Last week, domestic urea spot prices remained relatively weak. Urea futures influenced spot market sentiment, leading to temporary improvements in spot transactions, though overall market activity remained subdued. With the Spring Festival approaching, downstream industrial manufacturers saw declining operating rates. While industrial demand decreased, agricultural demand increased. As natural gas-based urea plants gradually resumed operations, urea production continued to rise, creating an overall market dynamic of increasing supply and decreasing demand. Looking ahead, urea plants still need to secure orders for the Spring Festival holiday period, suggesting the spot market may remain weak.

Production-wise, last week saw a continued increase in domestic daily urea output compared to the previous week, with the average daily production volume rising by 11,900 tons year-on-year. Demand-wise, the agricultural urea market is in its off-season for fertilizer use. However, the agricultural sector is actively procuring urea to prepare for spring wheat fertilization after the holiday, with noticeable willingness to buy on dips. Compound fertilizer plants show a slight decline in operating rates, leading to increased finished product inventories. Compound fertilizer distributors exhibit low enthusiasm for picking up goods, though the situation is relatively better in Northeast China. Most board plants have halted operations, further shrinking industrial demand for urea. Internationally, urea prices continued their upward trajectory. Market expectations that India may soon announce a new round of urea import tenders further bolstered confidence. Current international urea price gains have exceeded market expectations. Iran's natural gas supply may resume within the next 10-15 days, which could exert downward pressure on the market. Conversely, India's potential release of a new urea import tender would support short-term gains in international urea prices.

In the futures market, urea futures prices fluctuated within a narrow range last week. With spot market transactions stalling, fundamental drivers have weakened. Urea futures volatility largely depends on broader commodity market disturbances, including declines in non-ferrous metal futures and significant fluctuations in crude oil and coal prices, which impact most commodities including urea.

Looking ahead, urea futures exhibit strong expectations, fully reflecting anticipation for the upcoming peak season and robust market confidence. While awaiting spring to validate demand strength, the market must also monitor the gap between expectations and reality. Before the Spring Festival holiday, it is advisable to reduce positions in urea futures and await post-holiday market developments.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.