India’s domestic urea offtake surged to 3.42 million metric tons (t) in June, marking the highest monthly sales volume for the month on record. The strong demand further depleted stocks as domestic production declined year-on-year (y-o-y) in comparison with June 2024.
The June 2024 sales eclipsed the previous record of 3.36 million t set in June 2020 and represented a 12% increase over the 3.052 million t sold in the same month last year. Provisional data also indicate a record quarterly urea offtake for the April-June period, totaling 6.99 million t—up from 6.23 million t in 2024 and surpassing the previous high of 6.48 million t in 2020.
Monsoon Rains Drive Demand
The surge in urea sales has been largely attributed to robust monsoon rains this season. The monsoon arrived on 24 May—the earliest onset since 2009—and nationwide rainfall in June exceeded the historical average by 9%. Demand is expected to remain strong in July, with India’s meteorological department forecasting above-normal precipitation at over 106% of the long-term average.
Production Lags Behind Consumption
Despite rising demand, domestic urea output fell to 2.36 million t in June, lower than production levels in the same month over the past two years but slightly higher than May’s 2.24 million t. Indian urea production has struggled to match the record levels achieved in the 2023-24 fertilizer year, with output lagging since August-September 2023.
Stocks Decline Amid Supply-Demand Imbalance
The combination of heightened sales and constrained production has further eroded India’s urea inventories. Stocks were estimated at 6.6 million t as of 1 July, a sharp decline from approximately 11 million t a year earlier. India has faced challenges in rebuilding inventories ahead of the peak summer season after a series of import tenders failed to secure sufficient volumes before the monsoon. State-owned importer RCF is set to close a tender on 7 July, seeking 2 million t of urea for delivery across both coasts.
Outlook
With monsoon activity expected to remain above average in the coming weeks, urea demand is likely to stay elevated. However, the persistent gap between domestic production and consumption may necessitate additional imports to stabilize supplies and prevent further stock drawdowns in the critical kharif season.
