In the first week of September, China's domestic urea market saw a sudden rally. Data show that on September 7, the mainstream delivered price of small‑grain urea in Shandong reached RMB 1,830/ton, up RMB 100 from the previous working day. Ex‑works quotations in major producing regions were adjusted to RMB 1,750–1,820/ton, with increases ranging from RMB 50 to 150/ton. Early the next morning, some producers raised prices again by RMB 50–110/ton.
The direct driver behind this round of urea price increases is coal. As of September 8, the flat price of 5,500 kcal/kg thermal coal at Qinhuangdao Port stood at RMB 996/ton, rising more than RMB 90 over the week. Port inventories in northern China continued to decline, while prices at both mining sites and ports moved up in tandem. Coal is the core feedstock for coal‑based urea, and changes in coal prices directly push up urea production costs. According to industry estimates, the cash cost of production using the fixed‑bed process in Shanxi has risen to RMB 1,800–1,810/ton; coal alone has already pushed urea production costs to near current market prices.
However, downstream acceptance of high prices remains limited. By midday on September 8, the market showed signs of high‑level stalemate, with the delivered price of small‑grain urea in Shandong easing back to RMB 1,800–1,820/ton. Rigid demand purchases were limited, and transactions slowed markedly. In the short term, coal is buoying urea prices, but the sharp price increases, coupled with insufficient demand follow‑through, leave room for possible pullbacks and volatility ahead.
On the international front, geopolitical conflicts since March this year continue to disrupt global fertiliser supply chains. Urea prices climbed to above USD 850/ton in April, the highest level since April 2022. Prices subsequently retreated from May highs, weighed by China's resumption of urea exports and expectations of a US‑Iran détente. But since July, renewed tensions in the Middle East, stronger procurement demand from Latin America, and persistently high energy costs in Europe have pushed international urea prices higher again. According to the weekly report from Argentina's Fertilizer Engineering Company, as of September 7, Middle East urea FOB prices had rebounded to USD 425–435/ton.
The World Bank, in its Commodity Markets Outlook, cautioned that if supply risks persist, average urea prices in 2026 could exceed the 2022 average of USD 700/ton, which would mark the second‑highest real price level since 1974.
A broader backdrop is the climate. The World Meteorological Organization confirmed on September 3 that an El Niño event has already emerged and is expected to intensify into a strong El Niño in the coming months. Forecasts indicate that the probability of El Niño persisting until February 2027 is close to 100%, with its peak expected around the end of this year.
FAO data show that the global cereal price index stood at 116.3 points in August, up 2.2% month‑on‑month and the highest since May 2024. Among the components, wheat rose 2.6% month‑on‑month and 15% year‑on‑year, while corn gained 2.5% month‑on‑month. Rising grain prices improve planting profitability, which in principle creates room for higher fertiliser prices.
