Recently, the urea market has slightly rebounded, driven by the continuous rise in futures prices and the support of pre holiday demand for goods. Local prices have slightly increased. However, due to the serious supply-demand contradiction in China and the dual impact of not opening up exports, this round of price increases may still end in a short-term market trend, and the price increases are virtual and real. From the perspective of the spot market, the overall wait-and-see sentiment is heavy, with bearish expectations dominating the mainstream. At the same time, as prices continue to decline, cost pressure on enterprises increases. However, as of now, urea plants in various factories are still operating at high loads, and inventory levels in both upstream and downstream markets are relatively high. In the short term, the focus of enterprises is also on reducing inventory and accepting orders.

The quotation of urea enterprises is stable with partial upward adjustments, but the overall trend is relatively weak. According to China Fertilizer Network, the mainstream ex factory price of urea in Anhui region is around 1780-1920 yuan/ton, while in Shandong region it is around 1750-1790 yuan/ton; In the market with light actual demand, downstream consumers still have a strong mentality of buying up instead of buying down. The inventory of urea enterprises is slowly decreasing, and downstream markets do not rule out the possibility of local inverted sales. Currently, the local urea platform price in Jiangsu and Anhui is around 1830-1840 yuan/ton, and the overall market is mainly based on the mode of on-demand procurement and fast forward consumption. In the situation of supply pressure and slow demand follow-up, the spot market driven by futures is still passive, and futures are only one factor affecting urea, not the determining factor. The key depends on the supply and demand of the spot market and policy performance.

Even though the price of urea is running at a low level and the cost pressure on enterprises continues to increase, the overall load is still at a high level so far. According to statistics from China Fertilizer Network, the current daily production of urea is about 190000 tons. Except for the environmental protection production restrictions in Jincheng, Shanxi in the later stage, which led to a reduction in labor union, there is currently no willingness for enterprises to actively reduce production; In addition, as the National Day holiday approaches, the transportation of hazardous chemical vehicles is restricted, and the pressure on the shipment of liquid ammonia will increase. Moreover, the price has been fluctuating at a low level recently, and the production focus of enterprises is inevitably inclined towards urea; In addition, under the long-term high load production state of urea enterprises, the inventory level of urea enterprises has been difficult to lower recently, and there is also inventory to be digested in the grassroots market, making it difficult to completely alleviate the overall supply pressure.

Looking at the demand performance of urea again, it is not ideal. Although there have been periodic urgent demand support in the near future, the strength is limited and there is generally a lack of centralized and large-scale support. In terms of agriculture, it is in the off-season and there is no "Golden September" market trend. The demand in the grassroots market is scattered, and the procurement volume is relatively low. Dealers operate back-to-back; Large traders maintain a cautious reserve mode for urea, generally maintaining a relatively low inventory reserve progress and achieving a balance between purchase and sales. Although light reserves are clear, they have a bottoming out effect on the overall market, and the driving force is not significant; In the industrial sector, compound fertilizer factories have high inventory of finished fertilizers, slow sales progress, and poor market circulation, which makes it difficult for enterprises to promote production. The overall operating capacity of large factories is as low as less than 40% for a long time, and the operating capacity of small factories is also low and the procurement pace is scattered, resulting in limited new orders for urea; In addition, the export of urea is restricted, and the excess supply can only be digested through domestic circulation. There is also no sign of export liberalization in the short term.

However, as the supply-demand contradiction has not been completely alleviated, the "life-saving straw" that the urea market can grasp is the pull of the futures market. Therefore, the trend of the urea market is frequently affected by futures and recent domestic regulatory policies; In addition, the low volatility of coal prices has put significant cost pressure on most urea companies. Overall, the supply-demand imbalance in the urea market cannot be ignored, but the short-term positive support has led to a price increase, although the magnitude may be limited.