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India, Russia, and China are the leading exporters of urea globally, collectively accounting for a majority of international shipments, while Brazil, the United States, and India—acting as both major exporter and importer—top the list of importers due to domestic agricultural demand. Urea prices have remained sensitive to energy costs and regional supply constraints, influencing trade flows across key markets. Recent years show increased export diversification from Russia amid sanctions, with growing shipments to Africa and Southeast Asia, while Indian exports have expanded steadily in response to elevated global urea prices and capacity additions.
Urea Market Dynamics Intelligence (July 29, 2026)
I. Price Trends
1. Domestic Spot Market
- Main Regional Quotations: On July 29, China’s urea market continued its downward trend, with mainstream regional quotations declining by RMB 10–40 per ton.
- Shandong Province: Small- and medium-grain urea ex-factory prices ranged from RMB 1,700 to 1,810 per ton; Linyi delivery price stood at approximately RMB 1,760 per ton, and Heze delivery price at around RMB 1,750 per ton.
- Henan Province: Small- and medium-grain urea ex-factory reference prices ranged from RMB 1,700 to 1,740 per ton; delivery prices in Shangqiu were RMB 1,760–1,790 per ton.
- Shanxi Province: Small- and medium-grain urea ex-factory quotations ranged from RMB 1,650 to 1,670 per ton; large-grain urea prices were RMB 1,780–1,790 per ton.
- Northwest Region: In Inner Mongolia, small-grain urea ex-factory prices ranged from RMB 1,580 to 1,760 per ton; in Xinjiang’s northern region, small-grain urea ex-factory prices were RMB 1,480–1,560 per ton, while southern Xinjiang prices stood at RMB 1,600–1,650 per ton.
- Price Indices: As of July 20, China’s Urea Wholesale Price Index (CNPI) stood at 1,840.06 points, down 1.45% week-on-week; the Retail Price Index (CNRI) was 1,939.96 points, down 0.86% week-on-week.
2. Futures Market
- On July 28, the main urea futures contract (UR2609) closed at RMB 1,749 per ton, up RMB 9 per ton from the previous trading day’s settlement price; however, intraday volatility remained significant (low: RMB 1,722 per ton; high: RMB 1,747 per ton).
- Open interest totaled 259,100 contracts, with a net change of -1,174 contracts, indicating intensified long–short positioning and heightened market uncertainty.
II. Supply–Demand Fundamentals
1. Supply Side
- Production & Operating Rates:
- On July 24, national daily urea output reached 214,400 tons, with an operating rate of 85.47%; on July 15, daily output was 217,400 tons, with an operating rate of 94.03%. Although operating rates have fluctuated recently, they remain broadly elevated.
- Total 2026 urea production is projected at 76.5 million tons, representing a 6.2% year-on-year increase. Newly commissioned capacity is concentrated in the Northwest region, primarily utilizing low-cost water-coal-slurry technology; producers exhibit low willingness to suspend operations.
- Inventory Pressure:
- As of July 24, total domestic urea enterprise inventory stood at 1.1336 million tons, up 4.4% week-on-week; port inventory reached 179,000 tons, up 3,000 tons week-on-week. High inventory levels constitute the core factor suppressing prices.
2. Demand Side
- Agricultural Demand:
- In July, top-dressing demand for crops such as maize is gradually emerging; however, overall demand momentum remains sluggish, providing limited price support.
- Extreme weather events—including droughts or floods—may impact cultivated area, further weakening agricultural demand.
- Industrial Demand:
- Compound fertilizer enterprises maintain low operating rates (only 31.1% in early July), purchasing urea on a just-in-time basis; thus, industrial demand fails to provide meaningful price support.
- Export Demand:
- Export quotas were lifted at the end of May; however, international urea prices have declined (e.g., Baltic small-grain urea prices range from USD 360–385 per ton, up USD 15–20 per ton week-on-week). Narrowing domestic–international price spreads have squeezed export margins, resulting in slow vessel loading progress.
III. Costs & Profitability
1. Raw Material Costs:
- Anthracite coal delivered to plants averages RMB 1,150 per ton; gasification-grade bituminous coal costs RMB 900 per ton—providing strong cost-based price support.
- Fixed-bed process producers are now operating at a loss, while water-coal-slurry process operators barely break even; consequently, factories show limited willingness to further cut prices.
