Overseas urea prices surge by 90%! Factories in multiple countries are forced to halt operations, and the domestic and international price gap has increased to 3,000 yuan.

Reporter丨Dong Peng

Editor丨Zheng Shifeng Zhang Mingyan

Since the escalation of the conflict between the U.S. and Iran, the international market has seen nitrogen fertilizers lead the way, phosphate fertilizers follow, and potash fertilizers remain steady with modest gains.

Taking urea—the most important nitrogen fertilizer—as an example, data from Longzhong Information show that as of March 31, China’s urea spot (FOB, mid-price) reached $752.5 per ton, up 92.8% from $390 per ton at the beginning of the year.

This is not an isolated case. Regional sample prices such as those in the Baltic Sea and the Arabian Gulf have also generally exceeded $600 per ton, with a straight-line jump in prices occurring in March this year as well.

By contrast, in the domestic market, amid the spring plowing and supply assurance backdrop, fertilizer prices such as urea have stayed broadly stable overall. By the end of March, the highest spot prices in Henan and Shandong were no more than 1,900 yuan per ton.

As a result, the price gap between the two markets—domestic and overseas—has expanded rapidly, from 1,000 yuan per ton at the beginning of the year to more than 3,000 yuan per ton currently.

Overseas nitrogen fertilizers lead the rally

Among the world’s major urea-producing countries, including China, India, Iran, Russia, etc., Iran and Russia account for larger export volumes.

Relevant data show that in 2025, global urea exports were about 50.8 million tons. Iran’s export volume reached 7.8 million tons, accounting for around 15% of the global total.

At the same time, in the Middle East region, Qatar also plays an important role in the global fertilizer supply system.

“Starting in early March, Iran has essentially implemented a blockade or strict control over the strait. Although its official stance contains tactical ambiguity, the latest directive has clearly required maintaining the blockade,” said Greentree Huahua Futures. This situation has nearly halted transportation through this global energy chokepoint. Hundreds of ships have been stuck in place, and multiple Gulf countries have been forced to cut production.

The institution noted that nearly 1/3 of the world’s urea and 44% of sulfur must be shipped out through the Strait of Hormuz. After shipping through the Strait of Hormuz became restricted, urea plants in multiple countries shut down or suspended operations. For example, the world’s largest urea plant in Qatar with 5.6 million tons per year was shut down.

This has broken the supply-demand relationship that was previously relatively balanced, and urea prices began accelerating upward starting in March this year.

Taking the urea FOB price in the Arabian Gulf (Middle East/Persian Gulf) as an example: this price is the most core spot pricing reference for the global urea market, and especially against the backdrop of the U.S.-Iran conflict, its role as a price bellwether has been further strengthened.

And from the price of this sample, the impact of the U.S.-Iran conflict this year is particularly clear.

According to Longzhong Information, this urea spot mid-price increased from $394 per ton in January and February this year to $492.5 per ton, and it was still within the price range since the second half of 2025. The increase also remained within a normal fluctuation range.

However, since February 28, when the U.S.-Iran situation escalated, with shipping through the Strait of Hormuz impeded, the rate of increase in local urea prices has risen significantly.

By the end of March this year, the urea FOB price in the Arabian Gulf had already risen to $742.5 per ton. The increase was much more pronounced than in the first two months of this year, and the cumulative increase is also basically consistent with China’s FOB price.

Driven by this, international prices of urea, phosphate fertilizers, and potash fertilizers have also risen to different degrees.

Among them, phosphate fertilizer is supported by factors such as sulfur prices and export policies from major producing countries. Diammonium phosphate rose to $700–800 per ton, and potassium chloride also saw a modest increase at high levels.

“Recently, international potassium chloride market prices have shown a clearly rising trend. Under the impact of the Middle East situation, most international market prices have been moving upward slowly,” Longzhong Information said on April 1.

In the view of the institution, the impact of the Middle East situation on potash fertilizers is mostly reflected in transportation costs. Because oil prices and ocean freight insurance have continued to rise, the increase in freight rates in most regions has exceeded 100%.

A conference call on April 1 by Salt Lake Co. also pointed out that the current potash fertilizer market is influenced by multiple factors, including fluctuations in the global supply chain, geopolitics, and seasonal changes in agricultural demand. Prices show a pattern of being easy to rise and hard to fall.

Domestic supply assurance and price stabilization

The Middle East situation has pushed up overseas fertilizer prices, but its impact on the domestic market is very limited.

After comparing prices from multiple sources such as ChemOnline, in the first quarter of this year, domestic urea spot prices increased by only about 150 yuan per ton, with a far smaller rise than in the overseas market mentioned above. As of the end of March, the main market price for small-granule urea in Henan was 1,860 yuan per ton.

Overseas prices rising while domestic prices remain steady has widened the price gap between the two markets even further.

Based on historical exchange rates, at the beginning of this year, China’s urea spot (FOB, mid-price) was about 2,726 yuan per ton, while the main price in the Henan urea market during the same period was 1,710 yuan per ton. The price difference between them stayed around 1,000 yuan per ton.

After the upswing in March this year, the aforementioned export price has approached 5,200 yuan per ton. The gap between the two sample prices has expanded to around 3,300 yuan per ton.

As for why domestic fertilizer prices were able to stay stable, it is due to multiple factors.

