August 21 Urea Weekly: Supply Tightening and Export Expectations Support a Rebound in the Urea Market

August 24, 2026

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Guide

Highlights at a glance

The urea market experienced a rebound driven by increased export activity and supply constraints due to plant maintenance, despite weak domestic demand. Export orders post-India's tender bolstered port accumulation and eased factory inventory pressure. Industry operating rates remained steady above 200,000 tonnes per day, with slight declines in producer inventories. Regionally, urea prices saw mixed movements, while port inventories surged, reflecting growing export activity. Domestic demand for urea remains subdued, with limited agricultural restocking and modest industrial consumption. While short-term sentiment is optimistic, the market is expected to remain volatile, influenced by export volumes, autumn fertilizer procurement, and supply shifts.

1. Urea Market Overview

1.1 Feidoodoo Price Index

The domestic urea market rebounded after stabilizing this week and then traded with a volatile but firmer tone. This round of improvement was jointly driven by faster export accumulation at ports and supply tightening resulting from plant maintenance. Spot and futures markets strengthened in tandem, although weak domestic demand and inventory pressure continued to limit upside potential.

On the export side, following the conclusion of India's tender, producers accelerated shipments to ports. Export orders diverted domestic supply and effectively eased pressure on factory sales and inventories.

On the supply side, several plants in major producing regions underwent maintenance or temporary shutdowns due to operational issues. The resulting short-term supply tightening supported producers' willingness to hold prices firm and lifted urea futures. However, weak domestic demand fundamentals continued to constrain further price increases. Industry operating rates changed little this week, while national daily output remained above 200,000 tonnes. Producer inventories started to decline, but the reduction was limited and has not yet developed into a sustained destocking trend. Port inventories rose more sharply than expected as port accumulation accelerated, with upstream suppliers building stocks in advance of September vessel shipments.

On the demand side, agricultural fertilizer demand has entered its traditional lull period. Field topdressing is largely complete, with only sporadic restocking demand from certain cash-crop areas. Downstream industrial users, including compound fertilizer and melamine producers, maintained relatively low operating rates and purchased mainly to meet rigid demand. There was no concentrated large-volume restocking. Downstream sectors such as wood panels and denitrification provided only basic stable demand and could not generate meaningful incremental support.

Overall, short-term market sentiment has improved, but this rebound is still primarily driven by a recovery in expectations. Fundamentals have not undergone a material reversal, and the urea market is expected to remain volatile. Attention should focus on the pace of export volume growth, the start of autumn fertilizer procurement, and changes in daily output.

According to Feidoodoo data, as of this Friday, the average domestic small-granular urea price index was 1,771.82 yuan/tonne, down 12.82 yuan/tonne from last week, or 0.72%.

During the first half of the week, the urea market traded relatively firmly. Although overall downstream demand was average, temporary supply contraction and smooth export shipments provided clear support. Improving export expectations, together with the gradual release of autumn fertilizer demand, also provided underlying support to futures. On the spot side, some producers showed a strong willingness to support prices, market trading sentiment improved slightly, and spot-futures linkage strengthened.

During the second half of the week, the urea market remained firm. On the spot side, maintenance and export expectations supported the market. Some producers at the lower end of the price range recorded strong new-order transactions, showed a firm willingness to support prices, and raised ex-factory quotations slightly. On the futures side, prices strengthened in step with the spot market, trading was active, and spot-futures linkage was pronounced.

1.2 Delivery Area Quotations

Specifically, prices in Northeast China were stable at 1,780-1,800 yuan/tonne. Prices in East China rose to 1,720-1,740 yuan/tonne. In Central China, small- and medium-granular urea rose to 1,730-1,900 yuan/tonne, while large-granular urea rose to 1,800-1,850 yuan/tonne. Prices in North China rose to 1,580-1,800 yuan/tonne. Prices in South China fell to 1,800-1,840 yuan/tonne. Prices in Northwest China were stable at 1,860-1,910 yuan/tonne. Prices in Southwest China fell to 1,680-2,000 yuan/tonne.

2. Industry Chain Developments

2.1 Daily Output

Output: Domestic urea output was approximately 1.4469 million tonnes this week, up 7,700 tonnes from last week, or 0.54%, and up 7.29% year on year. Daily output was 206,700 tonnes. Industry daily output remained above 200,000 tonnes during the week, and supply continued to fluctuate at elevated levels, leaving the market adequately supplied. Average daily output was 206,700 tonnes, up 1,100 tonnes from last week. Shaanxi and Xinjiang recorded significant week-on-week output increases, while Hubei and Jiangxi recorded notable decreases.

