Urea Monthly: Beginning of the Month Supported by Pending Shipments, End of Month Marked by Export News Impacting the Market, Urea Prices Stay Firm

June 12, 2024, 9:21 AM

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The report outlines the performance of China's domestic urea market in October. It starts off strong with companies having large orders before the National Day holidays, and pending shipments supporting the market. Despite some downward trends and increased production rates, the market remains firm due to favorable export news. However, the market also faces risks from export limitations and potential reflow of port inventory. Overall, the urea market is expected to continue its stable yet fluctuating performance in October.

Urea Market Analysis:

Price Analysis and Future Forecast for Urea Market in October:

In October, China's domestic urea spot market remained firm overall. Many companies received a large number of orders before the National Day holiday, and had abundant shipments pending afterwards, alleviating shipping pressures. Coupled with positive news of exports at the end of the month, many companies offered firmer and rising quotes. Downstream traders, however, have slowed their demand and largely maintain small just-in-time purchases, taking a wait-and-see attitude towards higher prices.

At the beginning of the month, the urea market was weak and trending downward. Companies had large orders before the National Day, with many pending shipments at the beginning of the month. As pre-holiday orders were gradually closed, new orders were slow, causing growing stockpiles and shipping pressure. Companies lowered their prices to attract orders. The post-holiday production rate continued to rise, which, along with other factors, put downward pressure on urea prices.

Mid-month, a new round of Indian urea tendering impacted the market. Many companies were energized and focused on this tender as a positive for the overall subdued market. Although there had been news of export limitations, exports had not been completely blocked. By the end of the month, the lowest bid price was still higher than current domestic market prices, supporting companies to raise their factory prices. However, some news of export suspensions and limited Chinese participation may lead to the risk of a reflow of port inventory, and the market situation remained firm.

Future Forecast:
On the supply side, there's a high level of production this month but an expected decrease next month due to maintenance. On the demand side, the coming winter will weaken agricultural demand, while industrial demand remains steady. Exports have been favorable but are not the main driver of substantial price increases. Overall, the urea market in October will maintain stable operations amid fluctuations.

Domestic Industry Statistics:

The monthly average operating rate for the domestic urea industry was 81.43%, an increase of 5.75% month-on-month and 15.11% year-on-year. Production increased compared to last month.

Import and Export Data:

According to customs data, exports and imports of urea have increased and decreased, respectively, with exports significantly outperforming imports.

Apparent Consumption Data:

Apparent consumption has decreased month-on-month and year-on-year.

Inventory Trends:

Both port and company inventories showed varied trends, but were generally below last year's levels.