Global urea prices are searching for a floor after the Q2 spike, with the benchmark CFD tracking at $452/t as of July 23, up 21.3% over the past month but still 0.2% below year-ago levels. The rebound from May's correction reflects renewed supply concerns around the Strait of Hormuz and the Russia-Ukraine conflict, where Ukrainian drone operations have challenged vessel flows out of Russian Black Sea ports.
Where prices sit across the curve. The Trading Economics benchmark hit $452/t on July 23, recovering from a mid-May slide when improved Middle East vessel traffic and the seasonal post-spring demand lull pulled prices lower. The World Bank's March peak of $726/t for granular urea now looks like a spike driven by the initial Hormuz closure rather than a new plateau. But the floor is forming higher than pre-crisis levels: early-July spot quotes of $410-440/t CFR major import markets are roughly double the pre-2021 range, and China has effectively set a new export floor of $420/t FOB for prilled urea and $430/t FOB for granular.
The China factor. Beijing's export control regime remains the single most powerful policy lever in the global urea market. China — normally one-third of global supply — saw exports plunge 86% in the first half of 2024 after tightening. While some relaxation has occurred in 2026 (international prices corrected in June to $572/t), the government is still managing export volumes through a complex registration and quota system. Argus reports that Chinese export volume is expected to remain below historical norms through at least the end of 2026, with the government prioritizing domestic agricultural affordability ahead of international market share.
Supply-demand math is structurally bearish on paper but geopolitically tight in practice. Global urea demand reached about 178.8 million metric tonnes in 2025, growing at roughly 0.9% per year. Capacity, by contrast, is running at 240-242 Mt — roughly 35% above consumption. On paper this suggests a massive glut. But effective supply is far lower: Chinese export curbs remove 5-10 Mt from accessible trade, Russian flows face insurance and shipping constraints, and Middle East production out of Iran and parts of the Gulf is disrupted by the ongoing conflict.
India is the demand bellwether, and kharif season is the moment. India's government told Lok Sabha on July 24 that urea availability stands at 163.78 lakh metric tonnes against a requirement of 109.40 LMT for the ongoing Kharif 2026 season — a comfortable buffer. But the government also acknowledged that 85% of natural gas used in domestic urea manufacturing is imported, linking Indian production costs directly to global LNG and gas prices, which remain elevated due to the Iran war and European demand. Indian urea imports in June cost $572/t, down 40% from the May spike but still 45% above the year-ago level of $395/t.
Analyst views diverge on the near-term direction. Agricultural Research Center (ARC) warns that urea prices could add $50-150/t over the next two weeks as demand returns in South America and the Northern Hemisphere for late-summer application. The bullish case rests on renewed Hormuz traffic restrictions pushing bunker fuel to $777/t, combined with Russian vessel flow challenges from Ukrainian drone operations in the Black Sea. The bearish case: global capacity overhang is real, and the IFA projects nitrogen consumption growth below 1%, meaning any sustained reopening of trade routes would flood the market.
Bull, bear, and base. Bull case ($500+/t): Strait of Hormuz stays restricted through August, Russia-Ukraine drone warfare escalates, and China keeps the export spigot tight. Bear case ($370-400/t): A diplomatic resolution to the Iran conflict reopens Hormuz, Chinese exports accelerate under loosened quotas, and South American demand normalizes without panic buying. Base case ($420-470/t through Q3): Current conditions persist — partial Hormuz disruption, controlled Chinese exports, and structural demand growth absorbing available supply at elevated but not crisis-level prices.
Fertilizer buyers should be locking in Q3 coverage at current levels rather than waiting for a correction back to $350-400/t. The risk asymmetry favors upside: a Hormuz escalation or further Russia-Ukraine disruption to Black Sea ammonia and urea trade could add $100+/t within days. The downside is capped by China's export floor at $420/t FOB and the fact that Indian and Brazilian demand is structurally inelastic during the planting window. Key catalysts: any Indian tender for October-December delivery (signals procurement confidence), Chinese export quota announcements, and water levels at the Panama Canal, which affects ammonia and urea shipments from the US Gulf to Asia. For buyers with storage capacity, consider pre-positioning for Q4 at the lower end of the $410-440 CFR range.