Operating rate: The domestic urea industry operating rate was approximately 86.63%, up 0.46 percentage points week on week and 2.64 percentage points year on year. The operating rate increased during the week and remained above the level seen in the same period last year. Operating rates rose in Shaanxi, Xinjiang and Jiangsu, while they declined in Jiangxi, Jilin and Hubei.

By product type, large-granular urea output was approximately 308,000 tonnes, up 10,400 tonnes from last week, or 3.49%, and up 65,600 tonnes year on year, or 27.06%. The operating rate for large-granular urea was approximately 88.91%, up 2.67 percentage points from last week and 16.03 percentage points year on year. Small- and medium-granular urea output was approximately 1.1389 million tonnes, down 2,700 tonnes from last week, or 0.24%, but up 20,200 tonnes year on year, or 1.81%. The operating rate for small- and medium-granular urea was approximately 86.03%, up 0.12 percentage points from last week and down 0.83 percentage points year on year.

By production route, coal-based urea output was approximately 1.1691 million tonnes, down 2,200 tonnes from last week and up 97,100 tonnes year on year. Its operating rate was approximately 88.98%, down 0.17 percentage points from last week and up 3.47 percentage points year on year. Gas-based urea output was approximately 277,800 tonnes, up 9,900 tonnes from last week and down 11,300 tonnes year on year. Its operating rate was approximately 77.95%, up 2.78 percentage points from last week and 2.18 percentage points year on year.

2.2 Market Inventories

Producer inventories: Producer inventories were approximately 1.6783 million tonnes this week, down 10,300 tonnes from last week, or 0.61%, but up 790,700 tonnes year on year, or 89.08%. Domestic urea producer inventories began to decline during the period, although the reduction was limited. On the export side, more positive signals, including India's tender, led most producers to concentrate shipments to ports, easing pressure in the domestic market to some extent. At the same time, more producers entered maintenance, reducing inventory accumulation on the supply side. Together, these factors resulted in a slight decline in producer inventories. Inventories increased in Henan, Heilongjiang, Ningxia, Qinghai, Shandong, Shanxi, Sichuan and Xinjiang, while they declined in Anhui, Hainan, Hebei, Hubei, Jiangsu, Jiangxi, Inner Mongolia, Shaanxi and Chongqing.

Port inventories: Total port inventories were 962,700 tonnes, up 248,400 tonnes from last week, or 34.78%, and up 419,700 tonnes year on year, or 77.29%. Industry port accumulation continued to improve during the period. Urea producers actively accelerated shipments to ports, and inventories at most ports continued to increase. Major changes included accumulation of large-granular urea at Qingdao, Rizhao, Zhenjiang and Huanghua ports, as well as small-granular urea at Longkou, Tianjin, Zhenjiang, Huanghua and Yantai ports. A small volume left a few ports, while other ports showed no notable changes.

Large granules: Domestic port inventories of large-granular urea were 438,800 tonnes this week, up 77,900 tonnes from last week, or 21.58%, and up 145,800 tonnes year on year. Large-granular urea port inventories increased significantly during the week and remained above the level recorded in the same period last year.

Small granules: Domestic port inventories of small-granular urea were 523,900 tonnes this week, up 170,500 tonnes from last week, or 48.25%, and up 352,900 tonnes year on year. Small-granular urea port inventories increased sharply during the week and remained above the level recorded in the same period last year.

2.3 Compound Fertilizer Industry

The domestic compound fertilizer market maintained a weak but stable pattern this week. Overall trading was subdued, and bargaining between upstream and downstream participants remained intense.

As of this Friday, the domestic 45% sulfur-based compound fertilizer price index was 3,396.67, while the 45% chloride-based compound fertilizer price index was 2,889.09.

On the cost side, the downward trend moderated. Urea prices rebounded slightly due to maintenance at some plants and export support; synthetic ammonia traded with a volatile but firmer tone because of maintenance at some plants; sulfuric acid prices continued weak consolidation, but declines narrowed. Prices of phosphate fertilizers, potash fertilizers and ammonium chloride changed only marginally, reducing fluctuations in overall compound fertilizer costs.

On the supply side, compound fertilizer operating rates were 30.81% this week, up 0.84 percentage points from last week. Producers flexibly adjusted operating rates according to orders, with overall utilization remaining relatively low and production focused on earlier orders awaiting shipment. New-order volume was limited. Major producers showed a strong willingness to control output and maintain prices, while the pace of supply releases was adjusted in line with downstream restocking progress, keeping overall supply pressure manageable.

