Urea Monthly: Expectations Repairing Again After a Reality-Driven Price Gap (202610)

01 Urea Market Analysis

1.1 Urea Market Price Analysis

In October, the domestic urea market showed an overall weak posture: it probed for a bottom during a transitional demand gap and then, buoyed by export news, market sentiment gradually stabilized and repaired. Early in the month during the National Day holiday the market was fairly quiet, with most participants awaiting the results of the Indian tender; once the tender opened, however, the bullish expectations were disappointed — the awarded price was far below market expectations and global supply was also far above the tendered volume. With the market in a pessimistic mood over the failed export expectations and the domestic demand gap, compounded by maintenance units gradually coming back on stream and the core contradiction of high daily output against weak demand intensifying, the urea market kept probing lower. From late in the month, because the low Indian tender price prompted resistance from domestic suppliers and actual supply fell short of the tendered volume, the market expected India to tender again shortly to make up the shortfall; combined with resonance from news that binary fertilizer exports might be liberalized, the bearish mood in the urea market began to ease, low-priced business improved somewhat, and market prices gradually stabilized and repaired. As time passed and prices fell, reserve enterprises' willingness to take cargo also gradually warmed; approaching month-end, with the combined support of export expectations and expectations of reserve procurement starting, the market began to repair upward. Going forward, the market will mostly watch the results of the new Indian tender and the pace at which domestic demand starts.

Based on FDD data calculations: as of October 30, 2026, the domestic urea small granular price index was 1,780.45, up 8.65% year on year.

At the beginning of the month, the market during the National Day holiday was supported reasonably well in sentiment by pre-holiday Indian tender news, but in the absence of futures guidance and with a cautious attitude most participants held steady and stood aside. After the holiday the market failed to carry over the pre-holiday mood; the core trigger was that the Indian tender result fell short of expectations, and the earlier bullish logic built on optimistic exports was revised. At the same time, autumn fertilization entered its closing stage, compound fertilizer operating rates were low, agricultural rigid demand weakened, while urea daily output and operating rates stayed high and gradually recovered, leaving supply relatively ample. With the demand off-season coinciding with failed export expectations, factories secured insufficient new orders, spot prices came under pressure and moved lower, and market sentiment shifted from mildly optimistic before the holiday to cautious.

In mid-month, spot prices gradually stopped falling but lacked rebound strength, and the market shifted into a low-level stalemate. On one hand, coal prices on the cost side remained high, factories' willingness to cut prices further weakened, and the cost side provided psychological support; on the other hand, enterprise inventories kept accumulating, and the combination of high supply, high inventory and the demand off-season left prices with no upward elasticity. During this period export news and localized maintenance did bring brief tentative gains, but lacking incremental demand, rebounds were short-lived and limited in scope. The futures side likewise kept probing weakly lower amid the transitional gap, further weighing on spot market sentiment. Overall, the mid-month market was in a stalemate of "no deep falls, no rallies," the essence being that weak reality caps rebound room while costs and export expectations limit downside depth.

At month-end, the earlier part of the period was still dominated by weak oscillation, but a clear turning point appeared in the final stretch. News that a new Indian tender window was approaching fermented once again, and combined with substantive moves beginning in off-season reserve procurement, low-end prices gradually entered reserve traders' psychological restocking range, trading atmosphere in mainstream regions warmed, some factories showed reluctance to sell and held back cargo, and enthusiasm for port consolidation also rose along with export expectations. Nevertheless, the month-end rebound was essentially an expectation-driven transitional repair rather than a fundamental reversal of the supply-demand pattern. Enterprise inventories remained high, output rose month on month, and the "weak reality" of high supply and high inventory had not been eliminated. The sustainability of the rebound depends on two key variables: whether the Indian tender translates into actual export orders, and whether off-season reserve procurement can move from scattered starts to scaled volume.

1.2 This Month's Domestic Urea Market Price Comparison

Urea Small Granular Market Quotations (yuan/t)

02 Urea Enterprise Plant Shutdown and Maintenance List

China Urea Sample Planned Maintenance Enterprise Data

03 Domestic Urea Industry Operating Rate Statistics

According to FDD data: this month, the domestic urea industry's monthly average operating rate was 89.05%, up 7.11% from the previous month and up 7.97% from the same period last year; the domestic urea industry monthly operating rate rose sharply month on month and was above the year-earlier level, mainly because units that underwent concentrated maintenance last month gradually resumed production.

04 Domestic Urea Output Trend

According to FDD data: this month, domestic urea monthly output was about 6.7002 million tonnes, up 12.84% month on month and up 13.91% year on year; enterprises that had shut down for maintenance gradually resumed production this month, and output kept recovering.

05 Urea Import and Export Data

5.1 Urea Export Data

According to customs data, in September 2026 China's urea exports were 2.4504 million tonnes, an increase of 1.9258 million tonnes from the previous month, a month-on-month rise of 367.07%; up 1.0792 million tonnes from the same period last year, a year-on-year increase of 78.71%; the average export price this month was 385.55 USD/t. Cumulative exports for January-September 2026 totalled 3.8796 million tonnes, up 1.0672 million tonnes from the same period last year, a year-on-year increase of 37.95%.

