Urea Monthly: Supply Dynamics and the Pace of Domestic and Export Demand (September 2026)

01 Urea Market Analysis

1.1 Urea Price Analysis

China’s domestic urea market rose initially before retreating in September, remaining within a low trading range. Early in the month, concentrated plant maintenance reduced supply, while continued sharp increases in coal prices provided an opportunity for prices to rise. During the middle and latter parts of the month, plants across several regions gradually resumed production, and new capacity progressively came onstream, easing supply conditions and increasing inventory pressure on producers. Agricultural demand remained in its seasonal lull, with only limited fertilizer restocking in some regions. Operating rates at downstream compound fertilizer plants declined, while industrial buyers largely restricted purchases to immediate requirements. Overall buying interest remained weak, providing little support for the market. Coal prices remained firm, establishing some cost support for urea prices. News of Indian tenders and expectations of shipments to ports for export periodically lifted sentiment, but actual domestic purchasing remained sluggish, and market participants maintained a pronounced wait-and-see attitude. Ahead of the Mid-Autumn Festival and National Day holidays, some producers offered discounts to secure advance orders, using their outstanding order books to ease shipment pressure. The market subsequently entered a consolidation phase. Overall, downside support remained in place, but upward resistance was also substantial. Without sustained positive catalysts, prices remained rangebound.

According FDD calculation, as of September 29, 2026, the domestic prilled urea price index stood at 1,789.63, up 4.07% year on year.

At the beginning of the month, concentrated maintenance shutdowns across the domestic urea industry reduced production in several regions, temporarily tightening overall supply and spot availability. Expectations of tighter supply improved market sentiment. At the same time, sharply higher coal prices raised production costs and strengthened producers’ willingness to hold prices firm, driving a brief price rally. Demand, however, failed to improve in tandem. Agricultural consumption remained in its traditional off-season, with no large-scale restocking at the farm level and only scattered replenishment in individual regions. Operating rates at downstream compound fertilizer plants and industrial processing facilities remained low. Purchasing was slow and largely limited to small volumes for immediate requirements, leaving transaction volumes insufficient to sustain the rally. Weak domestic demand limited price gains, and the market soon stalled and entered consolidation.

Around mid-month, urea plants previously undergoing maintenance gradually resumed production, steadily lifting industry operating rates. New capacity also continued to enter the market, shifting domestic supply conditions from relatively tight to increasingly ample and gradually raising producer inventory pressure. Positive news surrounding export tenders and stock accumulation at ports temporarily improved sentiment and eased pessimism, but provided only localized, short-lived support and failed to reverse weak domestic fundamentals. Downstream compound fertilizer producers faced substantial finished-product inventory accumulation and continued to reduce operating rates. They remained cautious about purchasing urea feedstock and sought lower prices, while industrial buying continued to lack momentum. The imbalance between supply and demand became more pronounced, prevailing prices moved lower, and the market entered a downward trend.

Toward month-end, activity slowed ahead of the Mid-Autumn Festival and National Day holidays, and market participants remained cautious. Most urea producers offered moderate discounts to secure orders in advance and reduce post-holiday inventory pressure. Outstanding orders helped support market prices and prevented a sharper decline. Persistently high coal prices provided a firm production-cost floor, further limiting downside potential. End-user demand, however, showed no material improvement. The autumn fertilizer season was drawing to a close, farm-level restocking was largely complete, and traders across the distribution chain refrained from concentrated replenishment. Most continued to purchase as needed and operate with low inventories. The market remained caught between cost support, ample supply and weak demand, leaving prices largely stagnant at low levels, with subdued trading and no clear directional trend.

02 Domestic Urea Operating Rates

According FDD data, the domestic urea industry’s average operating rate was 81.94% this month, down 3.50% from the previous month and 0.42% from the same period last year. The average operating rate for January–September 2026 was approximately 87.82%, an increase of 2.77 percentage points from 85.05% a year earlier. The monthly operating rate declined and remained below the year-earlier level. More producers undertook plant maintenance during the month, increasing production losses and reducing both output and capacity utilization. Daily industry production consequently declined.

03 Domestic Urea Production Trends

According to FDD data, domestic urea production totaled approximately 5,940,000 mt this month, down 6.00% month on month but up 3.35% year on year. Cumulative production for January–September 2026 was reported at 5,748.31 mt, compared with 53,057,400 mt a year earlier, with a reported increase of 4,425,700 mt, or 8.34%. More producers undertook plant maintenance during the month, increasing production losses and reducing both output and capacity utilization. Daily industry production consequently declined.

