Urea Market Summary for the First Quarter of 2024
Analysis of China's Urea Market:
During the first quarter of 2024, China's domestic urea market operated at a low and weak level. Following a price drop at the beginning of the quarter, there was a short-term rebound after the Spring Festival, ending the quarter with a sharp decline. Market demand changes led to minor fluctuations and adjustments. According to data from Fertilizer Multi-Dimensional, the Domestic Urea Small Particle Price Index peaked at 2408.64 and dipped to a minimum of 2234.36, a difference of 174.27 or 7.80%. The highest price index was recorded at the beginning of January, with the lowest at the end of January. The price trend for the first quarter of 2024 showed an initial decline, followed by a rise, and then a continuous downturn, overall indicating minor oscillations for adjustments.
In January, the domestic urea spot market operated weakly with continuous price drops. Factories gradually reduced their pending orders to accept new ones, slightly decreasing prices, but the market response was tepid, with minimal shipments and increasing difficulties in dispatching goods, leading to inventory accumulation. High prices and the resumption of production units influenced the downstream purchasing sentiment, leading to cautious restocking and minimal demand from compound fertilizer industries. Despite positive news from Indian tenders, the impact on domestic market prices was minimal due to export restrictions and low international prices.
In February, the domestic urea market shifted from weakness to strength, with the Spring Festival holiday marking a clear change. Market conditions remained weak before the holiday, with manufacturers accepting lower prices for Spring Festival orders. The transaction volume was low, with prices stabilizing as the holiday approached due to halted industry demand. Post-holiday, with the gradual resumption of work and increased downstream purchasing, along with the start of agricultural demand, the market saw improved transaction atmospheres and stable prices.
In March, the urea market maintained a weak and stable operation with continuous price reductions. Market sentiment rebounded due to maintenance shutdowns and export news, leading to a slight price increase. However, uncertainties in export news and a lack of enthusiasm for following high prices after restocking led to a slowdown in transactions, with the market eventually stabilizing and adjusting due to ample supply and demand.
Statistics on China's Urea Production and Operational Rates:
According to Feidoodoo data, from January to March 2024, China's cumulative urea production reached 16.0454 million tons, a 12.57% increase over the same period last year. The average operational rate of the urea industry was 80.89%, a 5.18% increase from the previous year, with gas-based and coal-based enterprises showing differing operational rates.
Analysis of Urea Import and Export Data:
Export data revealed a 94.73% decline in the first two months of 2024 compared to the previous year. Domestic apparent consumption of urea increased by 19.33% over the same period last year.
Inventory Statistics:
By the end of the first quarter of 2024, inventory levels at ports and enterprises increased, indicating a supply pressure.
Market Forecast for the Second Quarter of 2024:
The forecast suggests continued high production levels and supply pressure, with cautious demand and stringent export policies leading to a weak and fluctuating market with little prospect for price increases.
