August 26 Urea Daily Review: Weak Domestic Demand and Limited Maintenance Support Keep the Urea Market in Weak Consolidation

Domestic Urea Price Index:

According to Feidoodoo data, the small-granular urea price index was 1,769.55 on August 26, down 0.91 from the previous working day, down 0.05% month on month and up 0.08% year on year.

Urea Futures Market:

Today, the UR2701 urea contract opened at 1,758, reached a high of 1,768 and a low of 1,748, settled at 1,757, and closed at 1,758. The closing price was 4 yuan lower than the previous trading day's settlement price, down 0.23%. The January contract's basis in Shandong was -68 yuan/tonne. Open interest in the January contract decreased by 9,708 lots today to 225,641 lots.

Urea futures continued to trade in a volatile but weaker pattern today. Although prices briefly moved higher intraday, upward momentum clearly slowed and the price benchmark subsequently retreated. Positive factors previously priced into the market, including plant maintenance and export port accumulation, have gradually been absorbed by futures prices. Trading logic has returned to being driven by fundamentals, while domestic demand follow-up remains insufficient. Both spot and futures markets continued to edge lower.

On the supply side, overall availability remains ample. Although some plants have entered maintenance cycles, creating expectations of temporary supply contraction, regional divergence remains pronounced and cargo flows from outlying regions remain insufficient. Pressure from producer inventories has not eased and continues to weigh on prices. On the demand side, domestic agricultural demand is in its traditional lull, and large-scale autumn fertilizer procurement has not yet begun. Downstream compound fertilizer and industrial sectors are mainly purchasing to meet rigid demand. New-order follow-up is limited, the overall spot-trading atmosphere remains subdued, and weak demand continues to weigh on futures. Overall, weak domestic demand and high inventories limit upside potential. Without an actual positive catalyst, the market is likely to maintain a weak and volatile pattern in the short term. Attention should focus on changes in export policy, the implementation of plant maintenance, and the timing of autumn fertilizer procurement.

Spot Market Analysis:

The domestic urea spot market continued to trade weakly today. Weak domestic demand fundamentals have not improved. Agricultural demand has entered the off-season, while downstream compound fertilizer and melamine producers are purchasing only to meet rigid demand, with no incremental buying. New-order transactions have not followed up sufficiently, leaving the market in a stalemate. On the supply side, concentrated plant maintenance in late August has brought daily output down from high levels and tightened supply marginally. However, industry operating rates remain relatively high and overall availability is ample. Producer inventories have declined slightly through port accumulation, but total inventory levels remain high. Most producers recorded few new-order transactions and slightly lowered ex-factory prices. Market trading remained weak and stalled.

Overall, downstream demand is unlikely to improve materially. The export-driven rebound remains a phased positive factor, but before the fundamental imbalance of strong supply and weak demand is materially reversed, the market lacks sustained upward momentum. The market may maintain a weak and volatile pattern in the short term. Attention should focus on changes in export policy and the start of autumn fertilizer procurement.

Overall, the domestic urea spot market is trading with a volatile but weak tone. On the supply side, industry operating rates remain high, supply is ample, and inventory pressure continues to build. Some producers plan maintenance shutdowns and output reductions, but cargo flows from outlying regions remain insufficient. The supply-demand imbalance is difficult to ease fully, and there are even clear signs of inventory accumulation. On the demand side, agricultural topdressing demand remains regionally differentiated and has not generated concentrated procurement. Industrial demand is limited to rigid-demand buying, compound fertilizer operating rates remain low, downstream buyers are cautious, and transaction volumes remain limited. The core contradiction of loose supply-demand fundamentals has not been materially reversed. Upward momentum is mainly coming from expectations of supply reductions and export diversion. Attention should remain on the implementation of maintenance-related output cuts, the pace of export order fulfilment, and marginal changes arising from the start of autumn fertilizer procurement.

Specifically, prices in Northeast China were stable at 1,780-1,800 yuan/tonne. Prices in East China fell to 1,680-1,740 yuan/tonne. Prices in Central China fell to 1,700-1,900 yuan/tonne. Prices in North China were stable at 1,560-1,800 yuan/tonne. Prices in South China fell to 1,790-1,840 yuan/tonne. Prices in Northwest China were stable at 1,860-1,910 yuan/tonne. Prices in Southwest China were stable at 1,680-2,000 yuan/tonne.

Market Updates:

August 26: In Guangzhou, Guangdong, the reference delivered price for urea was 1,820-1,830 yuan/tonne, lower than the previous working day.

August 26: In Nanning, Guangxi, the reference delivered price for urea was 1,790-1,810 yuan/tonne, with the low end lower than the previous working day.

August 26: In Shijiazhuang, Hebei, the reference delivered price for urea was 1,730-1,750 yuan/tonne, broadly unchanged from the previous working day.

August 26: In Wen'an, Hebei, the reference delivered price for urea was 1,720-1,740 yuan/tonne, broadly unchanged from the previous working day.

August 26: In Shangqiu, mainstream reference prices for small- and medium-granular urea were 1,710-1,740 yuan/tonne, while large-granular urea was quoted at around 1,840-1,850 yuan/tonne.

August 26: In Jingmen, mainstream reference prices for small- and medium-granular urea were 1,740-1,750 yuan/tonne. Self-pickup prices at railway terminals were temporarily referenced at around 1,700-1,740 yuan/tonne, while mainstream self-pickup prices for large granules at railway terminals were 1,800-1,810 yuan/tonne.

August 26: In Tieling, Liaoning, ex-warehouse/vehicle-loading prices were referenced at 1,780-1,800 yuan/tonne, unchanged from the previous working day.

August 26: In Heze, Shandong, the reference delivered price for urea was around 1,690-1,700 yuan/tonne, broadly unchanged from the previous working day.

August 26: In Linyi, Shandong, the reference delivered price for urea was 1,680-1,700 yuan/tonne, broadly unchanged from the previous working day.

August 26: In Xianyang, mainstream prices were referenced at 1,800-1,820 yuan/tonne, unchanged from the previous working day.