September 2 Urea Daily Review: Urea Market Fluctuates Higher as Cost Support and Export Expectations Reinforce Each Other

Domestic Urea Price Index:

According to Feidoodoo data, the domestic small-granular urea price index stood at 1,760.00 on September 2, up 1.82 from the previous working day, up 0.10% month on month and down 0.28% year on year.

Urea Futures Market:

The UR2701 urea contract opened at 1,775 today, reached a high of 1,794 and a low of 1,768, settled at 1,781 and closed at 1,772. The closing price was up 15 from the previous trading day's settlement price, or up 0.85%. The basis for the January contract in Shandong was -72. Open interest in the January contract increased by 5,018 lots today to 265,338 lots.
The urea futures market opened sharply higher and then fluctuated upward. On the sentiment side, the escalation of Middle East tensions pushed international prices higher and supported domestic futures sentiment. Fundamentals centered on cost support, supply contraction and export expectations. On the cost side, coal prices continued to strengthen, progressively raising urea production costs and providing bottom support. On the supply side, concentrated maintenance at some plants recently reduced industry daily output to a relatively low level. Meanwhile, after the second batch of export quotas was issued, cargo consolidation at ports diverted some supply. With September Indian tender loading dates approaching, export expectations have strengthened. The approaching seasonal peak for autumn fertilizer demand and expectations for off-season reserves also supported market sentiment.
The combined effect of these factors has led to relatively bullish expectations for urea, supporting firmer futures prices. However, these expectations will take time to materialize, while fundamental pressure cannot be ignored. Although exports have shifted some cargoes to ports, they have not led to a sustained drawdown in industry inventories, and producer inventories showed no clear reduction this week. Demand for autumn fertilizer has also not entered a period of concentrated procurement, limiting its support for the market. Overall, the market is in a stalemate: cost support and export expectations provide downside protection, while high inventories and weak demand limit the room for a rebound. Attention should focus on the implementation pace of autumn fertilizer stocking, actual port loading progress and marginal changes in industry inventories.

Spot Market Analysis:

The domestic urea spot market moved marginally higher within a narrow range today. Following some improvement in low-priced transactions in certain regions, upstream prices rose slightly and trading sentiment improved somewhat from earlier levels. On the cost side, coal prices continued to strengthen, progressively raising urea production costs and supporting market valuations. On the supply side, concentrated maintenance at some plants brought marginal output reductions, while export cargo consolidation at ports diverted part of the supply and eased domestic supply pressure to some extent. Together with stronger expectations for autumn fertilizer stocking, these positive factors supported market sentiment. Producers showed a strong willingness to support prices, quotations remained firm in many regions, and new-order transactions improved somewhat at some lower-priced levels.
However, most supportive factors remain at the expectation stage, while pressure from market fundamentals remains prominent. Industry operating rates remain high, market supply is ample and producer inventories are being digested slowly. On the demand side, agricultural top-dressing is in a seasonal gap, while compound fertilizer producers and downstream industrial users continue to operate at low rates. Procurement is mainly limited to small rigid-demand orders, with limited transaction volumes and insufficient substantive support for the market. Overall, the market remains in a stalemate: cost support and supply contraction provide a downside buffer, while high inventories and weak demand constrain upside potential. The market is expected to remain range-bound in the short term. Attention should be paid to the implementation pace of export policies, the realization of maintenance-related output cuts and the start of autumn fertilizer stocking.
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 increased to 1,690-1,730 yuan/tonne. Prices in Central China increased to 1,700-1,900 yuan/tonne. Prices in North China increased to 1,570-1,800 yuan/tonne. Prices in South China fell to 1,760-1,820 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 2: The reference delivered urea price in Guangzhou, Guangdong was 1,800-1,820 yuan/tonne, unchanged from the previous working day.
September 2: The reference delivered urea price in Nanning, Guangxi was 1,760-1,770 yuan/tonne, unchanged from the previous working day.
September 2: The reference delivered urea price in Shijiazhuang, Hebei was 1,700-1,740 yuan/tonne, broadly unchanged from the previous working day.
September 2: The reference delivered urea price in Wen'an, Hebei was 1,700-1,730 yuan/tonne, broadly unchanged from the previous working day.
September 2: 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 2: 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 2: The ex-warehouse/truck-lift reference price in Tieling, Liaoning was 1,770-1,790 yuan/tonne, unchanged from the previous working day.
September 2: The delivered urea transaction price in Heze, Shandong was around 1,690-1,700 yuan/tonne, up 10 yuan/tonne from the previous working day.
September 2: The delivered urea transaction price in Linyi, Shandong was 1,690-1,700 yuan/tonne, up 10 yuan/tonne from the previous working day.
September 2: The mainstream reference price in Xianyang was 1,800-1,820 yuan/tonne, unchanged from the previous working day.