After the National Day holiday, domestic urea prices did not see the expected rebound, but instead experienced a new wave of accelerated decline. On October 13, it hit a new low in recent years, and then slowly increased on October 14 and 15. Urea prices showed signs of stopping the decline.
Supply pressures coexist with weak demand
Recent continuous rain in the Huanghuai region has hindered the autumn harvest, delaying the application of fertilizers for autumn sowing. This has weakened agricultural demand, resulting in poor compound fertilizer sales and declining operating rates. Urea purchases have fallen short of expectations, and coupled with subdued industrial demand, the urea market faces oversupply.
Currently, the national daily urea production has dropped to around 190,000 tons. While this decline has eased supply pressure, it remains at a relatively high level, indicating sufficient supply. Coupled with the continued sharp decline in urea futures prices and the lack of positive export news, urea prices are expected to continue to fluctuate and bottom out in the short term.
International Urea Market: Price Trends Diverge, with Significant Regional Disparities
Middle East and Black Sea Region: Due to the shutdown of some plants caused by geopolitical conflicts, granular urea FOB quotes rebounded to $410-420/ton, up $10-20 from last week. However, due to ongoing sanctions in major producing countries such as Iran, transaction prices remained low at $360-370/ton.
Southeast Asian Market: A Brunei granular urea transaction at $395/ton FOB (delivered to Nepal) dragged down regional prices, with mainstream quotes for small granules falling to $375-385/ton, roughly in line with China's export price of $375/ton FOB.
Short-Term Fluctuations
The short-term urea market is focused on policy and tenders. If the Indian tender is finalized and China's export policy is relaxed, prices could rebound to above $400/ton. However, high domestic supply will suppress price increases. If the tender results fall short of expectations, prices could fall back to $370-380/ton.
Market Forecast
Overall industrial and agricultural demand remains weak, with downstream purchasing activity low. Daily urea production remains relatively high, supply is ample, and inventories are high. With the arrival of winter wheat planting season, the peak in fertilizer preparation has passed, and fertilizer application has been delayed in some areas due to weather. Urea supply and demand have remained relatively stable, and there is no positive news on exports. Focus on policy, supply and demand, futures, and export news.