04 China’s Urea Imports and Exports

4.1 China’s Urea Exports

According to customs data, China exported 522,400 mt of urea in August 2026, up 119,200 mt, or 29.55%, month on month but down 274,300 mt, or 34.43%, year on year. The average export price was $415.21/mt. Cumulative exports for January–December 2026 were reported at 1,429,200 mt, down 12,000 mt, or 0.83%, from the same period last year.

4.2 China’s Urea Imports

According to customs data, China imported 45.35 mt of urea in August 2025, up 9.93 mt, or 28.04%, month on month but down 32.28 mt, or 41.58%, year on year. The average import price was $4,663.20/mt. Cumulative imports for January–December 2026 were reported at 914.10 mt, down 986.90 mt, or 51.92%, from the previous year.

05 Domestic Urea Apparent Consumption

According FDD data, China’s apparent urea consumption totaled 6,250,000 mt in August 2026, up 13,400 mt from June, with a reported month-on-month increase of 0.21%. Consumption increased by 341,400 mt, or 5.78%, year on year. Cumulative apparent consumption for January–August 2026 reached 50,568,000 mt, up 3,921,400 mt, or 8.41%, from the same period last year.

06 Domestic Urea Inventory Trends

6.1 Monthly Port Inventory Trends

According FDD data, domestic urea port inventories stood at approximately 536,800 mt at month-end, down 539,800 mt from the previous month but up 40,500 mt year on year. Port inventories declined sharply month on month while remaining above the year-earlier level. Early in the month, export shipments became the principal channel for producers to offset weak domestic demand and ease elevated plant inventories. Producers became significantly more willing to move supplies to ports, pushing port stocks above earlier highs and taking peak inventories beyond 1 million mt. Late in the month, export vessels arrived within a concentrated period, and outbound urea shipments from some ports became more certain, prompting a temporary inventory decline. In the short term, port inventories are expected to fluctuate as inbound deliveries from producers and outbound export shipments proceed concurrently.

6.2 Monthly Producer Inventory Trends

According FDD data, domestic urea producer inventories stood at approximately 1,475,700 mt at month-end, down 195,300 mt from the previous month, with a reported year-on-year increase of 25.75 mt. Producer inventories declined modestly during the month but remained above the year-earlier level. As shipment schedules associated with Indian tenders entered a concentrated fulfillment period, producers in major producing regions accelerated deliveries to ports. Meanwhile, the restart of some plants previously scheduled to resume production was delayed, temporarily bringing daily industry output down to a low level. This accelerated inventory drawdowns and shifted supplies from plants to ports, directly easing the pressure from earlier inventory accumulation. Consequently, the buildup in producer inventories, which had previously remained elevated, continued to moderate. However, domestic demand remained in its seasonal lull, autumn compound fertilizer production was nearing completion, and feedstock replenishment lacked momentum. Domestic product movements therefore received limited support, keeping the overall inventory decline relatively modest.

07 Urea Market Outlook

On the supply side, domestic urea supply pressure is expected to persist. Some plants previously undergoing maintenance are scheduled to resume production, creating scope for industry operating rates to recover. Temporary unplanned shutdowns may briefly ease supply pressure, but are unlikely to produce a sustained contraction. Meanwhile, seasonal operating-rate reductions at natural gas-based plants in the fourth quarter could constrain overall output. Supply is therefore expected to fluctuate within a relatively narrow range.

On the inventory side, the industry continues to face some inventory pressure. As plants resume production, slow downstream purchasing could lead to renewed stock accumulation at producers. Commercial inventories across the distribution chain will largely track the progress of winter restocking. Local traders remain cautious and show limited willingness to build substantial inventories proactively. Port stocks will adjust with export shipment schedules, while the pace of inventory drawdowns will directly influence the spot market’s scope for price movements.

On the demand side, domestic demand is entering a seasonal transition. Direct agricultural consumption will provide limited support in the short term, and market attention will gradually shift toward winter restocking. Operating rates at compound fertilizer plants and downstream chemical producers are recovering slowly, with purchases mainly involving periodic replenishment. Sustained, concentrated procurement is therefore unlikely. Winter restocking should provide some demand support once it begins, but local buyers remain cautious and are more likely to purchase as needed. The timing of demand recovery remains uncertain, and a sharp surge in buying is unlikely.

On the export side, exports remain an important marginal factor shaping the market outlook. International tender activity and changes in the spread between domestic and overseas prices require continued attention. If international market conditions remain favorable, exports could absorb some domestic supply and ease the domestic supply-demand imbalance. However, exports face considerable uncertainty because of international competition, overseas demand and policy constraints. They can provide temporary relief but are unlikely to fundamentally reverse domestic market conditions or independently drive a substantial increase in domestic urea prices.

Overall, urea market fundamentals are expected to remain relatively loose. Prices are likely to remain rangebound, with limited upside potential. Key factors to monitor include plant operating rates, the progress of winter restocking and actual export shipments.