According to the Commodity Analysis System of Business Society, the mainstream market price of urea in Shandong Province fluctuated and increased in February. The price of urea increased from 2431.67 yuan/ton at the beginning of the month to 2515 yuan/ton at the end of the month, an increase of 3.43%, and the price at the end of the month decreased by 10.53% year-on-year.

On February 27th, the urea commodity index was 116.82, an increase of 0.15 points from yesterday, a decrease of 23.31% from the highest point in the cycle of 152.33 points (2022-05-15), and an increase of 110.11% from the lowest point of 55.60 points on August 17, 2016. (Note: The cycle refers to the period from September 1st, 2011 to present)

From the supply side perspective, the mainstream ex factory price of urea in Shandong slightly increased in February.

Cost side: Upstream market drops significantly

From a cost perspective: Due to the impact of rainy and snowy weather in some regions of China, market circulation is restricted, terminal demand is released slowly, trading atmosphere is poor, and bearish sentiment is strong. Liquid factories have lowered prices to digest inventory. In February, the price of liquefied natural gas (LNG) dropped significantly, from 5196 yuan/ton at the beginning of the month to 3796 yuan/ton at the end of the month, a decrease of 26.94%. The price of Yangquan anthracite (washed fast) stabilized at a low level, with a price of around 960 yuan/ton. The price of liquid ammonia has dropped significantly, from 3236.67 yuan/ton at the beginning of the month to 2960 yuan/ton at the end of the month, a decrease of 8.55%, and a year-on-year decrease of 32.83% at the end of the month. Overall, the upstream market for urea has experienced a significant decline, with insufficient cost support.

Demand side: Low price consolidation of melamine

From the demand side, agricultural demand for urea is gradually starting, industrial demand is following the market, and urea exports are currently not favorable. Composite fertilizer, board, and melamine enterprises are operating at a low level, with a focus on procurement for essential needs. In February, the price of melamine stabilized at a low level, with a price of 7475 yuan/ton. From a supply perspective, some gas companies have resumed production and started operating higher. The data shows that the operating rate of domestic coal urea enterprises this week is about 86.1%, while that of gas urea enterprises is about 85.8%. The daily urea production in China is about 190000 tons.

In the future, the urea market may experience slight fluctuations and gains in mid to early March. Although the price of liquefied natural gas has dropped significantly, there is insufficient cost support. But agricultural demand is gradually starting, with industrial primary demand. The daily production of urea is about 190000 tons, with sufficient supply. In the future, urea may experience a slight fluctuation and rise.