September 24 Urea Daily Review: Indian Tender and Export Expectations Lift Futures and Spot Markets into Firmer Rangebound Trading

Domestic Urea Price Index:

According to FDD data calculations, the urea small-granule price index was 1,782.73 on September 24, up 2.27 points from the previous working day, up 0.13% sequentially and up 6.06% year on year.

Futures Market Analysis:

Today's urea UR2701 contract opened at 1,763, reached a high of 1,772, a low of 1,754, settled at 1,763 and closed at 1,758. The closing price was 3 points above the previous trading day's settlement price, representing a sequential increase of 0.17%. The basis for the January contract in Shandong was -8. Open interest in the January contract fell by 1,597 lots today, bringing current open interest to 255,182 lots.

Today's urea futures market gapped higher at the open before trading within a narrow range. After spot-market quotations declined earlier, transactions recovered somewhat, providing a degree of support to futures prices. At the same time, India's new tender lifted market sentiment, while market rumors that an industry meeting may be held after the National Day holiday to discuss matters related to the fourth batch of export quotas further boosted short-term sentiment through multiple positive expectations. However, as the Mid-Autumn Festival holiday approaches, some trading funds have chosen to reduce positions and exit due to risk-aversion considerations, gradually strengthening the wait-and-see atmosphere in the market. The market also still needs to withstand the test of concentrated order collection by factories before the National Day holiday. Fundamentals have not yet shown any substantive signs of improvement at this stage, and the foundation for an upward move is not solid. Overall, urea futures remain in a phase where positive export expectations are competing against weak underlying fundamentals. Conditions for a trending market are not yet in place, and the futures market is likely to continue trading within a narrow range. Going forward, attention should remain on the implementation and actual execution of export quotas, improvement in spot-market transactions and the start of autumn fertilizer demand, which will guide the future direction of futures prices.

Spot Market Analysis:

Today's domestic spot urea market was stable to firm. After mainstream urea producers lowered quotations yesterday, downstream buyers restocked on dips, releasing some essential demand and increasing the volume of orders awaiting shipment at plants, which should be broadly sufficient to cover shipping demand during the Mid-Autumn Festival holiday. However, overall supply remains high, domestic demand has not recovered significantly, and the pace of export shipments has slowed, leaving substantive positive drivers relatively limited. Boosted by sentiment stemming from rumors of an Indian tender, spot quotations edged higher today and the market was relatively firm. However, downstream follow-through was weak, with traders and end users still purchasing only as needed and showing little willingness to restock actively. From the supply-demand perspective, overall supply remains relatively ample. On the demand side, agricultural autumn fertilizer stockpiling has not yet begun on a large scale, while operating rates in the compound-fertilizer and downstream industrial sectors have improved only marginally, leaving effective demand release weak. Overall, the market will gradually enter the pre-order collection phase before the National Day holiday. Fundamentals have not changed significantly, and prices are likely to continue fluctuating slightly within the current range next week. The market should continue to be monitored for follow-up on pre-holiday advance orders, the fulfillment of export shipments and the pace of downstream restocking.

Overall, the domestic spot urea market is undergoing weak consolidation. On the supply side, previously idled units are gradually resuming production, daily industry output has increased, supply pressure is accumulating and overall supply remains ample. On the demand side, although companies are seeking to collect orders and ship cargo before the National Day holiday, end-user demand has not improved significantly. Downstream buyers are still purchasing only to meet essential needs, agricultural autumn fertilizer stockpiling has not begun on a large scale, and operating rates in the compound-fertilizer and industrial sectors have improved only marginally. Effective demand release remains weak. The market is currently caught between cost support and the floor provided by export diversion on one side, and pressure from ample supply and weak demand on the other. Prices may continue to soften in the short term, but the room for a sharp decline is limited. If prices fall to low levels, buying-on-dips sentiment may be released. Going forward, close attention should be paid to follow-up on pre-holiday advance orders, the fulfillment of export shipments and downstream restocking.

In detail, prices in Northeast China were stable at RMB 1,790-1,810/tonne. Prices in East China rose to RMB 1,730-1,760/tonne. Prices in Central China were stable at RMB 1,730-1,920/tonne. Prices in North China rose to RMB 1,590-1,820/tonne. Prices in South China were stable at RMB 1,810-1,840/tonne. Prices in Northwest China were stable at RMB 1,860-1,910/tonne. Prices in Southwest China were stable at RMB 1,660-1,900/tonne.

Market Information:

September 24: The Guangzhou, Guangdong, market's reference urea delivery price was RMB 1,820-1,840/tonne, up from the previous working day.

September 24: The Nanning, Guangxi, market's reference urea delivery price was RMB 1,810-1,820/tonne, up from the previous working day.

September 24: The Shijiazhuang, Hebei, market's reference urea delivery price was RMB 1,750-1,800/tonne, broadly unchanged from the previous working day.

September 24: The Wen'an, Hebei, market's reference urea delivery price was RMB 1,780-1,800/tonne, broadly unchanged from the previous working day.

September 24: The mainstream reference price for medium- and small-granule urea in Shangqiu was RMB 1,730-1,750/tonne, while the reference price for large-granule urea was around RMB 2,040-2,050/tonne.

September 24: The mainstream reference price for medium- and small-granule urea in Jingmen was RMB 1,740-1,750/tonne. Station pickup was around RMB 1,690-1,720/tonne, while the mainstream station pickup price for large-granule urea was RMB 2,020-2,030/tonne.

September 24: The Tieling, Liaoning, market's ex-warehouse/truck-loading price was RMB 1,790-1,810/tonne, unchanged from the previous working day.

September 24: The Heze, Shandong, market's reference urea delivery price was around RMB 1,730-1,740/tonne, up RMB 10/tonne from the previous working day.

September 24: The Linyi, Shandong, market's reference urea delivery price was RMB 1,750/tonne, up RMB 10/tonne from the previous working day.

September 24: The mainstream price in Xianyang was RMB 1,800-1,820/tonne, unchanged from the previous working day.