Urea Weekly: Urea Prices Generally Increase, Exports Dominate
Market Overview:
This week, the domestic urea market saw a significant increase overall. The average price index for domestic small granular urea is 2530.32, an increase of 43.79 from last week. Influenced by positive news related to Indian standards, the domestic market sentiment was significantly boosted. There's a noticeable trend of businesses chasing higher prices, resulting in the downstream mainly purchasing in small quantities as needed, leaving the market in a stalemate. Additionally, due to some companies halting production for maintenance and low inventory levels, there's an overall supply shortage, leading to a market demand that exceeds supply. Currently, companies are mainly fulfilling previously received orders and foreign export orders. Overall, it's expected that the domestic urea market will remain at high levels in the short term, with specific market changes still dependent on the number of international Indian standards.
Urea Delivery Area Quotes:
Specifically, prices in the Northeast region are stable at 2240-2460 yuan/ton. Prices in North China have risen to 2380-2640 yuan/ton. Prices in the Northwest region have risen to 2590-2600 yuan/ton. Prices in the Southwest region have risen to 2400-2700 yuan/ton. Prices in East China have risen to 2530-2620 yuan/ton. In Central China, the price of small granules has risen to 2470-2680 yuan/ton, and large granules have risen to 2560-2600 yuan/ton. Prices in South China have risen to 2620-2750 yuan/ton.
Industry Chain Dynamics: Daily Production Rises Rapidly:
This week, domestic urea production was about 1.1835 million tons, a decrease of 3.25% from the previous month and an increase of 20.73% year-on-year. The daily production was 169,100 tons, with a slight decline during the week. The domestic urea industry's operating rate was about 79.83%, a decrease of 2.68% from the previous month and an increase of 17.1% year-on-year.
Looking at the production process, coal-based urea production was about 899,100 tons, a decrease of 23,600 tons from last week and an increase of 195,600 tons from the same period last year. The operating rate was about 80.3%, down 2.76% from last week and up 19.46% year-on-year. Gas-based urea production was about 291,400 tons, a decrease of 9,100 tons from last week and an increase of 14,600 tons from the same period last year. The operating rate was about 78.42%, down 2.45% from last week and up 10.31% year-on-year.
Market Inventory:
This week, the inventory of large granular urea at domestic ports was 144,000 tons, an increase of 13,000 tons from last week and an increase of 38,000 tons from the same period last year. The volume of large granular urea at ports increased during the week, higher than the same period last year.
This week, the inventory of small granular urea at domestic ports was 288,500 tons, an increase of 112,500 tons from last week and an increase of 152,500 tons from the same period last year. The volume of small granular urea at ports increased during the week, higher than the same period last year.
This week, the company's inventory was about 264,400 tons, an increase of 31,100 tons from the previous month. The total port inventory was 432,500 tons, an increase of 40.88% from the previous month.
Compound Fertilizer Industry:
This week, domestic compound fertilizer prices were stable with some areas seeing increases. On the raw material side, urea prices remain high due to the impact of Indian standards, providing some support for compound fertilizer costs. Some companies find it difficult to quote prices and limit orders. Currently, companies are mainly fulfilling previously received orders, and some new orders are slightly weak. On the downstream distributor side, affected by the price increase, the downstream is currently in a state of purchasing as needed, with cautious purchases and a strong wait-and-see sentiment. Overall, it is expected that domestic compound fertilizer prices will remain high in the next period, with prices more likely to rise than fall.
Melamine Industry:
This week, the domestic melamine market was generally stable with slight fluctuations. On the company side, most companies are currently in a state of restricted or suspended orders. Some companies have stopped production for maintenance or are planning to do so, leading to a decrease in the operating rate, a reduction in spot goods, and a clear intention to hold prices. On the demand side, current downstream demand is flat, causing companies to be cautious in adjusting prices and finding it difficult to quote. Overall, the current melamine market has limited positive factors, and market prices are mainly characterized by slight fluctuations. Specific changes still need to be observed based on upstream and downstream changes.
International Market Quotes:
On the international market, the FOB price for bulk small granules in China is 3701-376 USD/ton, down 1-3 USD/ton. The Baltic FOB price is 342-370 USD/ton, down 10-15 USD/ton.
The FOB price for large granules in China is 380-395 USD/ton, down 15-20 USD/ton. The FOB price for large granules in Iran is 340-360 USD/ton, down 20-30 USD/ton.
Market Outlook:
Supply: Currently, there are more equipment failures in companies, leading to a slight decline in the urea operating rate and daily production, resulting in a tight market supply.
Inventory: Company inventory has increased slightly.
Cost: The price of thermal coal has fallen slightly, but the range of increase and decrease is not large. The price of smokeless lump coal has rebounded from the bottom, and the cost of fixed beds has risen slightly.
Demand: Domestic fertilizer use is relatively small, foreign demand is large, and companies are mainly focused on exports.
