SunSirs: The Urea Market Was Mainly Volatile in 2025, and Production Capacity Will Continue to Expand in 2026

Price trends in 2025

According to data from SunSirs, the average market price of urea was 1,798 RMB/ton on January 1st and 1,725 RMB/ton on December 31st. The domestic urea market price fell by 4.08% throughout 2025. The highest price during the year was 1,997 RMB/ton on March 31st, and the lowest price was 1,570 RMB/ton on October 21st.

Market analysis for 2025

In 2025, the domestic urea market experienced mixed trends, with prices mainly volatile.

Phase 1 (January-March): Urea market consolidatesd and rose

Urea market prices fell in January. Market supply was ample, and downstream demand was weak. After the Spring Festival, domestic urea market demand began to increase. Urea market prices rose in February and March. During the peak season of spring planting, agricultural demand increased, and industrial demand also rose, leading to improved trading in the urea market.

Phase 2 (April-October): The urea market showed a weaker and downward trend.

From April to June, the urea market experienced volatile downward trends. Urea supply was abundant, and inventory levels remained high. Spring planting demand gradually slowed down, and downstream buyers became more cautious. The operating rate of compound fertilizer companies declined, leading to reduced demand for urea. From July to October, urea prices accelerated their decline. The futures market performed poorly, and the spot market followed suit. The autumn season marked a slack period for urea demand, and market trading activity weakened.

Phase 3 (November-December): The urea market showed a strong upward trend.

In November and December, the urea futures market strengthened, and the spot market followed suit, operating on a bullish trend. The combined positive factors of exports and a new round of Indian tenders boosted market optimism. However, daily urea production remained high, and supply pressure persisted. Following the phosphate fertilizer conference, demand for winter fertilizer stockpiling began to increase, leading to higher demand for raw materials from downstream buyers and an improved trading atmosphere.

According to the monthly candlestick chart for 2025, the largest price increase for urea in 2025 occurred in February, with a rise of 8.63%. The largest price decrease occurred in April, with a drop of 6.02%.

Market Forecast for 2026

Supply Situation

In 2025, China's urea production capacity and output both reached new highs. Urea production capacity reached 75.19 million tons in 2025, with a new capacity increase of 6.6 million tons during the year. Total production was 71 million tons, a year-on-year increase of 7.9%. The increase in production was mainly due to capacity expansion and improved operating rates.

Urea production capacity is expected to reach 88.06 million tons in 2026. The increase in capacity is mainly concentrated in coal-based urea production, while gas-based urea production is constrained by natural gas supply limitations and cost pressures, resulting in insufficient motivation for expansion. Urea production is expected to be around 74.85 million tons in 2026, showing an overall upward trend, with high inventory levels becoming the norm in the urea industry. The average industry operating rate is expected to remain above 80% in 2026, with coal-based urea operating rates reaching as high as 89.6%. Daily urea production will exceed 220,000-230,000 tons during the peak spring planting season, with an average daily production of 190,000-200,000 tons throughout the year.

Demand situation

In 2025, China's urea demand was 65.5 million tons, an increase of approximately 1 million tons compared to last year.

Agricultural demand: Expected to be 42 million tons, a year-on-year increase of approximately 1 million tons. During the autumn and winter planting season, the demand for agricultural fertilizers is expected to be 13.646 million tons, of which nitrogen fertilizers account for 6.57 million tons.

Non-agricultural demand: An estimated 23.5 million tons of physical product are expected, roughly the same as the previous year. Within this, demand in the industrial denitrification sector is steadily expanding, driven by accelerated ultra-low emission upgrades in power plants, steel mills, and cement plants, leading to the gradual replacement of liquid ammonia with urea.

In 2026, China's urea demand is projected to be around 66 million tons. Agriculture will remain the main consumer of urea, with an estimated demand of 42.5 million tons and a growth rate of 4-5%. This growth is attributed to the expansion of cultivated land, saline-alkali land improvement, and the construction of high-standard farmland, as well as the price advantage of urea. Industrial demand is expected to be 23.5 million tons, with limited growth.

Import and export situation

In 2025, the total import tariff quota for urea was 3.3 million tons, with a state-owned trade quota of 2.97 million tons and a non-state-owned trade quota of 330,000 tons. From January to November 2025, China's total urea exports reached 4.6163 million tons, a year-on-year increase of 94.38%, setting a new historical record. The total volume for the entire year may exceed 5 million tons. In 2025, China's urea exports were mainly concentrated in Asia and South America, with Vietnam, India, Chile, and Malaysia being the main trading partners. In 2026, it is expected that the quota system will be relaxed, and export volume is expected to continue to increase. Urea exports in 2026 are projected to be between 5 and 8 million tons, depending on the degree of relaxation of export policies. Imports will remain low, resulting in an overall pattern of "increased exports and stable imports."

Futures market

In 2025, the urea futures market showed a "downward trend followed by an upward trend," with the annual volatility narrowing to 22.45%, demonstrating the significant impact of policy interventions. Supply and price stabilization policies suppressed market fluctuations, resulting in a 10.69 percentage point decrease in futures volatility compared to 2024. In 2026, the urea futures market is expected to exhibit a "rising trend followed by a decline, with price fluctuations within a range." The main contract price is projected to fluctuate between 1,550 and 1,950 RMB/ton.

Summary and Outlook

In 2026, China's urea market is expected to show a "rise followed by a fall, with fluctuations within a range," and the annual price may fluctuate between 1,500 and 2,000 RMB/ton. Production capacity will continue to expand significantly, agricultural demand will remain stable with a slight increase, industrial demand will be weak, and exports will be a key variable. Adjustments to export quotas and policies represent the biggest uncertainty, and policy controls will have a dampening effect on market fluctuations. Overall, market volatility will be significantly influenced by policies and supply and demand. It is recommended to closely monitor export policies and price trends.

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