Urea Weekly: Supply-Side Momentum Is Gradually Fading (September 11, 2026)

01 Market Overview

1.1 Feidoodoo Price Index

The domestic urea market rose initially before correcting and retreating from its highs this week. On the cost side, upstream coal prices continued to rise, providing solid cost support for urea producers. This was the main driver of the temporary market rally and effectively strengthened producers’ confidence in supporting prices. On the supply side, production units in some regions underwent routine maintenance, causing the industry’s overall operating load to decline slightly and temporarily reducing supply. Combined with earlier positive export expectations, this further drove prices higher early in the week. However, overall industry availability remained relatively ample, and the limited scope of plant maintenance did not create persistent shortages.

On the supply side, producer operating rates declined slightly this week, although nationwide daily output remained above the high level of 190,000 tonnes. Producer inventories fell noticeably during the period, mainly because the temporary market rise improved cargo liquidity at some producers. More regional maintenance also reduced supply and moderately eased inventory pressure. At ports, most facilities accelerated cargo departures as shipping dates approached. The pace of departures increased significantly and port inventories declined.

On the demand side, agricultural demand has yet to begin on a concentrated basis. Downstream industries such as compound fertilizer and panel manufacturing maintained low operating rates and conducted only routine rigid-demand replenishment, with no large-volume raw material procurement. Overall, this week’s urea price increase relied mainly on short-term positive factors such as higher costs, plant maintenance and export expectations, while substantive support from fundamentals remained insufficient. Once these positive factors were realized, upward momentum faded rapidly. Attention should be paid to the start of fertilizer application at the grassroots level, the recovery in downstream industrial operating rates and changes in overall market sentiment.

According to Feidoodoo data, as of Friday, the average domestic small-granule urea price index stood at 1,808.82, up 47.64, or 2.70%, from the previous week.

During the first half of the week, the urea market strengthened as several positive factors jointly provided support. Raw material costs continued to rise, while temporary supply contraction caused by plant maintenance and positive export expectations strengthened market participants’ willingness to support prices. Although weak domestic demand did not improve materially, short-term positive factors dominated the market. Some downstream buyers conducted sporadic replenishment, producer transactions involving new orders improved, mainstream ex-factory quotations rose steadily and the overall market center moved higher.

During the second half of the week, the market fluctuated at high levels before retreating as fundamentals regained influence. Weak domestic demand became increasingly evident and showed no improvement. Overall downstream demand was poor, agriculture remained in its traditional off-season with no concentrated fertilizer demand, and the compound fertilizer and panel industries made only sporadic rigid-demand purchases. Demand-side support was therefore severely inadequate. Although some plants reduced production, overall industry supply remained ample and inventory pressure persisted. In the spot market, downstream willingness to chase higher prices faded rapidly after the surge. Traders mainly adopted a cautious wait-and-see stance, producer transactions involving new orders continued to weaken and trading sentiment shifted from warmer to subdued. Some producers made flexible concessions and adjusted prices to promote transactions, causing the market’s gains to narrow gradually.

1.2 Delivery-Region Quotations

Prices in Northeast China rose to 1,790-1,810 yuan/tonne. Prices in East China rose to 1,740-1,800 yuan/tonne. In Central China, small- and medium-granule prices rose to 1,750-1,800 yuan/tonne, while large-granule prices remained stable at 1,800-1,920 yuan/tonne. Prices in North China rose to 1,620-1,890 yuan/tonne. Prices in South China rose to 1,790-1,850 yuan/tonne. Prices in Northwest China remained stable at 1,860-1,910 yuan/tonne. Prices in Southwest China remained stable at 1,660-1,900 yuan/tonne.

02 Industry Chain Developments

2.1 Daily Output

Output: Domestic urea output was approximately 1.3456mn tonnes this week, down 26,300 tonnes, or 1.92%, from the previous week but up 5.21% year on year. Daily output stood at 192,200 tonnes. Industry output remained below 200,000 tonnes/day during the week, although supply continued to fluctuate at high levels and overall market availability remained ample. Average daily output was 192,200 tonnes, down 3,800 tonnes from the previous week. Output increased notably from the previous week in Shaanxi and Gansu and decreased notably in Henan, Hubei, Jiangsu, Shandong and Xinjiang.

Operating rate: The domestic urea industry operating rate was approximately 79.56%, down 2.58 percentage points from the previous week but up 0.22 percentage points year on year. The operating rate declined during the week but remained above the corresponding level last year. Operating rates increased in Gansu, Jilin, Shaanxi and Yunnan and declined in Jiangsu, Henan, Anhui, Hubei and Shandong.

