Supply Emergency: International Urea Prices Soar! Why Is the Domestic Market "Calm Amidst the Storm"?

The Middle East is one of the world’s key fertilizer production regions, and the Strait of Hormuz is a critical shipping route for fertilizer exports.

Experts have stated that about one-third of global urea exports come from the Gulf region. Countries like Qatar and Saudi Arabia, among the top ten urea exporters worldwide, may see their exports stall due to the US-Iran conflict. Experts predict that in the coming weeks, this impact could further influence grain prices. They warn that the food crisis caused by the Middle East conflict could be more severe than in 2022.

As of this week (up to March 6), international market prices for urea have generally risen, with most major regions seeing price increases, some by over $100 per ton.

Specific prices are as follows: Middle Eastern small granular urea FOB is $500.01–$640.01/ton, up $10–$145/ton week-on-week; Chinese bulk small granular urea FOB is $500.01–$630.01/ton, up $25–$143/ton; Black Sea port small granular urea FOB is $430.01–$565.01/ton, up $20–$103/ton; Baltic small granular urea FOB is $425.01–$560.01/ton, up $27–$142/ton; Brazil small granular urea CFR is $490.01–$620.01/ton, up $25–$145/ton; Egypt (Europe) large granular urea FOB is $495.01–$665.01/ton, up $15–$175/ton; Southeast Asia large granular urea CFR is $530.01–$680.01/ton, up $30–$160/ton; Iran large granular urea FOB is $440.01–$490.01/ton, up $12–$60/ton.

Yao Yao, a urea researcher at Xinhu Futures, told Futures Daily that since the escalation of the Middle East conflict, the production and export of petrochemical products in the Persian Gulf region have been greatly affected. Middle Eastern countries have large urea facilities; Iran and Qatar alone export about 15 million tons annually, accounting for 20%–30% of the global urea trade. In recent days, urea production has halted in Iran, Qatar, and other countries, disrupting exports.

“Previously, several oil tankers and merchant ships were attacked in the Strait of Hormuz. Data shows that shipping traffic through the Strait has decreased by 70%–80% this week,” Yao Yao said. Market concerns about urea supply shortages have driven prices in the Middle East and surrounding regions sharply higher, with FOB prices reaching $647/ton on the international spot market.

Qi Sheng Futures urea researcher Cai Yingchao believes that, on one hand, geopolitical conflicts can lead to disruptions in urea production. Iran, the world’s third-largest urea exporter with about 9 million tons annually, accounting for 10%–15% of global trade, has halted production, causing tight supply in the international market. On the other hand, the Strait of Hormuz, a major maritime route for global fertilizer shipments, faces navigation safety threats, further exacerbating concerns over supply chain disruptions.

In stark contrast to the soaring international prices, domestic urea prices remain stable, with mainstream quotes between 1780 and 1870 yuan per ton.

Yao Yao explained that although the Middle East conflict has a significant impact, the positive effects have not yet transmitted to the domestic market. On one hand, domestic spot urea prices are limited by policy restrictions, with limited room for price increases in April. On the other hand, relevant authorities have not announced new urea export quotas for 2026, so domestic prices are more influenced by internal supply and demand. After the Spring Festival holiday, domestic demand was generally weak, with pre-order days dropping to around 7 days.

Cai Yingchao further stated that the impact of Middle Eastern geopolitical tensions on the domestic urea market is limited for three main reasons: first, domestic supply is sufficient, with current daily production exceeding 220,000 tons; second, export policies have essentially severed direct links between domestic and international markets; third, the Nitrogen Industry Association continues to publish monthly maximum guidance prices, with mainstream regional price caps stable at 1830 yuan/ton.

Looking ahead, Yao Yao believes that in the short term, domestic urea prices may fluctuate within a range, but there is potential for price increases in the medium term. In the second quarter, export quotas may increase; based on the first batch of export quotas announced around late May 2025, if the Middle East conflict persists, domestic fundamentals are expected to strengthen, providing stronger upward momentum.

Cai Yingchao, however, thinks that domestic supply pressures will continue to rise, and demand is gradually peaking, possibly leading the urea market into a surplus phase. Short-term prices may top out, with a downward trend expected in the medium to long term. The export policy in the second quarter will be a key factor determining whether the domestic urea market can develop independently of international influences.

(Source: Futures Daily)