Urea Weekly: Export Benefits Absorbed as Ample Supply and Weak Demand Dominate the Market (September 18, 2026)

September 20, 2026

FDD-global.com

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Guide

Highlights at a glance

China's urea market faced weak consolidation this week amid restrained downstream buying and stable producer inventories. Despite temporary boosts from export quotas and geopolitical shifts, high prices led to reduced transactions and subdued demands. On the supply side, production and operating rates increased modestly, maintaining an ample supply and high inventories. Demand from agricultural and industrial sectors remained weak, with buyers adopting cautious purchasing strategies. The compound fertilizer and melamine markets also experienced mixed trends, reflecting cost fluctuations and limited downstream purchasing. Overall, the urea market faces persistent pressure, with supply outpacing demand. Key factors to monitor include export quota execution and autumn fertilizer demand.

01 Market Overview

1.1 FDD Price Index

China's urea market underwent weak consolidation this week. Following the previous rally, costs continued to provide support, but high prices restrained downstream buying, causing quotations in mainstream regions to soften and retreat later in the week. Early in the week, the issuance of the third batch of export quotas and geopolitical disruptions briefly lifted sentiment. Producers stopped cutting prices and became more willing to defend them. However, the benefits of the quotas had already been priced in, actual shipments were delayed, and a new round of overseas tenders had yet to begin. Combined with loose fundamentals, producers' attempts to defend prices failed to generate substantive market momentum.

On the supply side, producers' operating rates recovered slightly, nationwide daily output remained high, and overall supply was ample. On the inventory side, producers' inventories changed little overall, and destocking progress fell short of expectations. Short-term news catalysts and lower production caused by maintenance generated only a temporary price increase. Transactions at high prices encountered resistance, purchases became concentrated on lower-priced cargoes, and poor outbound shipments at some ports slowed turnover. Port departures and cargo deliveries occurred simultaneously, leaving port inventories with limited overall changes. On the demand side, agricultural demand gradually weakened, while operating rates in compound fertilizer, panel manufacturing, and other industries remained low. Downstream buyers mainly purchased only as needed, maintained a strong wait-and-see stance, and showed little interest in bulk procurement.

Overall, with the National Day holiday approaching, producers need to secure orders and move cargoes before the holiday, leaving some possibility of price concessions. The urea market is expected to remain under pressure next week. Attention should focus on the actual pace of export quota implementation, improvements in spot transactions, and the start of autumn fertilizer demand.

According to FDD data, as of Friday, the average domestic small-granule urea price index was 1,799.73, down 9.09 from last week, representing a decrease of 0.50% week on week.

During the first half of the week, the urea market fluctuated on a relatively firm note. After prices retreated from their previous highs, raw material costs continued to provide downside support. Positive developments, including the issuance of export quotas and geopolitical disruptions in overseas markets, quickly strengthened bullish sentiment. Producers became noticeably more willing to defend prices, and quotations stabilized. Temporary reductions in supply caused by plant maintenance also helped futures strengthen slightly. However, most of these positive drivers were sentiment-based, and the market had already priced in the relevant expectations. A new round of overseas procurement had yet to begin, actual export shipments were delayed, and fundamental support remained insufficient. Market acceptance of high-priced cargoes gradually declined, while transactions remained weak, laying the foundation for softer conditions during the second half of the week.

During the second half of the week, the urea market underwent weak consolidation. Supply pressure continued to build as facilities that had previously undergone maintenance resumed production. The industry's overall operating rate recovered, market supply became increasingly ample, and industry inventories remained stable. Producers' overall destocking progress fell short of expectations, and pressure from accumulated cargoes gradually emerged. Demand-side weaknesses became increasingly apparent. Traditional agricultural fertilizer consumption entered the off-season, sharply reducing support from essential demand. Operating rates among compound fertilizer, panel, and other downstream industrial producers remained low. The industry maintained a cautious approach to stockpiling, with buyers generally adopting a light purchasing model based on immediate needs and showing no concentrated restocking activity. Market trading remained subdued. High-priced cargoes encountered transaction resistance, trading gradually shifted toward lower-priced supply, and quotations in mainstream regions successively softened.

1.2 Prices in Delivery Regions

Prices in Northeast China remained stable at RMB 1,790-1,810/tonne. Prices in East China rose to RMB 1,740-1,810/tonne. Prices for small- and medium-granule urea in Central China rose to RMB 1,750-1,920/tonne, while large-granule prices rose to RMB 1,950-2,050/tonne. Prices in North China remained stable at RMB 1,620-1,850/tonne. Prices in South China rose to RMB 1,800-1,840/tonne. Prices in Northwest China remained stable at RMB 1,860-1,910/tonne. Prices in Southwest China remained stable at RMB 1,660-1,900/tonne.

