, unchanged from the previous working day.

On June 15, the reference receiving price for urea in the Nanning market, Guangxi, was RMB 1,890-1,900/mt, down from the previous working day.

On June 15, the reference receiving price for urea in the Shijiazhuang market, Hebei, was RMB 1,790-1,800/mt, down RMB 40/mt from the previous working day.

On June 15, the reference receiving price for urea in the Wen’an market, Hebei, was RMB 1,780-1,790/mt, down RMB 50/mt from the previous working day.

On June 15, mainstream industrial ex-works prices within Henan Province were around RMB 1,730-1,760/mt. In the Shangqiu market, mainstream reference prices for small and medium-granule urea were RMB 1,780-1,790/mt, while large-granule urea was referenced at around RMB 1,830-1,850/mt.

On June 15, mainstream reference prices for small and medium-granule urea in the Jingmen market were RMB 1,780-1,800/mt. Self-pickup at railway stations was temporarily referenced at around RMB 1,740-1,750/mt, while mainstream large-granule urea self-pickup at railway stations was RMB 1,860-1,870/mt.

On June 15, ex-warehouse/truck pickup prices in the Tieling market, Liaoning, were referenced at RMB 1,880-1,920/mt, unchanged from the previous working day.

On June 15, the reference receiving price for urea in the Heze market, Shandong, was around RMB 1,780-1,790/mt, down RMB 20/mt from the previous working day.

On June 15, the reference receiving price for urea in the Linyi market, Shandong, was RMB 1,780-1,790/mt, down RMB 20/mt from the previous working day.

On June 15, mainstream prices in the Xianyang market were referenced at RMB 1,800-1,820/mt, unchanged from the previous working day.