First, differences in raw material structures: urea feedstock in the Middle East comes almost entirely from natural gas, while domestic feedstock is mainly coal with natural gas as a supplement. Coal accounts for roughly 80% of the feedstock, meaning it is less affected by shocks in external energy markets.

According to statistics from Huanwen Futures, in 2026, China’s newly added domestic urea production capacity totals 5.27 million tons. Among this, only the 0.5 million tons per year capacity of Xinjiang Aofu Chemical uses a gas-based process; all other capacities use coal-based processes.

Second, since 2022, domestic additional urea capacity has been continuously released, and overall production has increased accordingly.

Data from the China Nitrogen Fertilizer Industry Association show that in 2025, China’s national urea output was 72.01M tons (physical volume), up 7.1% year on year.

Further tracking production conditions in 2026 shows that the operating rates and daily output for coal-to-urea facilities are both at historical highs since 2022. Meanwhile, major coal prices are at relatively low levels within the same period, and costs remain relatively stable as well.

Third, March and April this year are still the key stages of spring plowing and supply assurance. Earlier, multiple listed companies also clearly said, “Strictly implement the domestic fertilizer market supply assurance and price stabilization policy to ensure national food security.”

“An industry association’s price cap provides a clear ceiling price. The nitrogen association continues to publish the highest guidance prices for each month. The main regions’ highest limit prices are stable at 1,830 yuan per ton,” Greentree Huahua Futures also pointed out. Under multiple factors such as the release of off-season reserves and association price guidance, the upside space for urea prices may be limited, and the market is gradually returning to a supply-demand pattern that is relaxed.

At the national spring nitrogen fertilizer market conditions analysis meeting for 2026 held in March, Gu Zongqin, Chairman of the China Nitrogen Fertilizer Industry Association, also said, “Overall, in 2025, domestic nitrogen fertilizer supply is sufficient and prices have fallen noticeably, successfully completing the ‘supply assurance and price stabilization’ task. What is worth affirming is that by strengthening industry self-discipline, urea has achieved orderly exports. Export profitability has improved significantly, providing successful experience for China’s nitrogen fertilizer exports.”

Export quotas could increase

As “grain of grain” for food, in recent years China has strengthened control over fertilizer products such as urea.

On October 16, 2025, the Ministry of Commerce released the《total amount of 2026 fertilizer import tariff quota, distribution principles, and related procedures》, clarifying that the total amount of 2026 fertilizer import tariff quotas will be 13.65 million tons, of which the urea quota is 3.3 million tons.

The above quota volume is lower than the actual export volume of 4.89 million tons domestically in 2025. However, institutions generally expect that export restrictions may be relaxed after the end of spring plowing, and this year’s export volume may further increase.

“From the domestic supply side, the pressure of newly added production capacity coming online in 2026 is significant. Allowing exports and expanding the quota scale may become the most effective way to relieve supply oversupply. We expect the 2026 export quota to further expand,” said Huanwen Futures.

Dongzheng Derivatives Research Institute predicted that China’s urea export quota in 2026 may increase by 2.0 million to 3.0 million tons compared with 2025, reaching a level of 7.0 million to 8.0 million tons.

Against the background that overseas urea prices were nearly 200% higher than domestic prices, if expectations of increased export quotas are realized, China’s urea industry may seize a phase opportunity for a “rising both in quantity and price” situation in overseas markets.

Under the above background, export quotas have become not only a core variable affecting domestic and overseas supply-demand dynamics, but also a hot topic for the capital market. Recently, multiple investors and institutions have mentioned the issue through interactive platforms, conference calls, and other channels.

For example, Hubei Yihua was asked, “Is the company currently operating at full capacity? What are the 2026 export quotas for the company’s urea and diammonium phosphate? What is the current export situation?”

There are also investors who have advised Sichuan Meifeng: “The price gap between domestic and international urea is huge. For urea for vehicle use, which is an industrial product under quotas—will the company fully seize this historic opportunity to expand vehicle-use urea exports and turn around the loss situation from last year?”

It should be noted that the government will not disclose the specific export quota information of individual enterprises. Up to today, there is also no authoritative data on each company’s specific urea export volume in 2025. The relevant listed companies can only provide vague answers such as “actively participating.”

Yuntianhua said recently that after the domestic spring plowing ends, the company will also actively coordinate with relevant associations and self-regulatory organizations, proactively strive for export conditions, and ensure the company’s reasonable profitability.

However, in the above Ministry of Commerce document, there are some rules that can be relatively clearly used as references. For example, “the enterprise’s annual quota utilization rate will be used as the basis for setting the starting tariff quota amount for the next year.”

Quota utilization rate is a core indicator to measure whether an enterprise fully utilizes its export qualifications. Suppose a company received a quota of 100k tons in 2025, and ultimately exported 80k tons in reality. Then its quota utilization rate would be 80%.

And according to the quota allocation principles from the Ministry of Commerce mentioned above, starting from 2026, the starting (tariff quota) amount will be based on the starting amount in 2025 and adjusted according to the quota utilization rate in 2025. For enterprises with a quota utilization rate of 80% or above, the quota will be increased by 40%; for enterprises with a quota utilization rate of 25%–49%, it will remain unchanged; for enterprises with a quota utilization rate below 25%, it will be reduced by 50%……

Enterprises with large capacity scale and relatively high quota utilization rates, and that take on more domestic supply assurance tasks, may also obtain more export quotas afterward.

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