Every year, from October to November, autumn sowing across the country is usually completed, but large-scale winter storage has not yet begun. This period typically marks a slow season for the fertilizer market. However, this year’s domestic fertilizer market has been anything but quiet. Instead of slowing down, it has seen a sharp rise in prices, especially for urea, which has surged rapidly and is now reaching historical highs. The question is: why is the urea market so strong during what should be an off-season?
Internationally, high prices have driven increased demand. Meanwhile, developed countries are scaling back heavy industries, leading to reduced urea production. Some exporting nations have even turned into importers. Combined with a significant price jump in global urea markets this year, this situation has pushed up domestic prices and boosted exports.
Currently, the FOB price for urea in Asia ranges between $350 and $370 per ton, while China’s FOB price is only around $300–$302. This large price gap creates a strong profit margin, encouraging Chinese companies to export more. Additionally, the government recently cut the export tax rate from 30% to 15%, further boosting export incentives. As a result, domestic supply has become tighter, contributing to rising prices.
In September, China produced 3.069 million tons of urea, with 252,400 tons exported—accounting for 9% of total supply. In October, production was 216.28 million tons, with 0.454 million tons exported, making up 22% of domestic resources. From January to October this year, total urea production reached 20,608,300 tons, with 2,811,800 tons exported (14%). Last year, exports were just 804,800 tons, or 5% of total supply. This shows a clear increase in export activity.
Rising production costs have also supported higher prices. Since winter began, coal, natural gas, and crude oil prices have all gone up, increasing pressure on urea producers. Last year, the average cost for coal-based urea was about 1,360 yuan per ton, but this year it has climbed to 1,500–1,600 yuan. With heating season in full swing, coal demand in Shanxi and other regions has spiked, pushing prices even higher.
The National Development and Reform Commission recently raised natural gas prices, though urea producers are not directly affected. However, because gas prices for them are low, suppliers are reluctant to allocate enough gas, causing shortages and limiting production. At the same time, the government raised refined oil prices by 500 yuan per ton, adding to energy costs for oil-based urea producers.
Transportation costs have also risen sharply. Increased freight rates affect both the movement of urea and its raw materials like coal and timber. This has led to local shortages and added to the burden on manufacturers.
On the demand side, some factories have started reducing operations. For example, Deqilong’s 1 million-ton plant is under maintenance, Anqing Petrochemical has been idle for two months, and Sinopec Baling hasn’t operated at full capacity. Meanwhile, downstream demand remains strong. Agricultural product prices have risen, driving increased use of chemical fertilizers. Industrial urea, used in melamine and ADC foaming agents, is in high demand, with prices climbing significantly.
In response to the crisis, the China Nitrogen Fertilizer Association held an emergency meeting, urging companies to limit production and stabilize prices. These measures, along with previous market volatility, have contributed to the current price surge.
With phosphate, potash, and compound fertilizer prices hitting record highs, urea has become a key focus for distributors, making price increases inevitable. The market is showing signs of a rebound after earlier declines, reinforcing the upward trend.
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