In late May, the domestic urea market entered a critical window as export policies were finalized. Driven by the confirmation of export quotas for the June–August period and a large-scale tender from India, domestic spot prices rose across the board. In many regions, quoted prices approached the upper limits mandated by regulatory controls. However, futures prices surged initially before retreating once the bullish news had been fully priced in, resulting in a distinct divergence between futures and spot market trends. Spot prices remained relatively strong, bolstered by export expectations and cost support; yet, high supply levels—coupled with dampened demand during the traditional off-season—constrained the extent of these gains. Consequently, the overall market settled into a pattern characterized by "firm spot prices but limited upside potential."
I. Performance of Spot Prices, Regional Prices, and Benchmark Prices (May 25–29)
On May 27, the SunSirs benchmark price for urea was quoted at 1,775 RMB/ton; it subsequently rebounded to 1,797.5 RMB/ton on May 28.
Throughout the week, spot prices trended upward in a volatile manner, tracking developments in export-related news. On a regional basis, ex-factory quotes in major North China production hubs—such as Shandong, Henan, and Hebei—ranged from 1,790 to 1,810 RMB/ton, serving as the national price anchor. In the South China markets (Guangdong and Guangxi), prices rose to between 1,820 and 1,850 RMB/ton, driven by increased stockpiling for port shipments. In Xinjiang, prices remained within the 1,500–1,650 RMB/ton range—consistently representing the lowest price point nationwide—due to the region's remote location and high transportation costs, as well as local inventory levels. Meanwhile, in the Southwest production hubs of Yunnan and Guizhou—which are largely self-sufficient in supply—prices remained stable, hovering between 1,760 and 1,790 RMB/ton. Overall, market traders leveraged the positive export outlook to implement moderate price hikes, while end-user agricultural buyers continued to make small, demand-driven purchases; industrial buyers, conversely, maintained a cautious "wait-and-see" stance. II. Domestic Production Capacity, Output, and Domestic/International Demand Landscape
On the supply side, the average daily domestic urea output this week stood at 209,000 tons—a week-on-week increase of 6,300 tons and a slight year-on-year uptick. Facilities that had previously undergone maintenance have resumed production in concentrated fashion; consequently, overall industry operating rates remain at a high level. New production capacity continues to come online steadily, resulting in an ample overall supply of goods. Inventories at both factories and ports have continued to accumulate, and there is no substantive shortage in the spot market—a key reason why positive factors regarding exports have failed to trigger a significant surge in spot prices.
On the demand side, the prevailing pattern is one of gradually recovering agricultural demand alongside persistently weak industrial demand. In the agricultural sector, the Northeast region began stocking up on base fertilizers for corn cultivation in mid-June, while the Huang-Huai-Hai region is gradually entering its summer top-dressing season in July. Currently, however, the market is in a traditional lull period for fertilizer application, and the pace of grassroots-level inventory stocking remains slow. In the industrial sector, compound fertilizer enterprises have entered their seasonal off-peak period; facility operating rates continue to decline, and the production of high-nitrogen fertilizers is winding down. Downstream industries—such as melamine and urea-formaldehyde resins—are currently limiting their purchases to immediate necessities, making it difficult to drive a substantial increase in raw material procurement volume. On the international front, overseas urea prices remain soft; however, India has finalized an import tender for 1.7 million tons (900,000 tons for the West Coast and 800,000 tons for the East Coast). This represents the only certain source of incremental global demand in the short term, providing a concentrated boost to domestic export shipments during the June-to-August period.
III. Customs Import and Export Statistics for April 2026
In April, domestic urea exports totaled a mere 15,000 tons—a sharp month-on-month decline of 74.41%. The average export price also trended downward during this period. As the country prioritized ensuring supply for the spring plowing season that month, urea exports remained in a state of near-total stagnation. Conversely, import volumes have consistently remained at low levels throughout the year; given the high domestic self-sufficiency rate, there is virtually no reliance on imports to supplement domestic supply. Cumulative exports for the January-to-April period showed a slight year-on-year increase, driven primarily by the allocation of sporadic export quotas during the first quarter. With the opening of the export window period in June, previously backlogged export orders are gradually being consolidated at ports for shipment; consequently, foreign trade data is expected to show a marked month-on-month improvement starting from late May. IV. Analysis of Price Linkages Between Upstream and Downstream Products
Upstream, coal serves as the primary raw material; with coal prices trending steadily upward recently, production costs are providing a floor of support for urea prices. Consequently, profit margins for coal-based urea producers have narrowed slightly, making manufacturers less inclined to sell at low prices. In contrast, gas-based urea producers benefit from stable natural gas supplies, resulting in limited cost fluctuations. Downstream, procurement of raw materials for compound fertilizers remains sluggish, and finished fertilizer prices are tracking the modest fluctuations in raw material costs. Meanwhile, chemical products such as melamine and wood-based panels are weighed down by lackluster end-market demand; their weak pricing performance is, in turn, dampening enthusiasm for urea procurement. Although demand for niche segments—such as value-added urea and liquid urea—is growing steadily, the overall volume remains too small to fundamentally alter the prevailing weakness in aggregate demand.
V. Market Outlook and Forecast
Short Term (Early June): With the finalization of export quotas and the launch of tenders from India driving increased demand for port-side stockpiling—bolstered by cost support from coal prices—spot urea prices are expected to remain at high levels, albeit within a volatile range. However, high domestic production volumes and elevated inventory levels will cap the potential for any significant price surges, effectively locking the price range between 1,760 and 1,830 RMB per ton.
Long Term: From a long-term perspective, as new domestic production capacity continues to come online, the overarching industry landscape of structural oversupply is expected to remain unchanged. Exports serve merely as a temporary mechanism for inventory adjustment and are unlikely to fundamentally alter the supply-demand dynamics. Once the peak season concludes, market conditions are highly likely to revert to a pattern of weak consolidation.
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