Seaborne urea prices have found a floor near $410-440/t CFR in recent weeks, down from the crisis peaks above $700/t in March when the effective closure of the Strait of Hormuz stranded about a third of globally traded urea supply. The Trading Economics benchmark settled at $451/t on July 24, up 21% over the past month but still roughly flat year-on-year.
The correction reflects a multi-layered normalization. QatarEnergy restarted urea and ammonia production at its QAFCO complex (5.8 Mt/yr capacity, or 14% of global trade) in early May after shutting down in March when its LNG facilities came under attack. ICIS reports that plants in Oman and the UAE are running well, Bahrain’s GPIC is at reduced rates, and Omani ports remain the most reliable origin for Hormuz-free loading. Saudi operating conditions are still unclear.
The single biggest supply-side shift has been China’s return to the export market. Beijing issued export quotas to individual producers in late May with minimum price floors of $660/t FOB for prilled and $670/t FOB for granular urea, well above the domestic equivalent of under $300/t FOB. Argus forecasts Chinese urea exports of 6.5 Mt in 2026, up from 4.6 Mt in 2025. CRU puts the figure at 5.9 Mt. CIQ customs inspections remain in place to prevent fertilizer misdeclaration.
India, the world’s largest urea importer with a structural gap of 7-10 Mt/yr between domestic demand (~30 Mt) and production (~22 Mt), has anchored the price discovery. An IPL tender for 2.5 Mt in April drew crisis-level bids near $935-959/t CFR. But the NFL tender floated June 8 cleared at $444.9-449.3/t CFR, roughly half the April peak. Analysts at Price-Watch.ai attribute the collapse to easing panic premiums, normalized Chinese supply, and lower Hormuz freight premia. The India Meteorological Department has revised the monsoon forecast to 90% of the long-period average, paring fertilizer requirements slightly.
Brazilian importers are beginning to re-enter the market ahead of the Safrinha purchasing season, providing the first meaningful demand signal after weeks of subdued buying. The International Fertilizer Association’s (IFA) annual conference in Monaco in early July was dominated by supply security concerns despite the price normalization.
Natural gas feedstock dynamics remain supportive of stable production. The IEA’s Q3 2026 Gas Market Report notes that LNG flows through Hormuz have begun recovering after the June US-Iran interim agreement, though volumes remain well below pre-conflict levels. The agency expects the Strait to fully reopen in Q3 2026 with Qatari and UAE deliveries ramping up progressively between July and October.
Looking forward, the market faces competing forces. Argus expects prices to stay near current levels through Q3 as Chinese exports and Middle East supply improvements outweigh seasonal demand. New production from Nigeria and Russia hitting the export market in November-December could push prices lower into year-end. But the upside risks are real: China could re-impose export restrictions after August as it did in October 2025, removing 2-5 Mt from global supply. And Hormuz disruption remains the principal wildcard for H2 2026.
The bull case: Chinese export quotas are removed or tightened after August, removing 2-5 Mt of supply from global trade, while Hormuz recovery stalls. This scenario could push India’s import prices back above $700/t CFR. The bear case: Hormuz fully normalizes, China maintains quotas through year-end, and new Nigerian and Russian capacity adds supply into a seasonally weak Q4, testing the $350-400/t CFR floor. The base case: a relatively balanced Q3 at $410-460/t CFR, with modest softening into Q4 as new supply arrives, but no return to pre-crisis $350-400/t levels while the geopolitical risk premium persists.
The window for locking in Q4 and Q1 2026-27 coverage is narrowing. Chinese export quotas are the single most impactful variable: if Beijing tightens after August as it did in 2025, the global market loses 2-5 Mt of supply almost overnight. Buyers should target term contracts in the $420-450/t CFR range for Indian Ocean delivery, with volume optionality to call additional tonnes if prices soften. For US buyers, domestic retail at $714/t still carries a 9% year-on-year premium — consider pre-buying fall ammonia/urea requirements before the seasonal winter demand pickup. The key risk to manage is not price but availability: Middle East supply remains unpredictable, and Omani cargoes are the only reliable Hormuz-free origin. Diversify procurement across Black Sea, Egyptian, and Southeast Asian origins. Set price triggers: buy on any dip below $400/t CFR for a minimum of 30% of H1 2027 requirements.