The rebound of urea prices has failed again, due to the support of low-priced prepayments in the past few days, which led to sporadic slight increases in some areas. However, market demand has not truly improved, and the price increase has exacerbated downstream resistance. Therefore, its price has turned around and started to decline again; Compared to last week, especially with the approaching National Day holiday, there seems to be a risk of a deep decline in the urea market. It seems that this round is coming for real. Recently, low prices in regions such as Shanxi, Shaanxi, and Gansu have gradually fallen towards 1500 yuan (ton price, the same below). Of course, the mainstream ex factory prices in major production areas are 1600 yuan or above, and transactions are generally negotiable. This is still some distance from the psychological expectations of some market participants.

The increase in supply came earlier than the market expectation of bottom fishing, and the daily production of urea has now rebounded to about 196000 tons, while demand has not improved. This week, urea experienced a slight downward trend, with strong market pessimism and slow purchasing and sales. According to China Fertilizer Network, the mainstream ex factory price of urea in Shanxi region is 1560 yuan, with low-end prices approaching 1500 yuan. The mainstream ex factory price of urea in Shandong region is around 1620-1650 yuan, and the mainstream ex factory price in Jiangsu Anhui region is 1620-1690 yuan.

In the situation of obvious contradiction between supply and demand, the long-term low or even continuous decline of urea prices is an opportunity to buy at the bottom, and downstream markets are inevitably eager to try. If the price drops to around 1500 yuan per ton, it can basically be sold, and even some winter storage can be promoted appropriately. However, whether it can be lowered to this price is a question, after all, the cost of urea enterprises needs to be considered, and the direction of exports in the later stage also needs to be considered. So whether urea will continue to lower prices to test downstream psychology, or gradually stop falling, stabilize or rebound, still needs to be seen from the perspective of supply and demand performance and exports.

It was mentioned earlier that if urea prices gradually fall towards the cost line, will factories actively reduce their load? However, as of now, the production has not decreased but instead increased, which may indicate that urea prices are still generally on the cost line; In addition, the liquid ammonia market is weak, and the cost pressure on enterprises is increasing. There is a lack of support for urea in the production focus. In addition, urea companies undergoing maintenance in the Yunnan Guizhou region will gradually resume production, and some new urea production capacity will be put into operation in the later stage. However, some urea plants in the Jincheng area of Shanxi may be shut down for maintenance next week, which will provide short-term support to the surrounding areas. Overall, the daily production volume is still high and difficult to maintain. In addition, urea companies have large inventory levels recently, and if demand cannot be pushed forward in the short term, supply pressure will be difficult to alleviate.

From the perspective of demand, "Golden Nine" has not appeared, and "Silver Ten" may not necessarily exist. Winter storage is still waiting. The current demand for industrial and agricultural products is weak, and the autumn fertilizer market in agriculture has performed poorly. Moreover, it is not the home market for urea, especially with the continuous decline in urea prices recently, the market has a strong sentiment of buying up rather than buying down; The demand performance in the industrial sector is also not ideal, with slow delivery of compound fertilizer factories and low expectations for the second half of the autumn market. It may be difficult to have a tail up trend, resulting in low production enthusiasm of enterprises. The overall load is still only around 40%, and the demand for raw material fertilizers is limited; In addition, the export of urea has limited support for the domestic market, and the actual export quantity in August once again does not match the export quota. In the short term, it lacks support for the domestic market, and long-term policies cannot be predicted.

Finally, with the continuous decline in urea prices, the cost pressure on enterprises continues to increase. Although there is a willingness to raise prices, there is currently no effective way to stimulate market demand in the short term, and there may be a risk of moderate downward pressure on local quotations.