First Capital Futures: Ample Urea Supply Suppresses Upward Potential

In the morning, the main contract of urea futures UR2605 reached a intraday high of 1,843 yuan/ton, nearly a 3% increase. From the supply side, as previously shut-down facilities resume production, the daily urea output has risen to over 210,000 tons, the highest level in the same period historically, which suppresses the price upward potential. Regarding agricultural demand, it is currently the off-season for agriculture, mainly purchasing reserved fertilizer. After the temperature rises in March, it will enter the peak application season. On the industrial demand side, as the Spring Festival holiday approaches, most companies are gradually shutting down, and operating levels have decreased to a low point, leading to an overall contraction in industrial demand. For exports, India announced a tender for 1.5 million tons of urea on February 18, with favorable domestic and international price differences, boosting export expectations. Conclusion: UR2605 shows a high-level oscillation with a slight bullish bias, with increased volatility between bulls and bears. In the short term, it is expected to fluctuate within a range (1790~1850 yuan/ton). Attention should be paid to the fulfillment of spring plowing demand and the results of India’s tender. (First Capital Futures)