Urea Eases as China Releases Third Export Quota, But Nitrogen Floor Holds Firm

The China Nitrogen Fertilizer Industry Association issued a third package of urea export quotas on 14 September totaling about 2.0 to 2.5 million tonnes, with roughly 60 percent allocated to distributors and 40 percent to producers, valid until January 2027. Chinese granular urea offers rose 20 dollars a tonne on the week to 420 to 430 dollars a tonne FOB in bulk, while prilled offers added 2.5 dollars to 360 to 365 dollars. Domestic prilled values moved the other way: producers cut quotes by 25 yuan a tonne to 1,740 to 1,750 yuan ex-works because local demand remains weak even as coal costs stay high.

Supply-side data point to a market that is tightening at the margin. As of 16 September, port stocks of prilled and granular urea amounted to 732,300 tonnes, 29 percent lower than the previous week, and Chinese producers held 1.563 million tonnes, a week-on-week decline of about 7 percent. Daily output reached 196,100 tonnes, up 3 percent on the week. Some suppliers have already sold out of granular urea until the end of October, and trade participants expect a fresh Indian purchase tender soon, without which Chinese prilled offers could soften in both domestic and export markets.

On the import side the restart of Chinese supply has reset benchmarks. India's state-run Rashtriya Chemicals and Fertilizers tendered for 1.7 million tonnes and China alone is expected to supply roughly 1.2 million tonnes of that total. The lowest bids, submitted by trading house Ameropa, came in at 390.25 dollars a tonne on India's east coast and 393.65 dollars on the west coast, with cargoes required to leave loading ports by 24 September. That is a 58 percent decline from the 935 to 959 dollars a tonne India paid in an emergency purchase in April, when the Strait of Hormuz crisis first disrupted fertiliser trade, although global urea around 443 dollars a tonne is still 13.6 percent above a month earlier.

Demand is diverging by region. Argus reports that Brazilian purchases for the 2026-27 Safrinha corn crop accelerated from June but nitrogen imports between January and August were about 2 million tonnes, nearly 21 percent below the same period last year, with farmers having secured roughly 40 percent of nutrient requirements by mid-August. Brazilian urea fell from a peak of 805 dollars a tonne CFR on 16 April to 480 dollars by end June, and ammonium sulfate fell from 295 dollars CFR in early April to 193 dollars in early July, making ammonium sulfate the more attractive unit-of-nitrogen buy. European producers face the opposite pressure: with Dutch TTF above 66.50 euros per megawatt hour, the break-even for an efficient European urea plant sits near 605 dollars a tonne ex-works, well above current global spot levels.