Since 2025, there has been a significant release of new production capacity in the urea market, with daily output hovering around 190000-200000 tons. This will be the norm in the later stage, adding insult to injury to the current weakened market; In addition, the export of urea is still limited, and the domestic demand progress is gradually slowing down, resulting in a decrease in demand and concentrated release of negative factors. The remaining new urea production capacity is waiting to be released, which will inevitably add another flame and deepen the already oversupplied market weakness. Will the urea market be in a precarious situation or turn danger into safety in the future? We need to consider various factors such as supply and demand, policies, costs, and the futures market.

From the perspective of urea prices, most of them are stable, with slow and small declines in some areas, and there is also some looseness or lack of market in some areas of the grassroots market. According to statistics from China Fertilizer Network, the mainstream ex factory price of urea in Shandong region is around 1760-1810 yuan/ton, and in Jiangsu and Anhui regions it is around 1770-1850 yuan/ton. After the agricultural demand is reduced, the sales progress of distributors has also slowed down, and it is inevitable to lower prices and attract orders. It is reported that the wholesale price of small particle urea in central China is around 1830-1880 yuan/ton, and the local platform price in Jiangsu and Anhui is around 1820 yuan/ton. The recent market focus is on the progress of urea production capacity and changes in demand, while in the long run it is the direction of domestic policies.

The supply-demand contradiction in the current urea market is showing signs, with production enterprises generally operating at high levels and sufficient supply. Additionally, there are still expectations of some new urea production capacity being released within this year; In addition, with sufficient supply of raw materials such as coal and natural gas, the cost pressure on urea enterprises is not high, and the profit margin is relatively considerable, so the production enthusiasm of enterprises is generally high at present; Furthermore, the liquid ammonia market, which is closely related to it, has fluctuated upwards, but the transaction progress has also slowed down after the price rises to a high level. Compared with urea prices, the production focus of enterprises is relatively tilted towards urea; Furthermore, the continuous release of urea light storage fertilizer will increase market supply and affect market confidence.

From the perspective of demand performance, both industrial and agricultural demand are weakening, especially in the agricultural sector where demand is gradually coming to an end. The demand for supplementary orders in local markets is limited, and grassroots markets are purchasing according to demand; Large and medium-sized traders hold cautious expectations for urea and therefore maintain back-to-back operations; Furthermore, the demand in the industrial sector is orderly, but it is mainly driven by essential needs. According to statistics from China Fertilizer Network, the operating rate of major compound fertilizer factories is currently about 43%. Due to the overall rise in prices of various raw materials, compound fertilizer enterprises face significant cost pressure, and the execution time of low-priced orders in the early stage is inevitably delayed. In the situation where cost pressure is difficult to alleviate, the production enthusiasm of compound fertilizer enterprises will be affected. Urea is mostly purchased on demand, or some enterprises purchase ammonium chloride to replace some urea; Furthermore, the export of urea, which is often hyped up, is still restricted in the near future. Therefore, regardless of the price difference between the international and domestic markets, we can only observe and wait quietly.

However, the trend of urea futures market is unpredictable and often affects the sentiment of the spot market; In addition, urea companies generally have a certain amount of pending orders to support their demand, and there are still goods available for immediate needs, indicating a willingness to raise prices. Overall, the short-term performance of the urea market is stable with a slight adjustment in prices, so it is not in a precarious situation. If new production capacity is released in the later stage, the market will passively digest the negative sentiment, and prices will inevitably be under pressure or have a significant decline. However, the production progress of new production capacity still remains variable and needs to be monitored at all times.