Urea Prices Plunge from $900 Peak Back to Pre-War Levels as China Export Quotas and Weak Demand Weigh
0xBroomberg
Global urea spot prices have plunged from an April peak of $900/tonne back to pre-war levels, driven by China reopening export quotas and seasonal demand weakness — but stranded cargoes at the Strait of Hormuz and Beijing's opaque policy stance keep the outlook uncertain.
What kind of ride did urea prices just take?
When the Iran war broke out on February 28 and the Strait of Hormuz closed, Middle Eastern urea FOB prices surged from $492.50/tonne to $900/tonne by April 23.
This means → prices nearly doubled in two months, because the Middle East normally handles 30%–35% of global urea exports — closing the strait cut off roughly a third of supply.
By the first week of June, prices had already fallen back to pre-war levels — even before a ceasefire was formally announced.
Why did the price collapse so fast?
CRU Group senior analyst Pranshi Goyal attributes the "free fall" primarily to absent demand: May is a seasonal low, and sky-high prices pushed buyers to delay restocking.
China's return to the export market in June accelerated the decline. Reuters reported that authorities issued a new batch of export quotas; some producers received permits valid through August.
In plain terms = the supply side saw "Middle East cut off, China stepped in," while the demand side saw "too expensive, nobody buying" — both ends pushed prices down simultaneously.
What is happening inside China?
As of June 10, China's domestic urea inventory rose 7.6% week-on-week to 959,400 tonnes.
This reflects three things happening at once: a seasonal pullback in agricultural demand, weak industrial demand, and producers stockpiling in anticipation of looser export restrictions.
Shandong Hualu Hengsheng Chemical stated explicitly that it would "actively seek urea export opportunities to ease domestic overcapacity pressure."
What does the Strait of Hormuz reopening mean?
Argus Media estimates roughly 1.2 million tonnes of urea remain loaded on vessels anchored or drifting in the Persian Gulf, yet to pass through the strait.
On June 16, the first urea-laden vessel transited the strait post-ceasefire, heading for Thailand — but congestion may delay subsequent shipments.
This means → if these stranded cargoes flood the market at once, they could push prices down further in the short term; but if transit is slower than expected, there is upside price risk.
What is the biggest unknown for the months ahead?
Argus nitrogen-pricing head Harry Minihan says China's behavior in the export market "will be one of the most important drivers of price direction over the coming months."
Beijing holds more than just quotas — it can set a minimum export price at any time to control the pace of shipments.
In plain terms = whether prices keep falling, and how far, depends largely on a policy variable that has not yet been spelled out. CRU's Goyal believes the price floor will ultimately be anchored by Chinese policy and European production costs.
Content is for reference only, not financial advice.