China Urea Granular Market Update: Prices Ease as Supply Stays High and Demand Remains Cautious

China's urea market moved slightly lower during May 29-June 4, 2026. Domestic offers were mostly stable to weaker, actual transactions were limited, and new order follow-up remained soft. Although export expectations and India's import tender continued to attract attention, the spot market was still mainly guided by high supply, weak near-term demand and cautious buyer sentiment.

Market Overview

Shandong Linyi urea was reported at RMB 1,800/mt, about USD 265/mt using the working exchange rate of USD 1 = RMB 6.8, down RMB 40/mt or 2.17% from the previous week. Shandong small and medium granular urea ex-works prices moved to around RMB 1,750-1,800/mt, about USD 257-265/mt. The 2609 urea futures contract closed at RMB 1,773/mt, about USD 261/mt, down RMB 79/mt or 4.27% week on week.

For overseas fertilizer buyers, the key message is that the China urea market is no longer rising on export sentiment alone. Buyers looking for Urea Granular should reconfirm the latest factory quotation, shipment window, inspection requirements and export availability before placing new orders.

Supply and Inventory

Supply pressure remained an important factor. China's weekly urea production reached about 1.5094 million tons, up 69,400 tons from the previous week. Industry capacity utilization rose to 90.37%, up 4.15 percentage points week on week, and daily production stayed above 210,000 tons. This kept the market well supplied even though some producers still had maintenance plans.

Factory inventory fell to about 891,400 tons, down 29,600 tons or 3.21% from the previous week, but the overall inventory level remained high. Port sample inventory was around 148,900 tons, almost unchanged from the previous week. The limited port movement shows that export preparation still needs time, so the immediate impact on domestic supply was not strong enough to reverse the weaker spot tone.

Demand Conditions

Domestic demand was still cautious. In major northern regions, wheat harvest activity reduced near-term agricultural buying, while the market was between stronger seasonal application periods. Compound fertilizer demand improved in some areas as summer fertilizer replenishment continued, but urea procurement from compound fertilizer plants was still not strong enough to absorb the high operating supply.

By June 3, Chinese urea producers' mainstream pre-sale order coverage averaged about 5.76 days, down 0.59 days from the previous period. This reflected weaker new order follow-up, with many traders and industrial users buying only for immediate needs. Until demand becomes more concentrated, spot transactions may remain negotiated and price-sensitive.

Export and International Market Signals

International urea markets also showed pressure. FOB China small granular urea was reported at USD 655/mt, unchanged from the previous period, while FOB Middle East small granular urea fell to USD 570/mt, down USD 70/mt. Brazil CFR granular prices also moved lower, with large granular urea around USD 580/mt.

India returned to the market with a large urea import tender of about 1.7 million tons, with shipment required before July 20 and bidding scheduled to close on June 8. This may provide some support to international sentiment, but China's export details were still not fully clear during the report period. For buyers, export policy, inspection progress and actual cargo allocation remain more important than headline sentiment.

Related Product Prices

Related nitrogen and chemical markets were mixed. Synthetic ammonia in Shandong was reported at RMB 2,205/mt, about USD 324/mt, down 1.12% week on week. Compound fertilizer 45%S in Shandong stayed at RMB 3,420/mt, about USD 503/mt. Melamine averaged RMB 5,727/mt, about USD 842/mt, down 0.69%, while methanol in Changzhou rose to RMB 3,190/mt, about USD 469/mt.

Coal costs showed some upward movement for urea producers, especially for anthracite lump coal, but the cost-side support was not strong enough to offset the pressure from sufficient supply and weak downstream buying. As a result, domestic urea prices were more likely to remain weakly adjusted rather than show a broad rebound.

Buyer Considerations

For importers, the current China urea market requires careful timing. The recent price correction may create negotiation opportunities, but buyers should not assume that every lower domestic price can immediately convert into export cargo. Inspection procedures, port collection, export quota details, supplier allocation and freight schedule should all be checked before confirming orders.

For quotation requests, buyers should specify grade, particle size, nitrogen content, biuret requirement, packing, destination port, quantity and preferred shipment period. Market figures in this article are based on the reported period and should be reconfirmed for current quotations before any purchase decision.

Short-Term Outlook

The short-term China urea market is expected to continue weak consolidation. Next-period daily production is expected to stay around 214,000-218,000 tons, keeping supply relatively abundant. Demand from industry remains moderate, while agricultural demand may recover only in stages after wheat harvest activity eases.

The main factors to watch are factory inventory, compound fertilizer operating rates, futures movement, India's tender results and the progress of China export details. If export shipments become clearer and domestic demand improves at the same time, prices may stabilize. If buying remains cautious and supply stays high, local prices may still face mild downward pressure.

FAQ

Why did China urea prices weaken this week?
Prices weakened because high operating rates, sufficient supply and cautious downstream demand outweighed the limited support from export expectations.

Is China urea supply tight now?
No. Weekly production increased and capacity utilization rose to more than 90%, so the market remained well supplied during the reported period.

Can export demand support China urea prices?
Export demand may support sentiment, especially after India's tender, but actual support depends on export allocation, inspection progress, port collection and confirmed shipment schedules.

What should overseas buyers check before ordering urea?
Buyers should confirm the latest price, cargo availability, grade, packing, inspection requirements, export documentation, port schedule and freight cost before placing orders.