Amid a complex and volatile international landscape marked by escalating geopolitical conflicts, the global nitrogen fertilizer market is facing significant turbulence. However, China is poised to maintain a secure supply of nitrogen fertilizer throughout 2026, with urea production projected to hit a record high of 76.5 million metric tons, according to preliminary analysis from the China Nitrogen Fertilizer Industry Association (CNFIA).
Global Supply-Demand Dynamics Under Strain
On the supply side, the International Fertilizer Association (IFA) forecasts global ammonia production to grow by 1% in 2025 to 192 million metric tons, while urea production is expected to rise by 2% to a record 204.1 million metric tons. Global effective nitrogen fertilizer capacity (in terms of nitrogen) is projected to increase from 166.3 million metric tons in 2024 to 172.7 million metric tons in 2026, a 4% increase, driven largely by low-cost projects in the United States, Russia, Qatar, and Nigeria. However, the ongoing Middle East conflict is now casting doubt on these projections, with new capacity additions likely to fall short of expectations due to negative impacts on production in the region.
On the demand side, global fertilizer demand growth slowed in 2025, weighed down by falling grain prices and rising fertilizer costs. The IFA’s *Short-Term Fertilizer Outlook 2025–2026*, released in February 2026, indicates that global fertilizer consumption growth will remain below 1% for the 2025–2026 period, reaching approximately 209.4 million metric tons, with nitrogen consumption increasing across most regions.
Middle East Conflict Disrupts Global Urea Trade
The recent escalation of hostilities involving the United States, Israel, and Iran has entered a phase of substantive confrontation. Airstrikes and disruptions to shipping through the Strait of Hormuz are severely impacting natural gas supplies, production facilities, and logistics in major urea-exporting nations in the Middle East, particularly Iran and Egypt. This is triggering 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 is being directly constrained by the conflict. Major producers such as Saudi Arabia, Qatar, and the UAE face increased risk of supply disruptions due to the presence of US military forces. Reduced natural gas supplies from Israel to Egypt are indirectly affecting Egyptian urea production. The Strait of Hormuz, a critical maritime artery for Middle Eastern urea, is central to these disruptions, exacerbating global supply tightness.
Prior to the Middle East conflict, international urea prices were generally stable in the range of $400–450 per ton. Prices have since risen sharply, with reports now indicating levels exceeding $600 per ton.
China’s Raw Material Supply and Price Analysis
Coal: In 2026, China’s coal market is expected to remain broadly balanced, with modest price fluctuations. National raw coal output is projected at 4.86 billion tons, up 0.7% year-on-year—the slowest growth rate in a decade. Total coal demand is estimated at approximately 4.75 billion tons, a marginal increase of 0.6%. According to a CNFIA survey conducted on March 3, the average delivered price for anthracite lump coal to plants was RMB 959 per ton, up 2.35% year-on-year, while the average delivered price for bituminous coal was RMB 783 per ton, down 5.43%.
Natural Gas: China’s natural gas supply-demand situation in 2026 is heavily influenced by international geopolitics. According to analysis from Shichuang Consulting, two scenarios could unfold. If the conflict ends quickly and the Strait of Hormuz reopens, the impact will be limited. However, if the conflict persists and the strait remains closed, it will pose significant challenges to China’s gas-based nitrogen fertilizer production, warranting close attention.
Spring 2026 Nitrogen Fertilizer Supply-Demand Forecast
Supply: By the end of 2025, China’s urea production capacity is estimated at 72.45 million metric tons per year, an increase of 2.86 million metric tons or 4.1%. According to CNFIA statistics, 2026 remains a period of concentrated new project launches for the nitrogen fertilizer industry, with an estimated 5.07 million metric tons of new annual urea capacity scheduled to come online. This would bring China’s total urea production capacity to 77.5 million metric tons per year. Based on current average operating rates and daily output figures, urea production is expected to reach a record 76.5 million metric tons in 2026.
Agricultural Demand: According to agricultural authorities, national agricultural fertilizer demand for 2026 is estimated at approximately 49.94 million metric tons, including 25.72 million metric tons of nitrogen fertilizer, 11.10 million metric tons of phosphate fertilizer, and 13.12 million metric tons of potash fertilizer. For the spring plowing season specifically, demand is projected at 23.42 million metric tons, including 10.27 million metric tons of nitrogen fertilizer. Nitrogen fertilizer demand for agricultural use is expected to remain largely flat compared to the previous year.
Non-Agricultural Demand: Experts forecast that demand for urea in non-agricultural sectors in 2026 will be approximately 23 million metric tons. This includes an estimated 11.5 million metric tons for wood-based panel production (an increase of 400,000 metric tons) and steady but slightly declining demand for denitrification (DeNOx) urea applications in vehicles, power plants, and marine and off-road equipment. Total urea demand (agricultural and non-agricultural) for 2026 is estimated at around 66 million metric tons.
Conclusion and Recommendations
Based on comprehensive analysis, domestic nitrogen fertilizer resources will be ample during the spring plowing season, and the overall nitrogen fertilizer supply for the year is secure. If raw material prices remain stable, urea prices during the spring plowing period are expected to stabilize.
To ensure the success of nitrogen fertilizer supply efforts for the new year, CNFIA President Gu Zongqin emphasized several key priorities:
-
Ensure the completion of nitrogen fertilizer production tasks for the spring plowing season and the full year.
-
Increase the proportion of high-efficiency fertilizer products.
-
Maintain stable nitrogen fertilizer market prices throughout the spring plowing season and the year.
-
Arrange export volumes appropriately and in a timely manner.
