Despite tepid domestic consumption, China’s urea market witnessed an upward price trajectory in the week ending July 15, 2025, driven by a combination of supply-side adjustments and export demand. Regional dynamics and product-specific trends emerged, and the market entered a transitional phase with mixed signals for the near term.
Market Performance
Urea prices increased nationwide last week, though regional discrepancies persisted. Prices declined in the Northeast and Northwest regions due to diminished agricultural demand. Summer top-dressing fertilization activities had largely concluded in northeastern China, and Xinjiang experienced oversupply and weak local demand, which led to price drops. Conversely, prices climbed in regions such as Jiangsu, Anhui, Guangdong, and Guangxi due to ongoing agricultural demand. By Friday, ex-factory prices were as follows:
Northern China: ¥1,780–1,820/ton (up slightly from the previous week).
Shanxi: As low as ¥1,640/ton (stable to slightly lower)
Xinjiang: ¥1,500–1,650/ton (local sales; down by ~ ¥50/ton week over week)
Jiangsu and Anhui: Small-Granule Urea: ¥1,810–1,930/ton (up by ~ ¥30–40/ton WoW)
Guangdong and Guangxi: ¥1,850–1,930/ton (up by ~ ¥20–30/ton WoW).
Nationwide, wholesale urea prices hovered around ¥1,800–1,900/ton, reflecting a mixed regional landscape. Large-granule urea prices remained firm, supported by export orders. In contrast, small-granule urea prices faced pressure from weakening domestic demand.
Supply and Production Dynamics
Domestic urea production increased slightly last week, with plants operating at 83.4% capacity and generating a daily output of 196,900 tons. This represents a 1,900-ton increase from the previous week and a substantial 16,900-ton increase from last year. As of July 11, daily production reached 197,100 tons, indicating sustained supply levels. Reduced production in certain regions (e.g., Xinjiang) led to tighter inventories, especially for large-granule urea, which saw strong export demand. Total weekly production was 1.378 million tons, an increase of 1.3% WoW and 9.4% YoY.
Industrial Demand: Weather-Induced Sluggishness
High temperatures and humidity hindered industrial consumption, particularly in downstream sectors such as plywood and melamine manufacturing. The operating rate of compound fertilizer plants dipped by 0.25 percentage points week over week to 28.58%, though it remained 0.49 points higher than the prior year. Subdued demand limited price support for small-granule urea, which relies more on industrial applications. Weekly industrial urea consumption was estimated at ~520,000 tons, down 2.5% week over week (WoW) but 4.1% higher year over year (YoY).
Agricultural Demand: Seasonal Shifts
Summer fertilization demand varied by region. While the top-dressing season was coming to an end in Northeast China, other northern regions experienced price hikes due to increased agricultural activity. The national summer fertilization peak is expected to taper off by late July. The next surge in demand is anticipated in September–October for autumn planting. As of last week, agricultural urea consumption accounted for ~65% of total demand. This figure is down 5% week over week (WoW) but up 8% year over year (YoY) due to increased acreage in key regions.
Market Outlook: Balancing Contradicting Forces
The urea market faces short-term challenges as agricultural demand decreases and industrial consumption remains lackluster. However, two key differentiators are expected:
- Large-Granule Urea: Tight supply, driven by production cuts (e.g., maintenance shutdowns in Shanxi) and robust export orders (up 12% year over year as of June), may underpin prices, particularly in regions with export exposure.
- Small-Granule Urea: Weakening agricultural demand, coupled with limited industrial uptake, will likely pressure prices.
Key exporters (e.g., Shandong and Hebei) are expected to maintain price stability. In contrast, inland regions (e.g., Xinjiang and Shanxi) may face further price declines if local demand fails to improve.
In summary, China’s urea market is navigating a complex balance between supply constraints favoring large-granule urea and weakening domestic demand affecting small-granule urea. Export volumes (currently ~250,000 tons per month, up 15% year over year) and the pace of industrial recovery (dependent on weather conditions and downstream sector activity) will be pivotal indicators for future price movements. Market participants should monitor regional demand shifts, export trends, and production adjustments to anticipate near-term fluctuations.
Key Data Highlights:
- Prices: Nationwide average: + ¥20-30/ton week over week (WoW);
- Xinjiang: down ¥50/ton WoW.
- Production: +1.3% WoW; +9.4% YoY (daily output: 196,900-197,100 tons).
- Demand: Industrial: -2.5% week over week (WoW), +4.1% year over year (YoY); agricultural: -5% WoW, +8% YoY.
- Exports: +12% year over year (YoY) (June data); +15% year to date.
