Urea Monthly: Market Falls, Rebounds, and Pulls Back During the Month as the Supply-Heavy, Demand-Weak Fundamentals Persist (July 2026)

1. Urea Market Analysis
1.1 Urea Market Price Analysis
2. Domestic Urea Industry Operating Statistics
3. Domestic Urea Output Trends
4. Domestic Urea Import and Export Data
4.1 Domestic Urea Export Data
4.2 Domestic Urea Import Data
5. Domestic Urea Apparent Consumption
6. Domestic Urea Inventory Trends
6.1 Monthly Port Inventory Trends
6.2 Monthly Producer Inventory Trends
7. Urea Market Outlook

01 Urea Market Analysis

1.1 Urea Market Price Analysis

In July, China's urea market remained characterized by ample supply and weak demand, and the price center continued to decline. Supply pressure remained elevated while demand was generally weak. Support from summer agricultural top-dressing was limited and short-lived. In the industrial sector, compound-fertilizer plants maintained low operating rates, material moved poorly to end users, and urea inventories at producers continued to rise, highlighting accumulation pressure. Internationally, escalating tensions in the Middle East pushed global urea prices higher against the broader trend. China's export policy was eased slightly, creating expectations that the export window could recover. Domestic producers gradually began moving cargo to ports, but shipments advanced slowly and only some producers reduced inventories at a modest pace. Exports have therefore not yet fully absorbed excess domestic supply. Although favorable export-policy expectations periodically improved market sentiment, their impact lacked persistence and could not reverse pressure on the spot market. Attention should remain on the timing of autumn fertilizer demand and the implementation of subsequent export policies.

According to Feidoodoo data, as of July 31, 2026, China's small-granular urea price index stood at 1,831.83, down 1.57% year on year.

At the beginning of the month, the urea market fluctuated with a weak bias. Changes in news-based expectations remained the main driver of volatility. Favorable export news briefly lifted bullish sentiment. Some major producers also lowered offers to stimulate purchases, significantly improving trading activity and temporarily accelerating shipments, after which offers were adjusted slightly higher. However, once the news was refuted, the rally lacked lasting support. High-priced material encountered obvious resistance, downstream distributors and farmers had limited capacity to absorb supply, and interest in bulk restocking was weak.

In mid-month, urea-market sentiment recovered and the price center moved higher. Escalating geopolitical conflict in the Middle East lifted international urea prices and supported domestic sentiment. At the same time, signs of modest easing in China's export policy prompted some producers to begin moving export cargoes to ports, raising expectations of larger export volumes. Spot inquiries and trading activity improved, prices in some regions stabilized or rebounded slightly, and urea futures also advanced, temporarily easing bearish sentiment.

At month-end, favorable factors were gradually absorbed while the fundamental imbalance remained unresolved. Port deliveries for export continued to advance slowly and actual volumes were limited, causing earlier policy support to fade. Domestically, agricultural top-dressing demand was insufficient, industrial operating rates recovered slowly, essential purchases failed to reach meaningful scale, and material still moved poorly to end users. With no new market driver, prices came under renewed pressure and edged lower. Port deliveries helped some producers reduce inventories slightly, but total inventories remained high and continued to accumulate. Market sentiment turned cautious and wait-and-see behavior again dominated as participants awaited autumn fertilizer demand, the Indian tender, and clarity on additional export quotas.

02 Domestic Urea Industry Operating Statistics

According to Feidoodoo data, the average monthly operating rate of China's urea industry was 89.77%, up 0.54% from the previous month and 5.36% year on year. The average operating rate in January-July 2026 was approximately 89.00%, 3.26 percentage points higher than 85.74% in the same period last year. The monthly operating rate increased and remained above the year-earlier level. Capacity utilization edged lower because maintenance-related output losses increased, but average daily output remained high and overall supply showed no obvious contraction.

03 Domestic Urea Output Trends

According to Feidoodoo data, domestic urea output totaled approximately 6.64 million tonnes this month, up 3.07% month on month and 9.90% year on year. Cumulative output in January-July 2026 was 4,522.42 tonnes, up 3.8434 million tonnes or 9.29% from 41.3808 million tonnes in the same period last year. Although more units underwent maintenance this month, the greater number of calendar days supported a modest monthly output increase. Capacity utilization edged lower because maintenance-related losses rose, but average daily output remained high and overall supply showed no obvious contraction.

04 Urea Import and Export Data

4.1 Urea Export Data

Customs data show that China exported 7,100 tonnes of urea in June 2026, up 3,700 tonnes or 108.98% month on month, but down 59,100 tonnes or 89.24% year on year. The average export price was USD 328.47/tonne. Cumulative exports in January-December 2026 totaled 503,600 tonnes, up 426,300 tonnes or 551.64% from the same period last year.

