Against a backdrop of complex and volatile international dynamics and escalating geopolitical conflicts, the world has entered a period of heightened risk and turbulence. This environment is not only delivering sharp shocks to the global economy but also exerting significant influence on international fertilizer prices. The escalating conflict between the US, Israel, and Iran has led to tight supplies and surging prices for key fertilizer categories such as urea and phosphates on global markets. In contrast, through measures including capacity expansion and policy adjustments, China has ensured adequate fertilizer supply and stable prices during the spring plowing season, laying a solid foundation for the year’s agricultural production.
Urea: Global Prices Surge While Domestic Supply Remains Stable
Recent substantive confrontations involving the US, Israel, and Iran—including airstrikes and disruptions to shipping through the Strait of Hormuz—have severely impacted natural gas supplies, production facilities, and logistics for major urea-exporting countries in the Middle East, such as Iran and Egypt. This has triggered a reshaping of international urea prices and trade flows.
As the world’s largest urea-exporting region, the Middle East ships approximately 20 million metric tons annually. Iran, the region’s top urea exporter, accounts for 40–45% of this total, and its export capacity has been significantly constrained by the direct impact of the conflict. Meanwhile, major Middle Eastern urea producers like Saudi Arabia, Qatar, and the UAE face escalating risks of supply disruption due to the presence of US military forces. Reduced natural gas supplies from Israel to Egypt are further indirectly affecting Egypt’s urea production. The Strait of Hormuz, a critical maritime outlet for Middle Eastern urea, is seeing shipping disruptions that directly exacerbate global supply tightness. According to monitoring, international urea prices, which had been stable at $400–450 per ton before the conflict escalated, have risen for several consecutive days, recently surpassing $600 per ton to hit a new high.
Domestically, according to the China Nitrogen Fertilizer Industry Association, 2026 remains a period of concentrated new project launches for China’s nitrogen fertilizer industry. An estimated 5.07 million metric tons of new annual urea production capacity is scheduled to come online this year, which would bring China’s total urea production capacity to 77.5 million metric tons per year. Based on current operating rates and daily output figures, China’s urea production is expected to continue setting records in 2026, potentially reaching 76.5 million metric tons. Industry analysts suggest that given the current domestic capacity, output, and inventory levels, nitrogen fertilizer resources will be ample during the spring plowing season, and the year’s nitrogen fertilizer supply is secure. If raw material prices remain stable, urea prices are expected to maintain stable operation during the spring plowing period.
Phosphates: Sulfur Supply Under Pressure, Market Remains Steady
The phosphate fertilizer market is also being affected by the transmission effects of geopolitical conflict, with tight supplies of the key raw material sulfur becoming a central focus. Sulfur is a critical component in the production of monoammonium phosphate (MAP) and diammonium phosphate (DAP). Its global supply pattern is highly concentrated, with the Middle East contributing approximately 42% of global production and over 45% of global trade. The Strait of Hormuz handles 44% of the world’s sulfur seaborne trade. The conflict has disrupted sulfur shipping, keeping international sulfur prices high and directly increasing downstream phosphate fertilizer production costs. While the phosphate and phosphorus chemical indices have recently experienced fluctuations, they have generally remained resilient.
Currently, as China enters the critical period of preparing fertilizers for spring plowing, phosphate and compound fertilizer enterprises are generally operating at high utilization rates, creating rigid and substantial demand for upstream raw materials such as sulfur and sulfuric acid. Industry insiders have cautioned about the risk of market panic spreading from the sulfur segment downstream to phosphate fertilizers and even the broader agricultural sector. Despite international uncertainties and strong raw material cost support, domestic phosphate and compound fertilizer enterprises are generally operating smoothly, focusing on fulfilling outstanding orders and maintaining normal operations to ensure fertilizer supply for spring plowing. As the spring plowing season approaches, grassroots market demand will gradually be released. Some rigid demand gaps remain, and expectations for market restocking are strong. Guided by ongoing policies, the DAP market is expected to continue its steady and resilient performance in the near term.
Potash: Stable Market, Reserve Releases Anchor Expectations
According to the latest data from the China Inorganic Salts Industry Association, the domestic market for potassium chloride (MOP) remained generally stable this week, with mixed but limited price movements. For major domestic producers, the ex-factory price for 60% powder and crystal MOP from Qinghai Salt Lake and Qinghai Zangge remained at RMB 2,800 per ton, unchanged from the previous week. The average ex-factory price for 57% powder (bulk) from smaller Qinghai producers held steady at RMB 2,400 per ton. In the port market, the policy price for 60% Lao white powder (pickup) was RMB 3,050 per ton, flat week-on-week, while the non-mainstream market average was RMB 3,300 per ton, down RMB 50 per ton. The policy price for 62% white potassium (pickup) was RMB 3,150 per ton, with the non-mainstream market average at RMB 3,625 per ton, up RMB 25 per ton. The policy price for 60% red granular potassium (pickup) was approximately RMB 3,300 per ton, with the non-mainstream market average at around RMB 3,325 per ton, down RMB 25 per ton. For border trade, the policy price for 62% white potassium (delivered by rail) was RMB 3,150 per ton, while the non-mainstream market average was RMB 3,375 per ton, down RMB 100 per ton.
On the supply side, industrial demand for potassium chloride has increased as spring plowing needs are gradually released. While international markets have seen some price fluctuations due to the US-Israel-Iran conflict, domestic potassium chloride prices are expected to remain generally stable in the near term, guided by government policies aimed at ensuring supply and price stability.
Outlook: Building a Diversified System to Manage a “Double-Edged Sword”
Facing a complex international market environment, China continues to implement policies to ensure supply and stabilize prices, safeguarding the stable operation of its fertilizer market. On March 2, the China Phosphate and Compound Fertilizer Industry Association and the China Agricultural Means of Production Association jointly issued a statement calling on the entire industry to fulfill its responsibility for ensuring supply and stabilizing prices, and to accept public oversight. The statement explicitly required phosphate fertilizer producers to maximize production and shipments, and distributors to sell at fair prices, with strict action to be taken against violations such as hoarding, price hikes, and tying arrangements.
On March 4, the two associations again jointly announced that 11 potash supply companies would publicly disclose their sales volumes and prices. They also required relevant reserve enterprises to gradually release their reserve inventories starting in March 2026, in accordance with national fertilizer reserve management requirements, to fully meet the concentrated fertilizer demand during spring plowing.
Industry insiders note that since late 2025, the national government has introduced a series of policies to ensure supply and stabilize prices, covering production, distribution, and reserves. Policy guidance remains a key force stabilizing the market, and the likelihood of a total loss of control in China’s fertilizer market is relatively low.
It is worth noting that while fertilizer supplies from sources such as Iran offer high cost-performance advantages, they also carry increasing geopolitical risks, acting as a “double-edged sword” for China’s fertilizer imports. In response, industry insiders recommend that relevant companies closely monitor shipping conditions in the Persian Gulf and developments in major production regions like Iran, and establish contingency plans for extreme supply cut-off scenarios. They should accelerate the diversification of import sources, increasing procurement from regions such as Canada, Central Asia, and East Asia. Additionally, exploring collaboration with domestic refining and chemical enterprises to improve the utilization rate of domestically recovered sulfur would help build a robust and resilient resource security system, buffering the impact of international market volatility.