02 Industry Chain Updates

2.1 Daily Output

Output:

Domestic urea output was approximately 1.3710 million tonnes this week, up 25,400 tonnes from last week, representing an increase of 1.89% week on week and 5.52% year on year. Daily output stood at 192,200 tonnes. Industry output remained below 200,000 tonnes per day during the week, but supply continued to fluctuate at high levels and remained ample. Average daily output was 195,900 tonnes, up 3,700 tonnes from last week. Hebei and Inner Mongolia recorded notable week-on-week output increases, while Anhui and Shandong recorded notable decreases.

Operating Rate:

China's urea industry operating rate was approximately 81.06%, up 1.50 percentage points week on week but down 0.16 percentage points year on year. The operating rate increased during the week but remained below the level recorded in the same period last year. Hebei and Inner Mongolia recorded week-on-week operating-rate increases, while Anhui, Shandong, and Shaanxi recorded declines.

By Product Type:

Large-granule urea output was approximately 304,000 tonnes, down 7,900 tonnes or 2.53% from last week but up 57,900 tonnes or 23.53% year on year. The large-granule operating rate was approximately 87.76%, down 2.28 percentage points from last week but up 13.77 percentage points year on year.

Small- and medium-granule urea output was approximately 1.0671 million tonnes, up 33,400 tonnes or 3.26% from last week but down 16,800 tonnes or 1.55% year on year. The operating rate was approximately 79.34%, up 2.48 percentage points from last week but down 3.72 percentage points year on year.

By Production Process:

Coal-based urea output was approximately 1.0823 million tonnes, up 14,000 tonnes from last week and 29,300 tonnes year on year. The operating rate was approximately 81.07%, up 1.05 percentage points from last week but down 0.40 percentage points year on year.

Gas-based urea output was approximately 288,700 tonnes, up 11,400 tonnes from last week and 11,700 tonnes year on year. The operating rate was approximately 81.03%, up 3.20 percentage points from last week and 8.69 percentage points year on year.

2.2 Market Inventories

Producer Inventories:

Producer inventories were approximately 1.5562 million tonnes this week, down 6,700 tonnes or 0.43% from last week but up 461,200 tonnes or 42.12% year on year. Domestic urea producer inventories changed little overall. Although news developments and plant maintenance briefly lifted prices, downstream acceptance of high-priced cargoes remained limited. Transactions were temporarily concentrated in lower-priced regions, while shipments from some ports were relatively slow, resulting in sluggish producer destocking.

Producer inventories increased in Hubei, Jiangsu, Inner Mongolia, Qinghai, Shandong, and Chongqing. Inventories decreased in Gansu, Hainan, Hebei, Henan, Heilongjiang, Jiangxi, Shanxi, Shaanxi, Sichuan, Xinjiang, and Yunnan.

Port Inventories:

Total port inventories stood at 776,700 tonnes, up 54,400 tonnes or 7.53% from last week and up 275,700 tonnes or 55.03% year on year. Port inventories showed limited overall changes during the reporting period, with departures and cargo deliveries occurring simultaneously. As concentrated shipping dates approach, most ports are accelerating both outbound transportation and cargo deliveries. Cargo turnover within ports has increased noticeably, and liquidity continues to improve. The principal changes included deliveries of large-granule cargoes to Qingdao, Rizhao, Tianjin, and Huanghua ports; deliveries of small-granule cargoes to Lianyungang, Longkou, and Huanghua ports; and departures of small-granule cargoes from Zhenjiang and Tianjin ports.

Large-Granule Urea:

Domestic port inventories of large-granule urea stood at 425,400 tonnes this week, up 86,100 tonnes or 25.38% from last week and up 78,400 tonnes year on year. Large-granule port inventories increased slightly during the week and remained above the level recorded in the same period last year.

Small-Granule Urea:

Domestic port inventories of small-granule urea stood at 351,300 tonnes this week, down 41,700 tonnes or 10.61% from last week but up 148,900 tonnes year on year. Small-granule port inventories declined slightly during the week but remained above the level recorded in the same period last year.

2.3 Compound Fertilizer Industry

China's compound fertilizer market was generally stable to weak this week. Prices in some regions continued to decline slightly, while overall trading remained subdued.

As of Friday, China's 45% sulfur-based compound fertilizer price index stood at 3,370.00, while the 45% chlorine-based compound fertilizer price index stood at 2,855.45.

On the cost side, raw material trends diverged. Urea consolidated at high levels, while synthetic ammonia continued to rise, providing some support for high-nitrogen fertilizers and market sentiment. However, lower sulfur prices, weak sulfuric acid, and a significant decline in MAP prices provided insufficient support for some high-phosphate and balanced fertilizers and could not drive compound fertilizer quotations higher.

On the supply side, the compound fertilizer industry operating rate was 33.41% this week, up 0.42 percentage points from last week. Producers flexibly adjusted production loads according to their order books, and overall supply remained adequate. Some producers prioritized fulfilling previously signed orders and remained cautious about accepting new business, while showing an increased inclination to control production volumes.