4.2 Domestic Urea Import Data

Customs data show that China imported 22.18 tonnes of urea in June 2025, up 22.18 tonnes or 100.00% month on month, but down 5.77 tonnes or 20.63% year on year. The average import price was USD 4,577.90/tonne. Cumulative imports in January-December 2026 totaled 833.31 tonnes, down 457.15 tonnes or 35.43% year on year.

05 Domestic Apparent Consumption

According to Feidoodoo data, China's apparent urea consumption was 6.4352 million tonnes in June 2026, down 152,900 tonnes or 2.32% from March, but up 596,000 tonnes or 10.21% year on year. Cumulative apparent consumption in January-June totaled 38.0814 million tonnes, up 2.8185 million tonnes or 7.99% year on year.

06 Domestic Urea Inventory Trends

6.1 Monthly Port Inventory Trends

According to Feidoodoo data, domestic monthly urea port inventories totaled approximately 197,400 tonnes at month-end, up 44,500 tonnes from the previous month but down 242,600 tonnes year on year. Port inventories increased slightly month on month but remained below the year-earlier level. Export policy was gradually relaxed during the month, while a renewed escalation in international geopolitical conflict strengthened the global fertilizer sector. Support from overseas prices gradually reached the domestic market and further encouraged producers to move cargo to ports. As some scheduled vessels arrived, port inventories first rose and then declined. Despite frequent favorable export-policy developments, port deliveries continued to advance slowly. With another Indian tender expected soon and domestic producer inventories continuing to accumulate, exports are needed to divert excess supply. Port deliveries may therefore accelerate in August. Attention should remain on the progress and implementation of specific export policies.

6.2 Monthly Producer Inventory Trends

According to Feidoodoo data, domestic urea producer inventories totaled approximately 1.6186 million tonnes at month-end, up 485,000 tonnes from the previous month and 59.33 tonnes year on year. Producer inventories accumulated sharply during the month and exceeded the year-earlier level. This high inventory was not caused by a single factor, but resulted from a systemic accumulation as both domestic and external demand slowed. On the export side, the port-delivery process failed to overcome persistent bottlenecks, periodic volume increases were difficult to sustain, and overseas sales provided little relief for excess domestic capacity. Domestically, peak-season agricultural stockbuilding was largely complete and the market entered a demand gap with no new near-term purchasing focus. Industrial users faced weak end-product orders, uneven restarts, cautious raw-material purchases, and repeated disappointments in the pace of demand recovery. With both domestic and external support absent, the supply-demand imbalance became concentrated upstream, and the transmission of material from factories to end users slowed markedly. Although some producers still held earlier orders, actual spot trading was subdued, market liquidity was low, and large volumes accumulated in factory warehouses, keeping storage utilization high.

07 Urea Market Outlook

Supply: The high and ample supply pattern will continue, with little prospect of a sharp near-term contraction. Overall supply pressure will remain substantial as new low-cost capacity continues to come online. Producers remain willing to operate, with little inclination to shut down voluntarily or reduce loads. Local temporary maintenance and unplanned outages will create only minor disruptions and are unlikely to change the high operating rates and high daily output that define the loose supply environment. Raw-material cost fluctuations are limited and provide little support or pressure, while supply will continue to impose rigid pressure on spot prices.

Inventories: Accumulation pressure remains and destocking will be slow. Producer inventories are currently high, while weak off-season demand is slowing internal stock digestion. Without concentrated export orders or an increase in essential demand, producer inventories will continue to accumulate gradually. Only some producers participating in port deliveries may reduce stocks slightly. Slow overall destocking will continue to limit room for higher producer offers.

Demand: The off-season will persist in the short term, while the market waits for autumn demand over the longer term. Domestic agricultural top-dressing is largely complete and the traditional agricultural demand gap is evident, with no new support. Compound-fertilizer plants and downstream chemical industries maintain low operating rates, end users remain cautious about stockbuilding, and purchases are scattered and need-based. Material moves poorly through the chain and incremental industrial demand is insufficient. Attention will gradually turn to autumn fertilizer preparation. The recovery in compound-fertilizer operating rates and early end-user stockbuilding will be central to any later improvement in domestic demand.

Exports: Improvement is expected, but support will be periodic and uncertain. China's export policy is generally loose, while geopolitical conditions in the Middle East support international prices and create favorable conditions for domestic exports. As the industry enters its traditional export window, producers may become more willing to move and ship cargo through ports, and higher export volumes could periodically ease domestic inventory and supply pressure. However, port-delivery and shipment progress remains uncertain, orders are implemented unevenly, and favorable support lacks persistence. Exports can drive only periodic market recovery and cannot completely reverse weak domestic fundamentals.

Overall, the core pattern of ample supply and weak demand is unlikely to reverse in the short term, and the urea market will mainly fluctuate weakly within a narrow range. Export expectations will provide periodic near-term support. Over the medium term, the market will depend entirely on the start of autumn industrial demand and the scale of export orders. Fundamental improvement still requires tangible incremental demand.