As is well known, the current frequent price adjustments of urea are different from usual. Originally, it was raised or lowered all the way. During the mask period, the factory price in Shandong and other places skyrocketed to 3200-3300 yuan/ton. Since 2023, the price decline has been almost exploratory, especially since the third quarter of 2024. Even in the past two years, the daily production of urea has been very high, which has indeed broken the original price adjustment law. At the end of November, urea prices have weakened slightly again. Can Shandong and other places hold on to 1700 yuan/ton this time? Will it fall below the low point of September 24-25?

The author believes that the short-term price is expected to hold at 1700 yuan/ton, but falling below 1700 yuan/ton seems to be only a matter of time, possibly in mid to late December or later. The reasons are as follows:

Firstly, the supply of urea is temporarily slightly higher. Although some manufacturers have fallen below full cost, these manufacturers have no plans to withdraw. Even if some manufacturers are undergoing short-term maintenance, the current daily urea production is still above 185000 tons, and in some cases, it can even approach 190000 tons, far higher than the 170000 tons or slightly lower level in the same period last year.

However, the daily production of urea will slightly decrease. At the end of November, Inner Mongolia Qinghai gas head urea manufacturers will enter the winter maintenance period, and from December 5-15, Sichuan Chongqing gas head urea manufacturers will also do the same. This winter, the maintenance time of Inner Mongolia gas head manufacturers has been advanced by half a month to a month, and the shutdown time of other gas head manufacturers is basically similar to 2023. Considering the three new facilities in Shandong, Henan, and Anhui, there is a high probability that the daily urea production will continue to be higher than the same period last year. The expected value in this regard is not high, but we can use the news of production stoppage to hype it up, especially before it stops, the hype effect seems to be better.

Secondly, the pace of urea procurement by light storage and storage customers, as well as the progress of raw material procurement for urea and other materials by compound fertilizer enterprises, are relatively loose and intermittent, which has not yet brought about a boost. This can be seen from the fluctuation and downward trend of urea prices since October. It cannot be ignored that traders engaged in spot trading and power plant trading have shown better than expected enthusiasm for purchasing goods. As a result, some loss making urea manufacturers are still producing normally, while some non loss making manufacturers are still at ease, and the daily production of urea may remain high. As for the acquisition of urea by light storage urea and compound fertilizer enterprises, they still need to rely on guiding speculation in the future to have the opportunity to borrow power. These two aspects can only be slightly anticipated, and traders in spot trading and power plants still obtain goods on demand. Urea manufacturers have higher expectations for these two aspects.

Until the peak season of spring plowing when urea is slightly concentrated and digested, everything is only a tentative decline or speculation, and the relatively high level of urea social inventory seems to be only a matter of time.

Again, there is no new news regarding exports. In order to provide cost-effective urea for domestic agriculture, the policy in recent years was initially focused on legal inspection, followed by a reduction in exports. From January to October, the export volume of urea was only about 260000 tons, and the annual export volume in 2024 is basically the lowest since 2008. Although international prices have been continuously declining for three weeks, the ex factory prices of manufacturers in Shandong and other places are still close to 2000 yuan/ton based on the lowest international urea offshore price. The fourth quarter is the peak season for reserves, the first quarter of next year is the peak season for spring plowing, and from April to June next year, it is necessary to consider the possibility of delaying spring fertilizer use and advancing summer fertilizer use.

It is possible to export more at any time, or it is highly likely to maintain the status quo. The author's subtle psychology: Despite a year-on-year decrease of 92% in exports, the price of urea can still remain at the current level of 1750 yuan/ton or above in the main production areas, and the low-end Mengxi is still at 1610-1650 yuan/ton. It is no wonder that many market participants continue to purchase goods on demand, and urea manufacturers can receive relatively moderate or mediocre order volumes with a slight reduction.

Overall, the atmosphere of urea futures and spot prices is lukewarm, and prices may continue to be deadlocked. In the short term, Shandong and other places are still expected to maintain the price level of 1700 yuan/ton.