October 29 Urea Daily: Demand Expectations Improve, Signs of a Warming Mood

Domestic Urea Price Index:

According to FDD data estimates, on October 29 the urea small-granular price index was 1,770.45, up 0.45 from the previous working day, a month-on-month change of +0.03% and a year-on-year change of +7.92%.

Urea Futures Market:

Today the UR2701 contract opened at 1,698, with a high of 1,718, a low of 1,694, a settlement price of 1,705, and a closing price of 1,716. The closing price was up 20 from the settlement price of the previous trading day, a change of +1.18%. The basis for the 01 contract in Shandong was +26; the 01 contract saw open interest change of +941 lots today, with open interest standing at 312,193 lots as of now.

Today the urea futures market edged higher and overall continued to run firm. Short-term export-related news remains volatile, and as time passes stocking expectations are also gradually strengthening; market talk that some stockpiling enterprises have been taking goods provided a strong sentiment boost, and the board rebounded in response. The spot market is basically in a state of steadying while awaiting a driver, low-price transactions in a few regions show signs of improving again, and the focus of market trading is beginning to move gradually out of the lull. Overall, the market currently has policy floor expectations plus cost and export expectation support; at the same time, as spot prices keep falling, expectations for subsequent winter-storage restocking will gradually warm, but in the short term there is no sufficiently strong real-world improvement, making it hard to reverse the weak pattern; the market is in a phase where fundamental reality and forward stocking expectations wrestle with each other, incremental drivers remain limited for now in the short term, and overall sentiment is still cautious. Overall, urea futures are gradually trading the expectation of a stocking recovery. Going forward, watch the pace of downstream procurement, whether export expectations are realized, and the rhythm at which stocking demand is released.

Spot Market Analysis:

Today the domestic urea spot market was basically stable; low-price transactions in some regions showed signs of improvement and prices were raised slightly. However, a cautious mindset persists for now, willingness to chase prices is limited, and most are watching and waiting for export expectations to materialize. Contradictions in current market fundamentals remain, and demand temporarily lacks a sustainable driver. In terms of supply and demand fundamentals, overall supply remains ample; on the demand side, agricultural fertilizer demand at the tail end is fairly limited, operating rates in compound fertilizer and downstream industrial sectors mostly remain low, and substantive demand release is weak. For the moment the market is mainly watching for further materialization of export news and the rhythm of stocking demand. Overall, the urea market is expected to remain in range-bound oscillation in the short term; if new orders continue to fail to scale up and producers' inventory pressure accumulates, further concessional selling cannot be ruled out. However, there is still bottom support from the raw-material side and policy stance. Going forward, focus on the landing of positive export-side developments and the pace at which real demand and stocking purchases are made.

Overall, the domestic urea spot market is currently in narrow-range oscillation. On the supply side, industry daily output remains at a year-on-year high, supply-pressure accumulation from available goods is gradual, and overall supply remains loose. On the demand side, although terminal demand shows signs of improvement, its sustainability is not promising; downstream buyers maintain rigid-demand procurement, agricultural fertilizer application is basically finished, operating rates in compound fertilizer and industry have improved only modestly, and substantive demand release is weak. The market is currently in a phase where cost support and export diversion provide a floor while loose supply and demand exert pressure; short-term prices show signs of steadying and repairing, but the drivers supporting a rebound are not particularly strong, and after the burst of sentiment there may still be a softening decline, though the room for a deep fall is limited; if prices fall back to relative lows, that could trigger a release of bargain-hunting sentiment.

Specifically, prices in the Northeast held stable at 1,760-1,800 yuan/t. Prices in East China held stable at 1,730-1,760 yuan/t. Prices in Central China held stable at 1,730-1,920 yuan/t. Prices in North China held stable at 1,610-1,800 yuan/t. Prices in South China held stable at 1,810-1,840 yuan/t. Prices in Northwest China held stable at 1,860-1,910 yuan/t. Prices in Southwest China held stable at 1,650-1,900 yuan/t.

Market News Roundup:

October 29: In the Guangzhou, Guangdong market, the reference price for urea pick-up was 1,820-1,840 yuan/t, flat versus the previous working day.

October 29: In the Nanning, Guangxi market, the reference price for urea pick-up was 1,800-1,810 yuan/t, flat versus the previous working day.

October 29: In the Shijiazhuang, Hebei market, the reference price for urea pick-up was 1,730-1,750 yuan/t, flat versus the previous working day.

October 29: In the Wen'an, Hebei market, the reference price for urea pick-up was 1,730-1,750 yuan/t, flat versus the previous working day.

October 29: In the Shangqiu market today, mainstream medium/small granular was referenced at 1,720-1,730 yuan/t, with large granular at around 2,040-2,050 yuan/t.

October 29: In the Jingmen market today, mainstream medium/small granular was referenced at 1,730-1,750 yuan/t, with large granular at around 2,020-2,030 yuan/t.

October 29: In the Tieling, Liaoning market, the ex-warehouse/ex-factory pick-up price was referenced at 1,760-1,780 yuan/t, flat versus the previous working day.

October 29: In the Heze, Shandong market, the reference price for urea pick-up was around 1,710-1,720 yuan/t, up 10 yuan/t versus the previous working day.

October 29: In the Linyi, Shandong market, the reference price for urea pick-up was 1,710-1,720 yuan/t, flat versus the previous working day.