China Urea Granular Market Update: Export Quotas Lift Sentiment While Demand Remains Limited

China's urea market moved from weakness to a firm rebound during May 22-28, 2026. Export quota news and India tender expectations improved market sentiment, helping producers raise offers after a soft start to the week. However, domestic demand support remained limited, and higher prices gradually met resistance from downstream buyers.

Market Overview

Shandong Linyi urea was reported at RMB 1,840/mt, about USD 271/mt using RMB 6.8/USD, up RMB 60/mt or 3.37% from the previous week. Shandong small and medium granular urea ex-works prices rose to around RMB 1,780-1,810/mt, about USD 262-266/mt. The 2609 urea futures contract closed at RMB 1,852/mt, about USD 272/mt, up 1.20% week on week.

For international fertilizer buyers, the key signal is that China's domestic urea market is now driven more by policy and export expectations than by immediate domestic demand. Buyers looking for Urea Granular should reconfirm factory offers, port availability and export documentation before placing new orders.

Export Policy and Market Sentiment

The export quota announcement gave the market short-term momentum. After the news, trading sentiment improved, some regions saw better shipment activity, and producers reported more new orders. This helped the spot market stop falling and move higher in the second half of the week.

At the same time, international energy sentiment weakened as market optimism increased around a possible U.S.-Iran peace agreement and the reopening of the Strait of Hormuz. The resulting decline in international crude oil prices added a softer macro signal. For urea buyers, this means the market is balancing export policy support against wider commodity-market uncertainty.

Supply and Inventory

China's weekly urea production was about 1.44 million tons, down only 0.12 million tons from the previous week. Industry operating rates stayed high at around 86.22%, only 0.07 percentage points lower week on week. Supply therefore remained sufficient even though some producers were under maintenance.

Factory inventory increased to about 921,000 tons, up 144,500 tons or 18.61% from the previous week. Port sample inventory was around 149,900 tons, up slightly by 2,000 tons. The inventory increase shows that earlier domestic demand was not strong enough to absorb supply, even though export news later improved sentiment and slowed the pace of stock accumulation.

Demand Conditions

Domestic demand was still not strong enough to fully support a sustained price rally. Spring application demand has mostly passed, while only some northern regions showed scattered top-dressing replenishment. Large-scale seasonal stocking has not yet started in most mainstream regions.

Compound fertilizer demand remained weak. Operating rates were only around 30.71%, and Linyi compound fertilizer producers' daily urea consumption fell to about 1,110 tons, down 15.91% week on week. Melamine demand also stayed under pressure as prices continued to soften and downstream finished-goods orders remained limited.

Related Product Prices

Related nitrogen and chemical markets were mixed. Synthetic ammonia in Shandong averaged RMB 2,230/mt, about USD 328/mt, up 0.81% week on week. Compound fertilizer 45%S in Shandong was stable at RMB 3,420/mt, about USD 503/mt. Melamine averaged RMB 5,767/mt, about USD 848/mt, down 1.92%, while methanol in Changzhou declined to RMB 3,105/mt, about USD 457/mt.

International urea prices were weaker in the latest reported period. FOB China small granular urea was reported around USD 655/mt, down USD 65/mt, while FOB Middle East small granular urea was around USD 640/mt, down USD 50/mt. Brazil CFR granular markets also moved lower. This international weakness may limit how far Chinese sellers can lift export offers unless buying interest improves.

Buyer Considerations

For importers, the current China urea market offers both opportunity and risk. Export quota news may support firm offers in the short term, but high factory inventory and limited domestic downstream demand can restrict the upside. Buyers should avoid relying only on market sentiment and should verify actual cargo availability, inspection requirements, shipment schedule and latest price before confirming orders.

For fertilizer procurement, buyers should specify grade, particle size, nitrogen content, biuret requirement, packing, destination port and target shipment window. Jinan ZZ International Trade Co., Ltd. can help overseas buyers check current China urea availability and provide quotations based on real-time market conditions.

Short-Term Outlook

The next market phase is expected to stay volatile. On the supply side, daily production may rise to around 210,000-216,000 tons, keeping overall supply abundant. Demand from industry remains modest, while agriculture may bring staged demand in June and July.

Export details, factory inventory, compound fertilizer operating rates and futures movement will be the main factors to watch. If export preparation and agricultural demand improve together, prices may stay firm. If export sentiment fades before real demand increases, the market may return to a weaker fundamental balance.

FAQ

Why did China urea prices rebound this week?
Prices rebounded because export quota news and India tender expectations improved sentiment, encouraging some buyers to follow the market and producers to raise offers.

Is domestic urea demand strong enough to support higher prices?
Not yet. Agricultural demand is between major application periods, compound fertilizer operating rates remain low, and industrial demand is mostly need-based.

What is the main risk for urea buyers now?
The main risk is buying only on short-term sentiment while inventories remain high and supply is expected to stay abundant. Buyers should confirm actual shipment conditions and latest offers.

What information is needed for a urea quotation?
Please provide grade, particle size, nitrogen content, biuret requirement, quantity, packing, destination port and preferred shipment time.