By product type, large-granule urea output was approximately 311,900 tonnes, down 11,400 tonnes, or 3.53%, from the previous week but up 68,400 tonnes, or 28.09%, year on year. The large-granule operating rate was approximately 90.04%, down 3.29 percentage points from the previous week but up 16.83 percentage points year on year. Small- and medium-granule urea output was approximately 1.0337mn tonnes, down 14,900 tonnes, or 1.42%, from the previous week and down 22,100 tonnes, or 2.09%, year on year. The small- and medium-granule operating rate was approximately 76.86%, down 2.35 percentage points from the previous week and 4.04 percentage points year on year.

By production process, coal-based urea output was approximately 1.0683mn tonnes, down 12,200 tonnes from the previous week but up 45,500 tonnes year on year. Its operating rate was approximately 80.02%, down 2.22 percentage points from the previous week but up 0.16 percentage points year on year. Gas-based urea output was approximately 277,300 tonnes, down 14,000 tonnes from the previous week but up 800 tonnes year on year. Its operating rate was approximately 77.83%, down 3.90 percentage points from the previous week but up 5.49 percentage points year on year.

2.2 Market Inventories

Producers: Producer inventories stood at approximately 1.5629mn tonnes this week, down 112,800 tonnes, or 6.73%, from the previous week but up 477,100 tonnes, or 43.94%, year on year. Domestic producer inventories declined this week. Recent positive developments on both the cost and supply sides caused futures and spot prices to strengthen together, and producer offers rose noticeably. Although downstream buyers clearly resisted high-priced cargoes, the temporary improvement in market sentiment moved some material downstream. Concentrated maintenance in certain markets also reduced the risk of inventory accumulation at its source, resulting in an overall decline. Producer inventories increased in Jiangsu and Qinghai and declined in Anhui, Gansu, Hainan, Hebei, Henan, Heilongjiang, Hubei, Jiangxi, Inner Mongolia, Shandong, Shanxi, Shaanxi, Xinjiang, Yunnan and Chongqing.

Ports: Port inventories totaled 722,300 tonnes, down 312,700 tonnes, or 30.21%, from the previous week but up 258,300 tonnes, or 55.67%, year on year. Port inventories declined during the period, with cargo arrivals and departures occurring simultaneously. Producers are currently concentrating on export shipments, but increased regional maintenance reduced arrivals at ports. As shipping dates approached, cargo departures accelerated, causing port inventories to decline markedly. Major changes included departures of large-granule cargoes from Qinhuangdao, Rizhao, Yantai, Tianjin and Huanghua ports and small-granule cargoes from Longkou, Tianjin, Zhenjiang and Huanghua ports.

Large granules: Domestic port inventories of large-granule urea stood at 339,300 tonnes this week, down 100,700 tonnes, or 22.89%, from the previous week and down 64,700 tonnes year on year. Inventories declined during the week and remained below the corresponding level last year.

Small granules: Domestic port inventories of small-granule urea stood at 393,000 tonnes this week, down 202,000 tonnes, or 33.95%, from the previous week but up 176,100 tonnes year on year. Inventories declined during the week but remained above the corresponding level last year.

2.3 Compound Fertilizer Industry

The domestic compound fertilizer market remained weak, stable and locked in a stalemate this week. Quotations were steady, although actual transactions allowed flexible negotiation. Regional market divergence was evident, and bargaining between upstream and downstream participants remained pronounced.

As of Friday, the domestic 45% sulfur-based compound fertilizer price index stood at 3,379.17, while the 45% chloride-based index stood at 2,863.64.

On the cost side, raw material trends diverged. Urea prices rose before falling, temporarily providing some cost support from nitrogen, while phosphate and potash raw materials weakened. Overall cost support was limited and insufficient to drive sustained increases in compound fertilizer quotations.

On the supply side, the compound fertilizer operating rate stood at 32.99% this week, down 1.19 percentage points from the previous week. Producers adjusted operations flexibly according to orders. Some continued to ship against earlier prepaid orders. Inventory pressure varied, and some producers made concessions to major downstream customers to promote shipments.

On the demand side, downstream distributors maintained a strong wait-and-see stance and generally adopted low-inventory, buy-as-needed strategies. Large-scale concentrated stockpiling had yet to begin. Some distributors remained cautious and planned to replenish only after end-user fertilizer demand started. Producer quotations remained relatively stable, but concessions on actual transactions and order-by-order negotiations were widespread, leaving the market outwardly stable but underlyingly weak.