5.2 Domestic Urea Import Data

According to customs data: in September 2026 China's urea imports were 26.04 tonnes, down 19.31 tonnes from the previous month, a month-on-month decline of 42.58%, and down 50.04 tonnes from the same period last year, a year-on-year decline of 65.77%; the average import price this month was 4,310.98 USD/t. Cumulative imports for January-September 2026 totalled 940.12 tonnes, down 1,036.93 tonnes from last year, a year-on-year decline of 52.45%.

06 Domestic Apparent Consumption Data

According to FDD data: in September 2026, China's apparent urea consumption was 3.4874 million tonnes, down 2.3091 million tonnes from August, a month-on-month decline of 39.84%, and down 1.6499 million tonnes from the same period last year, a year-on-year decline of 32.12%. Cumulative apparent consumption for January-September 2026 was 53.6019 million tonnes, up 1.8180 million tonnes year on year, an increase of 3.51%.

07 Domestic Urea Inventory Trend

7.1 Port Monthly Inventory Trend

According to FDD data: as of the end of this month, the domestic urea port monthly inventory was about 855,400 tonnes, up 305,800 tonnes from the previous month and up 745,400 tonnes from the same period last year. Urea port inventory picked up from last month and is far above the year-earlier level. The flow rhythm of domestic urea port cargo was driven chiefly by the dual impact of disruption from the two holidays and the Indian tender landing below expectations: in the first ten days, participants' enthusiasm for consolidating and shipping cargo to ports cooled markedly and a wait-and-see mood accumulated rapidly; subsequently, advance signals that the next Indian tender would soon open gradually spread through the industry. Approaching month-end, actual port shipments began to rise month on month, and most urea producers, to relieve the pressure of accumulated in-plant inventory, actively increased the volume of cargo they placed into ports, pushing full-scope port inventory into a continuing upward trend. At present, domestic urea ports maintain a rhythm in which "port consolidation and stocking proceed in parallel with outbound shipments," and the final pricing and total procurement volume of the next Indian tender, together with the knock-on trend in international urea spot prices, will become the core variables shaping port inventory going forward.

7.2 Enterprise Monthly Inventory Trend

According to FDD data: as of the end of this month, the domestic urea enterprise monthly inventory was about 1.7976 million tonnes, up 371,300 tonnes from the previous month and up 243,300 tonnes from the same period last year. Urea enterprise inventory accumulated substantially during the month to a new high for the year and was above the year-earlier level. Entering October, the domestic urea industry formally entered its seasonal demand off-season. As autumn compound fertilizer production wound down one after another, the consumption momentum of rigid urea purchasing weakened noticeably and the pace of spot digestion in the market slowed further. Combined with the Indian tender's final volume and price both falling short of market expectations, enthusiasm for port consolidation and shipment was directly weakened, and the role of export channels in diverting enterprise inventory narrowed markedly. At the same time, urea units that had shut down for periodic maintenance had basically completed their return to production, overall industry operating loads rose steadily, supply continued to generate incremental volume, and pressure was further transmitted to enterprise inventories. Even though news-driven sentiment briefly accelerated the pace of cargo circulation in the short term, the core contradiction of high producer inventory has not been substantively eased; industry-wide inventory remains at a relatively high level, and the fundamentals of ample supply and demand have yet to reverse.

08 Urea Market Outlook

On the supply side, overall domestic urea supply pressure will persist later on, but maintenance plans have increased, which may somewhat ease expectations that supply will keep strengthening. In addition, gas-based units may see seasonal load reductions in the fourth quarter, which will restrain overall output to some extent, and the supply side will subsequently show a pattern of narrow-range fluctuation.

On the inventory side, industry-wide inventory is still under some pressure at this stage. As units resume production, if downstream purchasing stays slow, factories still face the risk of inventory build-up; commercial inventory in the circulation segment will mainly follow the progress of winter storage, grassroots traders' restocking stance is fairly cautious and their willingness to build large positions on their own initiative is not strong; port inventory will adjust dynamically with the pace of export shipments, and the pace of inventory drawdown will directly affect the elasticity of the spot market.

On the demand side, domestic demand will enter a phased transition: in the short term, direct agricultural fertilizer use offers limited support, and the market's focus will gradually shift to winter storage fertilizer later on. On the industrial side, compound fertilizer and downstream chemical enterprises are slow to restore operating rates and are mainly making transitional restocking, so sustained concentrated purchasing is unlikely; once winter storage starts, market demand is expected to be lifted, but grassroots wait-and-see sentiment is heavy and buyers mostly purchase as they use, so the pace of demand release is uncertain and explosive demand growth is unlikely.

On the export side, exports remain an important marginal variable for the market outlook. Going forward, continued attention should be paid to tender developments in the international market and to changes in the domestic-foreign price spread. If overseas markets hold up reasonably well, outbound shipments of domestic cargo can divert part of domestic supply and ease supply-demand pressure at home; however, exports involve considerable uncertainty and are constrained by international competition, overseas demand and related policies, so they can only play a periodic adjusting role, cannot fundamentally reverse domestic fundamentals, and can hardly single-handedly drive a large upward move in domestic urea prices.

Overall, urea fundamentals will remain on the loose side going forward, and prices will most likely run in a rangebound oscillation with limited room for upward rebounds; going forward, focus on plant operating rates, the progress of winter storage, and actual export shipments.