2. Industry Profitability:
- In 2025, nitrogen fertilizer manufacturing sector profit totaled approximately RMB 2 billion, down 75% year-on-year; sales profit margin stood at only 1.0%, and the proportion of loss-making enterprises reached 47.1%. No marked improvement in operational pressure is expected in 2026.
IV. Market Sentiment & Outlook
1. Short-Term Sentiment:
- Bearish sentiment has intensified, driven by high inventories, weak demand, and lackluster export performance. Some producers have adopted price-cutting promotions, yet new order volumes remain poor.
- The futures market saw increased volume and open interest accompanied by price declines, reflecting diminishing investor confidence in near-term fundamentals.
2. Medium-Term Outlook:
- Price Range: Urea prices are expected to remain in a narrow consolidation range throughout Q3 2026—characterized by insufficient upward momentum but limited downside risk—with mainstream prices likely trading within RMB 1,700–1,800 per ton.
- Key Variables:
- Export Policy: Further relaxation of export quotas or rebound in international prices could offer temporary sentiment support.
- Inventory Digestion: With agricultural demand waning after August, failure to meaningfully reduce enterprise inventories will re-expose supply–demand mismatches.
- Cost Support: A sharp decline in coal prices could erode cost-based floor support; however, current coal price fluctuations remain modest.
3. Risk Alerts:
- Monitor closely: (1) impacts of extreme weather on agricultural demand; (2) timing and scope of export policy adjustments; and (3) fund flows and positioning shifts in the futures market.
Urea is a white, crystalline solid at room temperature, odorless and highly soluble in water; it melts at approximately 133 °C and decomposes before boiling. It is a simple organic compound classified as a carbamide and the simplest amide of carbonic acid. Urea is primarily used as a nitrogen-release fertilizer in agriculture, but also serves as a key intermediate in the production of urea-formaldehyde resins, melamine–urea–formaldehyde copolymers, and various adhesives and binders. Its applications span agrochemicals, polymer manufacturing (especially thermosetting resins), and selective catalytic reduction (SCR) systems for diesel exhaust treatment.
Agriculture usesMore than 90% of world industrial production of urea is destined for use as a nitrogen-release fertilizer. Urea has the highest nitrogen content of all solid nitrogenous fertilizers in common use. Therefore, it has the lowest transportation costs per unit of nitrogen nutrient.In the soil, it hydrolyses back to ammonia and carbon dioxide. The ammonia is oxidized by bacteria in the soil to nitrate, which can be absorbed by the plants. Urea is also used in many multi-component solid fertilizer formulations. Urea is highly soluble in water, therefore, very suitable for use in fertilizer solutions (in combination with ammonium nitrate: UAN), e.g., in ‘foliar feed’ fertilizers. For fertilizer use, granules are preferred because of their narrower particle size distribution, an advantage for mechanical application. The most common impurity of synthetic urea, biuret, must be present at less than 2 percent of the time, as it impairs plant growth.
The urea molecule is planar in the crystal structure, but the geometry around the nitrogens is pyramidal in the gas-phase minimum-energy structure. In solid urea, the oxygen center is engaged in two N-H-O hydrogen bonds. The resulting dense and energetically favourable hydrogen-bond network is probably established at the cost of efficient molecular packing: The structure is quite open, the ribbons forming tunnels with square cross-section. The carbon in urea is described as sp2 hybridized, the C-N bonds have significant double bond character, and the carbonyl oxygen is basic compared to, say, formaldehyde. Urea's high aqueous solubility reflects its ability to engage in extensive hydrogen bonding with water.Urea dissolved in water is in equilibrium with the isomeric ammonium cyanate. The resulting activity of the isocyanic acid ions do result in carbamylation (formation of long-chain carbamides, liberating ammonia molecule as byproduct) of proteins if proteins are present in the solution too. The carbamylation reaction may occurs at elevated temperatures even without catalysts. At room temperature, water solutions of urea are prone to same decomposition reaction in the presence of urease. The isomerization of urea in solution at room temperature without catalysts is a slow process (taking days to reach equilibrium), and freshly prepared, unheated solutions had negligible carbamylation rates.Urea can react with alcohols to form urethanes and react with malonic esters to make barbituric acids.
This chemical is included in Basic Chemicals - Fertilizers. See more about what is Urea and Urea SDS information.
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