Overall, weak cost support, poor demand follow-through and routine sales concessions are dominating the market. Actual domestic compound fertilizer transaction prices may soften further next week, although shipments have room to improve. Attention should be paid to the progress of autumn fertilizer distribution at the grassroots level and changes caused by raw material price fluctuations.

2.4 Melamine Industry

The domestic melamine market recorded localized price increases this week, with pronounced regional divergence. On the cost side, raw material urea prices rose significantly. Combined with maintenance shutdowns at some production units in Henan, higher costs and tighter availability produced dual support. Producers became more willing to hold firm, and some tentatively raised ex-factory quotations.

On the supply side, the melamine operating rate stood at 54.14%, up 3.37 percentage points from the previous week. Plant operations underwent regional adjustments. Maintenance in northern production regions reduced spot circulation and tightened locally available supply. Other producers maintained production schedules based on demand, resulting in clear differences in spot inventories. Producers undergoing maintenance steadily delivered pending orders, while those not undergoing maintenance faced relatively high inventory pressure. Most prioritized existing orders and showed limited willingness to release additional spot material. Differences in regional plant operating status further widened the supply gap between northern and southern markets.

On the demand side, mixed performance created a supply-demand mismatch between northern and southern markets. Severe weather previously restricted operations at downstream panel, impregnated-paper and other end-user plants in southern China, temporarily weakening demand. Supply reductions were concentrated mainly in northern production regions, widening the regional supply-demand divergence. New-order transactions and inventory pressure differed significantly among producers in different regions. No uniform market quotation emerged, and producers negotiated flexibly according to their shipments and inventories.

Overall, bullish and bearish factors remain intertwined. Industry operating rates may recover and additional supply could weigh on the market. Conversely, producers retain a reasonable volume of pending orders, while high urea prices continue to provide cost support. The domestic melamine market is expected to remain firm next week, with producers continuing to adjust quotations flexibly according to inventories and shipment schedules.

2.5 International Market Quotations

FOB prices for Chinese bulk small-granule urea were USD 355.01-365.01/tonne, down USD 10-15/tonne. FOB prices for Black Sea small-granule urea were USD 375.01-385.01/tonne, with the low end up USD 5/tonne and the high end down USD 15/tonne. FOB prices for Baltic small-granule urea were USD 370.01-380.01/tonne, with the low end up USD 5/tonne and the high end down USD 15/tonne. FOB prices for Middle Eastern small-granule urea were USD 420.01-440.01/tonne, up USD 15/tonne. CFR prices for small-granule urea in Brazil were USD 415.01-420.01/tonne, with the low end up USD 5/tonne. Indian delivered prices were USD 390.01-394.01/tonne, unchanged from the previous week.

FOB prices for Iranian large-granule urea were USD 330.01-345.01/tonne, with the high end up USD 10/tonne. FOB prices for Egyptian large-granule urea for Europe were USD 505.01-510.01/tonne, up USD 5/tonne. CFR prices for large-granule urea in Brazil were USD 455.01-485.01/tonne, up USD 15-20/tonne. CFR prices for large-granule urea in Southeast Asia were USD 435.01-450.01/tonne, up USD 3-5/tonne. FOB prices for Chinese large-granule urea were USD 410.01-420.01/tonne, up USD 10/tonne.

03 Market Outlook

On the supply side, units that underwent maintenance earlier will gradually resume production, leaving room for the industry’s overall operating rate to recover and strengthening expectations of additional supply. Although maintenance may temporarily reduce availability, overall supply elasticity is considerable and the industry has a strong obligation to ensure supply. A large and sustained production reduction is unlikely, meaning that supply will continue to constrain price increases. Approximately three producers plan to conduct maintenance over the next three weeks, while 12-14 producers are expected to resume operations. Daily output is temporarily low but should rise gradually in the middle and latter parts of the month, with supply expected to loosen.

On the inventory side, producer and port inventories show regional divergence. Inventory pressure is relatively high in major production regions, while the industry’s overall destocking pace remains slow. As units resume production, inventories may accumulate again if downstream procurement falls short of expectations. Export cargo collection can temporarily divert some supply and marginally ease inventory pressure, but it cannot fundamentally change the overall inventory structure.

On the demand side, expectations for higher downstream compound fertilizer operating rates are concentrated in the latter part of the month or after the National Day holiday. Finished-product shipments are currently weak, and procurement of urea raw material is mainly limited to rigid demand. Current agricultural fertilizer consumption is limited and grassroots-level sales are subdued. Reserve demand will begin gradually in September and enter its procurement peak from October through February of the following year. Previous export orders are scheduled to be shipped by the end of the month. A new round of export quotas has yet to be issued, so export shipments may temporarily slow at the end of this month and during the following month.