India Tender Lands with Higher Volume and Lower Prices, Urea Retests the Policy Floor

This week, the most closely watched event in the urea market, the result of India RCF’s 1.7 million-tonne urea import tender, was finally announced. However, the landing of this long-awaited “large order” once again confirmed the logic of positive news being exhausted. Futures prices again tested previous lows, while the spot market also fell back again.

1. India Tender Result: Higher Volume, Lower Prices, and Fierce Competition

The tender officially opened this week, and the final result showed two key features:

On price, this round of India tender prices came in sharply below previous market expectations. The lowest East Coast price was 390.25 USD/tonne CFR, while the lowest West Coast price was 393.65 USD/tonne. Compared with the previous June India tender price of 444.90-449.30 USD/tonne, the decline exceeded 12%. Compared with the historic high of 959 USD/tonne during the peak of the geopolitical crisis in April this year, prices plunged nearly 60%. This price level was also clearly below earlier quota transaction prices.

On volume, bids far exceeded the planned purchase volume. The tender received offers from 30 suppliers, totaling as much as 5.5475 million tonnes, including 2.435 million tonnes for the East Coast and 3.1125 million tonnes for the West Coast. This was more than three times the planned purchase volume of 1.7 million tonnes. Other data showed total bids exceeding 6.2505 million tonnes. The extremely high bid multiple fully reflects the current oversupply pattern in the international urea market, with unusually fierce price competition among suppliers.

From the perspective of supply sources, China’s small-granule urea export prices have fallen to 385-400 USD/tonne FOB. Industry estimates suggest that China’s available export supply for this round of India tender is around 1.0-1.5 million tonnes. At the same time, affected by this tender, Middle East prices fell sharply, with FOB prices once falling below 400 USD/tonne to around 370 USD/tonne.

2. Domestic Market: Expectations Materialize, Prices Fall Back

The announcement of the India tender result again reflected the reality of “expectations materializing.” When bid volumes far exceeded planned procurement, the market basically recognized that tender prices would certainly be low. The futures market then fell below the 1700 mark again and returned to domestic fundamental logic.

In the spot market, urea prices continued to decline and hit new lows for the year. After the India tender price landed, its driving effect on the market was “not yet obvious.” Although some enterprises with relatively low prices saw transaction volumes increase appropriately, overall market transaction volume did not expand simultaneously.

On the supply side, industry output remained high. Daily output in the urea industry was 204,600 tonnes, up 13,400 tonnes from the same period last year. The operating rate was 85.74%, up 3.15 percentage points from 82.59% in the same period last year. From January to July 2026, domestic cumulative urea output reached 45.27 million tonnes, up 3.76 million tonnes from the same period in 2025, or about 9% year on year. Industry daily output has remained in a high range for an extended period, with capacity utilization above 90%.

On inventories, pressure is particularly prominent. Total inventory at Chinese urea enterprises reached 1.6886 million tonnes, up 22,500 tonnes from the previous cycle, reaching a record high for the same period and marking three consecutive months of inventory accumulation. Meanwhile, port inventories also surged sharply. As of August 13, China’s sampled urea port inventory reached 714,300 tonnes, up 405,400 tonnes month on month, an increase of 131.24%. The surge in port inventory reflects that enterprises accelerated port collection under India tender expectations, but it also shows limited export absorption capacity. Moreover, with domestic inventories still accumulating despite port diversion, weak domestic demand has become even more evident, intensifying bearish sentiment in the domestic market.

On the demand side, seasonal weakness is evident. Agricultural topdressing is basically ending, compound fertilizer operating rates remain low, raw material inventories are acceptable, and there are no plans for excess procurement. Compound fertilizer plants’ own finished-product inventories continue to accumulate, raw material procurement is cautious, and the market is seeing a tug-of-war between high-priced phosphate nutrients and more cost-effective nitrogen nutrients for autumn fertilizer production. However, overall short-term market transaction volume still has not expanded effectively.

The core variables worth monitoring next include:

First, domestic supply volume. Although the India tender price is low, if Chinese supply accounts for a relatively high share of the 1.7 million-tonne total, estimated at 1.0-1.5 million tonnes, it could still ease domestic inventory pressure to some extent.

Second, the export shipment pace. Slow port collection and shipment are the actual bottlenecks currently facing exports. Actual export volume after quota implementation will take time to be gradually fulfilled.

Third, cost support. Current spot prices are already approaching or even below enterprises’ production costs. As industry losses widen, whether the supply side may actively cut production deserves close attention. In particular, with coal prices continuing to rise recently and frequent accident-related safety inspections, cost-side changes may gradually affect sentiment in coal chemical products as downstream profits narrow.

Fourth, policy expectations. Whether substantive measures follow after the price-stabilization meeting remains an important variable in market bargaining. This is also one of the reasons futures prices rebounded near last week’s “policy floor” after testing lower levels. The policy support stance continues to affect fund sentiment.

Overall, the India tender landed this week with prices around 390 USD/tonne and bid volumes exceeding 5.5 million tonnes, clearly sending one signal to the market: the international urea market has shifted from “supply shortage” to “oversupply.” For the domestic market, against the backdrop of daily output above 200,000 tonnes and enterprise inventories approaching a historical high near 1.7 million tonnes, a single external demand event is no longer enough to reverse the loose supply-demand fundamentals. The future direction of the urea market still needs to return to the main line of bargaining between supply-demand fundamentals and policy factors.