On the demand side, the market has not yet entered the concentrated autumn fertilizer procurement cycle. Grassroots procurement has been delayed, distributors generally maintain low inventories and purchase and sell as needed, and willingness to build inventories in advance remains limited. Only certain cash crops saw sporadic restocking. Rigid demand release remained weak, farmers remained visibly cautious, and acceptance of prices was limited, restricting sales.

Overall, compound fertilizer prices have limited room for sharp moves in either direction. Market direction will depend mainly on subsequent raw material volatility and the start of autumn fertilizer procurement. Attention should focus on the release of concentrated downstream restocking, changes in raw material costs, industry policy, and indirect impacts from external geopolitical events. The market will likely remain driven by rigid-demand procurement, with a high probability of volatile consolidation.

2.4 Melamine Industry

The domestic melamine market declined from high levels and traded weakly in a volatile pattern this week. Supply-demand imbalances remained prominent, market trading continued to be subdued, and transactions were mainly sporadic rigid-demand purchases, with bulk orders scarce.

On the cost side, upstream urea prices rebounded slightly due to maintenance at some plants and export support, although the support was limited.

On the supply side, the melamine industry operating rate was 53.95% this week, down 3.19 percentage points from last week. Producers scheduled for maintenance shut down as planned, lowering capacity utilization to a low-to-mid range for the year. However, several plants are scheduled to restart, and spot supply remains relatively ample. Major producers still face shipment pressure, while some producers with high inventories are more willing to offer concessions to secure sales. Supply releases are adjusted according to downstream order intake.

On the demand side, demand remained weak overall. Downstream wood panel, decorative surface and coatings sectors operated at low rates, terminal product orders lacked momentum, and downstream processors mostly maintained low inventories and purchased small volumes as needed. Willingness to build large inventories remained insufficient, while additional export orders were limited and could not effectively absorb domestic supply.

Overall, market sentiment remained cautious, buyers were strongly wait-and-see, and views on the outlook differed widely. In the short term, melamine lacks a clear bullish driver and has limited room for a substantial rebound. Market movements will continue to depend on raw material cost fluctuations, recovery in downstream rigid demand and changes in export orders. Indirect effects on raw materials from external geopolitical events also require continued attention. The market will likely remain in weak consolidation.

2.5 International Market Quotations

China bulk small-granular urea FOB was USD 360.01-385.01/tonne, with the low end down USD 5/tonne. Black Sea small-granular urea FOB was USD 320.01-360.01/tonne, down USD 20-40/tonne. Baltic small-granular urea FOB was USD 315.01-355.01/tonne, down USD 20-40/tonne. Middle East small-granular urea FOB was USD 375.01-405.01/tonne, up USD 5-25/tonne. Brazil small-granular urea CFR was USD 390.01-400.01/tonne, with the high end down USD 20/tonne. India CFR was USD 390.01-394.01/tonne, unchanged from last week.

Iran large-granular urea FOB was USD 325.01-345.01/tonne, down USD 15-20/tonne. Egypt (Europe) large-granular urea FOB was USD 430.01-475.01/tonne, up USD 10-15/tonne. Brazil large-granular urea CFR was USD 410.01-440.01/tonne, up USD 10/tonne. Southeast Asia large-granular urea CFR was USD 395.01-435.01/tonne, with the low end down USD 20/tonne. China large-granular urea FOB was USD 385.01-405.01/tonne, up USD 5/tonne.

3. Market Outlook

On the supply side, industry plants are adjusting operating rates flexibly, while some plants have maintenance plans. Overall supply will fluctuate in stages. Major producers are managing supply releases according to sales conditions, and overall supply pressure remains. A period of concentrated maintenance will create expectations of temporary supply contraction. Over the next three weeks, eight producers are expected to enter maintenance and five to six producers are expected to restart. Daily output is temporarily declining and is expected to rise gradually in early to mid-September as maintenance shutdowns and restarts proceed. Supply is temporarily tightening.

On the inventory side, producer inventories accumulated seasonally earlier because of weak domestic demand. However, as export port accumulation rises sharply, cargoes are moving to ports faster and producer inventories are expected to be further digested. Traders in the distribution channel are maintaining light inventories, with wait-and-see sentiment prevailing and weak willingness to build stocks actively.

On the demand side, industrial rigid demand is expected to improve in September, with compound fertilizer and wood-panel producers providing stable underlying support. However, agricultural demand has entered its traditional off-season, terminal consumption capacity remains very limited, and domestic demand alone is unlikely to reverse market confidence. On the export side, as export port accumulation rises sharply, domestic sellers' bargaining power will gradually strengthen. Sentiment may shift from caution to optimism, lifting the market price benchmark.

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