The domestic urea market, which has been declining for more than two months, seems to have shown signs of buffering recently, while at the same time, the market price has not dropped further and has shown a significant rebound. On May 30th and 31st, some companies in mainstream regions saw an increase in new orders, and on the 31st, there was a slight increase in quotations, showing a mixed trend of ups and downs in the market. So is the domestic market starting to stabilize and rebound? I personally feel that caution is the main focus, leaving room for operation.

Expected decline in rigid demand

With the expansion of wheat harvesting from the south to the north in mainstream areas, the production of high nitrogen fertilizers for compound fertilizers has also entered a later stage. Due to the unstable operation of urea prices, compound fertilizer companies often maintain low production inventories, and the small fluctuations in urea prices have limited impact on them. Therefore, currently, it is still mainly in the need for replenishment.

In agriculture, after the wheat harvest, corn or rice is planted, and there is still a certain amount of time before the actual topdressing time for urea. Therefore, agriculture may have an appropriate amount of stock in advance, but its sustainability is limited based on seasons and market conditions. Therefore, the demand side lacks support for the current market.

The operating rate are still on the high side

With the gradual recovery of parking and maintenance enterprises in the early stage, the daily production of the urea industry is expected to increase. In addition, the production of the second new set of production capacity in the previous year will once again reach a level of over 170000 tons in the near future. Moreover, there are currently fewer expected maintenance in June, and even with short-term corporate failures, the industry's daily production is still higher than that of the same period, so there is sufficient supply for the same period.

There is currently no final decision on exports

Another support in the market is exports, and there are rumors that India may release a new round of India's benchmark. Based on expected prices, the market price may be at an oversold level. At present, the export volume itself is relatively limited. Once there is export feasibility, the news will boost, coupled with short-term domestic demand replenishment, which may still drive a wave of market trends. Therefore, wait for the Indian biding to be announced first, and then the price will fall to the same level. Finally, let's see the substantive impact on the domestic market.

Therefore, based on the comprehensive analysis, the expectation of the urea market is still in a weak downward trend, and a brief rebound after a long-term price decline is also a normal reflection, after all, the seasonal cycle of domestic agriculture is still ongoing. However, it is also a fact that there is sufficient supply of spot goods, and the price difference between regions is not too large. Once there is a possibility of arbitrage between regions, there will always be potential sources of goods to supplement, thereby suppressing the upward space of prices. So there may be a slight rebound, but there is still room for improvement. A short-term weak and stable market still needs to be treated with caution, and there is room for moderate operation. (Wu Yuanli)