On the demand side, stockpiling for autumn planting progressed gradually, but activity at the grassroots level was slower than expected. Downstream distributors remained cautious. Due to uncertainty about the outlook, most abandoned large-scale stockpiling and instead purchased and sold cargoes as needed while making small replenishment purchases. End farmers showed limited acceptance of fertilizer prices, high-priced cargoes faced substantial shipment resistance, and channel inventories remained low.

Overall, the compound fertilizer market is expected to remain range-bound in the short term. Attention should focus on the actual pace of grassroots cargo collection, upstream raw material trends, and disruptions in external markets. The pace at which autumn fertilizer moves into local markets will determine the subsequent direction of the compound fertilizer market. Particular attention should be paid to grassroots autumn fertilizer distribution and changes caused by raw material price fluctuations.

2.4 Melamine Industry

China's melamine market remained narrowly range-bound this week, with quotations diverging by region. On the cost side, raw material urea prices increased noticeably. Combined with maintenance shutdowns at some production facilities in Henan, higher costs and tighter supply provided dual support. Producers became more willing to defend prices, and some tentatively raised ex-factory quotations.

On the supply side, the melamine industry operating rate was 49.15% this week, down 1.80 percentage points from last week. Some producers in Northwest and Southwest China successively began plant maintenance during the week. The industry's overall operating rate consequently declined and spot availability tightened, providing some support for market prices. However, limited downstream buying partly weakened the positive impact of the supply contraction.

On the demand side, operating rates in the panel industry and related downstream sectors showed no significant improvement. Midstream and downstream participants mainly replenished inventories for essential needs and showed little willingness to stock up proactively. The market lacked sustained purchasing momentum, constraining the potential for further gains. Raw material developments repeatedly disrupted sentiment, but overall supply-demand fundamentals remained loose. This strengthened the wait-and-see atmosphere and prevented an upward price breakout.

Overall, bullish and bearish factors competed throughout the week, while producers held differing views of the outlook. Enterprises mainly adjusted shipment strategies flexibly according to unfulfilled orders and inventory conditions. Looking ahead to next week, a specialized industry conference is due to take place, and market participants are awaiting policy signals from the meeting. In the short term, the market may remain relatively firm and range-bound. Producers will continue to adjust quotations according to their order books and inventory positions.

2.5 International Market Prices

China's bulk small-granule urea FOB price was USD 355.01-365.01/tonne, unchanged from last week. Black Sea small-granule urea was USD 380.01-395.01/tonne FOB, up USD 5-10/tonne. Baltic small-granule urea was USD 375.01-390.01/tonne FOB, up USD 5-10/tonne. Middle East small-granule urea was USD 430.01-460.01/tonne FOB, up USD 10-20/tonne. Brazil's small-granule urea price was USD 433.01-440.01/tonne CFR, up USD 18-20/tonne. India's delivered price was USD 390.01-394.01/tonne, unchanged from last week.

Iran's large-granule urea price was USD 340.01-350.01/tonne FOB, up USD 5-10/tonne. Egypt(Europe)'s large-granule urea price was USD 515.01-530.01/tonne FOB, up USD 10-20/tonne. Brazil's large-granule urea price was USD 465.01-500.01/tonne CFR, up USD 10-15/tonne. Southeast Asia's large-granule urea price was USD 450.01-470.01/tonne CFR, up USD 15-20/tonne. China's large-granule urea price was USD 420.01-435.01/tonne FOB, up USD 10-15/tonne.

3. Market Outlook

Supply:

Uncertainty remains over urea plant operations. Some facilities undergoing maintenance are expected to resume production, while temporary failures at individual plants must also be monitored. The pace of overall supply releases will vary according to producers' operating plans. Cost conditions also remain uncertain and may affect producer sentiment toward production and shipments. Over the next three weeks, approximately one producer is expected to begin scheduled maintenance, while nine to ten producers are expected to resume operations. As shutdown facilities return and fewer plants enter scheduled maintenance, daily output is expected to rise gradually, with a more noticeable increase during the latter part of the month.

Inventories:

Supply continues to grow faster than demand, leaving inventories across the industry chain at relatively high levels. The decline in producer inventories caused by temporary demand surges has gradually narrowed. Downstream purchasing enthusiasm has shown no substantive improvement, cargoes remain concentrated in upstream producers' warehouses, spot turnover is poor, and slow export fulfillment is the principal factor restricting destocking. Future inventory trends will depend heavily on the actual pace of export quota implementation. Concentrated export shipments would temporarily relieve domestic supply pressure and promote destocking. If export fulfillment falls short of expectations, high inventories will continue to weigh on prices.

Demand:

Agricultural fertilizer demand remains limited. Raw material procurement by compound fertilizer producers and essential industrial demand are currently unable to provide strong momentum. Downstream participants remain cautious about stockpiling and lack motivation for large-scale concentrated replenishment. Following the shipping period associated with the Indian tender, concentrated export shipments have also temporarily slowed. Domestic urea supply-demand fundamentals are therefore expected to become increasingly loose.

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