Profits Down 53.7% Year-on-Year, Losses Up 34.1%

On December 19, the 10th Session of the 7th Council Meeting of the China Nitrogen Fertilizer Industry Association convened in Xi'an. The meeting conveyed that the nitrogen fertilizer industry will face significant economic pressure in 2025, with most nitrogen fertilizer producers experiencing sales difficulties and severe losses. From January to October, the total profit of enterprises above designated size in the industry reached RMB 4.04 billion, a year-on-year decrease of 53.7%. Losses incurred by loss-making enterprises amounted to RMB 5.37 billion, a year-on-year increase of 34.1%.

Nitrogen fertilizer prices remained stable in the first half of the year, enabling the industry to successfully fulfill its task of maintaining prices and ensuring stable supply. However, nitrogen fertilizer market prices have declined significantly compared to the same period last year, falling notably below other fertilizer varieties, resulting in poor overall industry performance. Since the second half of the year, industry conditions have deteriorated significantly compared to the same period last year. Although orderly urea exports have eased domestic nitrogen fertilizer supply pressure, the market now faces a clear oversupply situation. This is due to the gradual commissioning of new production capacity, coupled with delays in autumn planting in some regions caused by autumn flooding. Fertilizer prices have continued to fall, resulting in severe losses for most nitrogen fertilizer enterprises.

Industry operations reveal several key trends: First, nitrogen fertilizer production has increased significantly. According to association statistics, from January to October, China produced a cumulative 64.64 million tons of synthetic ammonia, up 6.5% year-on-year; nitrogen fertilizer output reached 44.472 million tons, an 8.9% increase; and urea production totaled 60.358 million tons, rising 9.5% year-on-year. Growth rates for synthetic ammonia, nitrogen fertilizer, and urea all exceeded those of the same period last year.

Second, nitrogen fertilizer prices continued to weaken. According to the association's statistics, the average ex-factory price of urea from January to October was RMB 1,702 per ton, a year-on-year decline of 18.9%. Urea prices have been on a downward trend since May, hitting a low of RMB1,542 per ton in mid-October. Subsequently, prices recovered somewhat with the launch of the fourth batch of urea exports and the off-season fertilizer stockpiling program. By the last week of November, the average ex-factory price had rebounded to RMB 1,604 per ton, though it remained at a relatively low level.

Raw material coal prices also showed a slight uptick amid overall weakness. According to the association's statistics, the average delivered price of anthracite coal from January to October was RMB 981 per ton, down 11.5% year-on-year; while the average delivered price of bituminous coal was RMB 732 per ton, down 23.2% year-on-year. Although coal prices overall remained below last year's levels, they have been steadily rebounding since June. Taking bituminous coal as an example, prices rose to RMB 840 per ton in mid-November, marking a RMB134 per ton increase from the year's lowest point.

Overall, a combination of factors—including increased supply, rising raw material costs, and falling product prices—has led to a significant decline in profitability for nitrogen fertilizer enterprises. Statistics show that from January to October, the total profit of enterprises above designated size in the industry was RMB 4.04 billion, down 53.7% year-on-year; the loss incurred by loss-making enterprises reached RMB 5.37 billion, up 34.1% year-on-year. Although urea prices have rebounded recently, the industry still faces considerable operational pressure.

To resolve supply-side structural contradictions, the state is accelerating policies targeting “involutionary” competition, including strengthened management of major petrochemical projects. Coal-based synthetic ammonia and urea production may also fall under stricter project approval requirements. Enterprises should actively respond to the latest national policy directives, thoroughly assess domestic and international supply-demand dynamics, avoid large-scale capacity expansion, and prevent further escalation of “involutionary” competition.

As an integrated internet platform providing benchmark prices, on December 24th, the benchmark price of liquefied natural gas (LNG) according to SunSirs was 3490.00RMB/ton, a decrease of 14.33% compared to the beginning of the month (4074.00RMB/ton).

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