September 1 Urea Daily Review: Support from bullish expectations, but insufficient demand follow-through keeps the urea market fluctuating weakly

Domestic Urea Price Index:
According to Feidoodoo data, the domestic small-granular urea price index stood at 1,758.64 on September 1, up 0.91 from the previous working day, up 0.05% month on month and down 0.39% year on year.

Urea Futures Market:
The UR2701 urea contract opened at 1,765 today, reached a high of 1,768 and a low of 1,744, settled at 1,757 and closed at 1,767. The closing price was down 5 from the previous trading day's settlement price, or down 0.28%. The basis for the January contract in Shandong was -77. Open interest in the January contract increased by 5,805 lots today to 260,320 lots.
The urea futures market fluctuated within a narrow range today. The core market contradiction remains a balance between strong expectations and weak fundamentals. On the bullish side, India's new urea procurement tender is progressing, and export expectations are supporting sentiment. Meanwhile, the autumn fertilizer stocking season is approaching, leaving room for improvement in domestic demand. These factors jointly provide support at the lower end of the market. In addition, plant maintenance has marginally reduced supply, while prices are already at relatively low levels, limiting further downside. However, the realization of these expectations will take time, and pressure from market fundamentals remains evident. Exports have shifted some cargoes to ports but have not yet led to a sustained drawdown in industry inventories. Demand for autumn fertilizer has also not entered a period of concentrated procurement. On the spot side, the market remains in a seasonal low-demand period, with downstream buyers maintaining cautious, rigid-demand purchasing, continuously weighing on futures prices. Overall, the market lacks a clear one-way driver in the short term and is expected to remain range-bound. Attention should focus on the pace of autumn fertilizer stocking, actual port loading progress and changes in industry inventories.

Spot Market Analysis:
The domestic urea spot market moved within a narrow range today. On the demand side, weak domestic demand has not improved materially. Although maintenance at some plants has marginally reduced supply, overall cargo availability remains ample and producers' inventories are being digested slowly. Agricultural fertilizer demand is currently in a seasonal gap, while concentrated autumn fertilizer stocking has not yet fully started. Compound fertilizer producers and downstream industrial users are operating at low rates and are mainly making small, rigid-demand purchases, leaving overall trading subdued. New orders improved somewhat at certain low-priced producers today, while new-order sales at other producers remained weak. Trading sentiment remained deadlocked, demand support was insufficient, and the market lacked upward momentum. Overall, downstream demand is unlikely to recover significantly in the short term, while export-driven rebounds offer limited support. Unless the fundamentally loose supply-demand balance changes, the market will lack sustained upside momentum and is expected to fluctuate weakly in the near term. Attention should be paid to export policy changes and the actual start of autumn fertilizer stocking to assess whether supply-demand conditions can improve at the margin.
Overall, the domestic urea spot market remains weak and volatile. On the supply side, industry operating rates remain high, supply is ample and inventory pressure continues to build. Some producers plan maintenance and output cuts, but interregional cargo flows remain insufficient, making it difficult to fully ease the supply-demand imbalance and even generating evident inventory accumulation signals. On the demand side, agricultural top-dressing demand varies by region and has not formed concentrated buying support. Industrial demand remains limited to rigid-demand procurement, compound fertilizer operating rates are low, and downstream buyers remain cautious, resulting in limited transaction volumes. The core contradiction of loose supply and demand has not fundamentally changed. Upward drivers mainly stem from expectations of lower supply and export diversion. Attention should be paid to the implementation of maintenance-related output cuts, the pace of export-order fulfillment and marginal changes brought by the start of autumn fertilizer stocking.
Specifically, prices in Northeast China were stable at 1,780-1,800 yuan/tonne. Prices in East China were stable at 1,680-1,730 yuan/tonne. Prices in Central China were stable at 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 1,800-1,820 yuan/tonne. Prices in Northwest China were stable at 1,860-1,910 yuan/tonne. Prices in Southwest China were stable at 1,660-2,000 yuan/tonne.

Market Updates:
September 1: The reference delivered urea price in Guangzhou, Guangdong was 1,800-1,820 yuan/tonne, down from the previous working day.
September 1: The reference delivered urea price in Nanning, Guangxi was 1,760-1,780 yuan/tonne, unchanged from the previous working day.
September 1: The reference delivered urea price in Shijiazhuang, Hebei was 1,700-1,740 yuan/tonne, broadly unchanged from the previous working day.
September 1: The reference delivered urea price in Wen'an, Hebei was 1,700-1,730 yuan/tonne, broadly unchanged from the previous working day.
September 1: The mainstream reference price for small- and medium-granular urea in Shangqiu was 1,690-1,720 yuan/tonne, while large-granular urea was quoted at around 1,840-1,850 yuan/tonne.
September 1: The mainstream reference price for small- and medium-granular urea in Jingmen was 1,710-1,720 yuan/tonne. Station self-pickup prices were temporarily referenced at around 1,670-1,700 yuan/tonne, while large-granular urea station self-pickup prices were mainly 1,800-1,810 yuan/tonne.
September 1: The ex-warehouse/truck-lift reference price in Tieling, Liaoning was 1,770-1,790 yuan/tonne, unchanged from the previous working day.
September 1: The reference delivered urea price in Heze, Shandong was around 1,680-1,690 yuan/tonne, up 10 yuan/tonne from the previous working day.
September 1: The reference delivered urea price in Linyi, Shandong was 1,680-1,690 yuan/tonne, up 10 yuan/tonne from the previous working day.
September 1: The mainstream reference price in Xianyang was 1,800-1,820 yuan/tonne, unchanged from the previous working day.