August 27 Urea Daily Review: Strong Supply and Weak Demand Remain Unchanged as the Urea Market Continues to Trade Weakly and Volatily

 

According to Feidoodoo data, the small-granular urea price index was 1,765.00 on August 27, down 4.55 from the previous working day, down 0.26% month on month and down 0.18% year on year.

 

 

Today, the UR2701 urea contract opened at 1,757, reached a high of 1,764 and a low of 1,733, settled at 1,749, and closed at 1,746. The closing price was 11 yuan lower than the previous trading day's settlement price, down 0.63%. The January contract's basis in Shandong was -56 yuan/tonne. Open interest in the January contract decreased by 9,128 lots today to 216,513 lots.

 

Urea futures continued to trade in a volatile but weaker pattern today. Fundamentally, the urea market remains constrained by high supply, high inventories and weak demand. 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, spot trading remains subdued, and weak demand continues to weigh on futures.

 

However, the market also has some support. Prices have fallen to low levels, while elevated coal prices have raised costs and provided some support at the bottom. Although exports and favorable policy factors remain in place, demand is weak and bullish and bearish factors continue to compete. 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.

 

 

The domestic urea spot market continued to move lower with a weak bias today. Weak domestic demand fundamentals have not improved materially. On the supply side, although some plants entered concentrated maintenance in late August, industry operating rates remain relatively high and overall supply is still ample. Producer inventories have declined slightly through exports and port accumulation, but total inventory levels remain high and destocking pressure has not eased materially.

 

On the demand side, agricultural demand has entered its off-season gap. Downstream compound fertilizer, melamine and other industrial users are purchasing only to meet rigid demand, with no willingness to make incremental restocking purchases. Most producers have few new orders and continued to lower ex-factory quotations slightly, leaving market trading in a stalemate. However, prices have fallen to the low end of the annual range and are gradually approaching the cost-support zone. The market may enter a low-level stalemate and consolidation phase in the short term, with limited room for a further sharp decline.

 

Overall, downstream demand is unlikely to recover materially in the short term. The market receives only limited support from the export-driven rebound. Before the fundamentals of strong supply and weak demand reverse materially, the market lacks sustained upward momentum and is expected to maintain a weak and volatile pattern. Attention should focus on export policy changes and the actual start of autumn fertilizer procurement to assess whether supply-demand conditions may improve at the margin.

 

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 were stable at 1,680-1,740 yuan/tonne. Prices in Central China fell to 1,690-1,900 yuan/tonne. Prices in North China were stable at 1,550-1,800 yuan/tonne. Prices in South China fell to 1,790-1,830 yuan/tonne. Prices in Northwest China were stable at 1,860-1,910 yuan/tonne. Prices in Southwest China fell to 1,660-2,000 yuan/tonne.

 

 

August 27: In Guangzhou, Guangdong, the reference delivered price for urea was 1,820-1,830 yuan/tonne, with mainstream prices lower than the previous working day.

 

August 27: In Nanning, Guangxi, the reference delivered price for urea was 1,790-1,800 yuan/tonne, with the high end lower than the previous working day.

 

August 27: In Shijiazhuang, Hebei, the reference delivered price for urea was 1,700-1,750 yuan/tonne, down 10 yuan/tonne from the previous working day.

 

August 27: In Wen'an, Hebei, the reference delivered price for urea was 1,720-1,740 yuan/tonne, down 10 yuan/tonne from the previous working day.

 

August 27: In Shangqiu, mainstream reference prices for small- and medium-granular urea were 1,690-1,720 yuan/tonne, while large-granular urea was quoted at around 1,840-1,850 yuan/tonne.

 

August 27: In Jingmen, mainstream reference prices for small- and medium-granular urea were 1,720-1,730 yuan/tonne. Self-pickup prices at railway terminals were temporarily referenced at around 1,700-1,730 yuan/tonne, while mainstream self-pickup prices for large granules at railway terminals were 1,800-1,810 yuan/tonne.

 

August 27: In Tieling, Liaoning, ex-warehouse/vehicle-loading prices were referenced at 1,780-1,800 yuan/tonne, unchanged from the previous working day.

 

August 27: In Heze, Shandong, the reference delivered price for urea was around 1,690 yuan/tonne, down 10 yuan/tonne from the previous working day.

 

August 27: In Linyi, Shandong, the reference delivered price for urea was 1,680-1,690 yuan/tonne, broadly unchanged from the previous working day.

 

August 27: In Xianyang, mainstream prices were referenced at 1,800-1,820 yuan/tonne, unchanged from the previous working day.