Recent trends in urea prices

This month, the domestic urea market has experienced ups and downs. At the beginning of the month, the urea market continued the inertia downward trend of the previous month. Subsequently, due to supply tightening and an increase in factory orders, urea prices continued to rise, and the upward trend continued until mid month. In the latter half of the month, the market fell in a bearish atmosphere of the Indian market. According to the Commodity Analysis System of Business Society, the price of urea in Shandong Province increased from 2415 yuan/ton at the beginning of the month to 2435 yuan/ton at the end of the month, with a growth rate of 0.86%.

From the supply side, the average operating rate of urea enterprises this month is around 80%, and the daily production of urea in China is about 180000 tons, with supply slightly tightening compared to the previous month. Within the month, the factory prices of mainstream urea manufacturers in Shandong rebounded after falling, and the overall change was not significant, with the fluctuation controlled within 100 yuan/ton.

From the upstream market perspective:

Liquefied natural gas: In April, the liquefied natural gas market showed a strong upward trend. According to the Commodity Market Analysis System of Business Society, as of April 28th, the average price of liquefied natural gas in China was 4114 yuan/ton, which is 3870 yuan/ton compared to the average price on April 1st. The increase in domestic liquefied natural gas prices this month was 6.30%. High natural gas prices provide support for downstream urea production.

Coal: Coal has been operating weakly this month. Taking thermal coal as an example, prices fell in April, with a decrease of 2.54%. Overall, normal production and sales are maintained, and the market is operating weakly. The implementation of long-term cooperative shipping is still the main focus, and the overall supply level of coal has slightly decreased. Traders tend to maintain a cautious wait-and-see attitude due to their average willingness to ship due to their uncertainty about the future market. The negative performance of upstream coal has alleviated certain cost pressures for downstream coal urea enterprises.

Liquid ammonia: In April, the domestic liquid ammonia market was mainly volatile and fell, emerging from a trend of first rising and then falling. According to the Commodity Market Analysis System of Business Society, liquid ammonia recorded a decline of 2.93% in April. At the end of the month, the mainstream quotation in Shandong region is between 2800-3000 yuan/ton. In the future, the tight supply pattern in the northern main production areas may continue for a period of time, and ammonia prices will be supported on the supply side. On the demand side, the replenishment in the early stage is gradually ending, agricultural demand is gradually falling, industrial demand remains in demand, and may form constraints on ammonia prices in the future. The supply-demand game will intensify in the future, with narrow price fluctuations, and the impact on urea prices will be relatively small in the future.

From the perspective of downstream demand: agricultural demand has weakened, while industrial demand is average. Spring plowing is gradually coming to an end, with sporadic fertilization as the main focus. Composite fertilizer, board, and melamine enterprises have started production at a low level, and the industry lacks confidence in trading and investment, with a focus on essential procurement. The market price of melamine fell in April. According to the Commodity Market Analysis System of Shengyishe, as of April 28th, the average price of melamine enterprises was 7025.00 yuan/ton, a decrease of 3.44% compared to the price on April 1st.

Looking at the future: urea analysts from Business Society believe that in May, it is expected that the urea market in Shandong will maintain a narrow adjustment pattern. Although upstream raw material support for urea is strong, downstream agricultural demand may slow down due to seasonal weakening of procurement, with industrial demand being the main focus, especially exports being affected by insufficient Indian procurement, and prices may loosen.