Article: Opportunity in the Midst of Fluctuation

Winning Strategies in the Urea Market After India’s Tender and China’s Export Policies

This article is formatted into five specialized questions.

Nader Salek

---

🔹🔹🔹
———-www.Ghlolo.com

Question 1: What were the results of the RCF / NFL India tender and what volume of urea was sold?

Answer:

The urea tender by the Indian state-owned company NFL, which had requested to buy 2 million tonnes of urea, was successfully completed. According to an Argus report:

• On September 11, 2025, NFL sourced 2.03 million tonnes of urea.
• The allocation was in two parts: approximately 1.01 million tonnes for the West Coast and 1.02 million tonnes for the East Coast.
• The lowest accepted bid prices were $464.70/tonne cfr for the West Coast and $462.45/tonne cfr for the East Coast.
• Bids exceeded the base quantity (2 million tonnes), and suppliers were willing to offer more at higher prices, but concerns about congestion at Indian ports led to the final acceptance of only 2 million tonnes.

Impact Analysis:
These results indicate that Indian demand is strong and the market is ready for high volumes. The high bid prices also suggest that suppliers were expecting higher prices—this could put upward pressure on prices, especially if alternative supply is insufficient.

⸻www.Ghlolo.com

Question 2: What is China’s export policy for 2025 and what restrictions have been imposed on urea exports?

Answer:

China is implementing a policy of “Domestic first, moderate export” in 2025. Key details include:

1. Restricting Total Export Volume: Fertilizer exports (including urea) in 2025 are limited to a volume equal to or less than the 2023 export volume, with the restricted export volume for urea announced at approximately 4.25 million tonnes.
2. Specified Export Window (May–September): Exports are primarily permitted from May to September to avoid interfering with domestic production during the peak demand period for domestic farmers.
3. Export Ban to India: China has banned fertilizer exports to India to guarantee the domestic market and reduce over-reliance on foreign supply.
4. Committees and Scoring for Export Allocation: Export companies must meet criteria such as domestic commercial reserves, baseline production, and assigned quotas.
5. Restriction on Small Packaging: Revised fertilizer packaging regulations have made it more difficult to export fertilizers in small packages to prevent circumvention of regulations.

Impact Analysis:
This policy shows that China intends to prioritize its domestic market and prevent uncontrolled outflow of fertilizers. Consequently, the international supply of urea from China will remain limited. Whenever Chinese exports become more freely available, it could exert downward pressure on prices. However, because exports are restricted, this factor can serve as a price support in the international market.

⸻www.Ghlolo.com

Question 3: What is the impact of China’s export supply on the global urea price?

Answer:

China’s supply is a determining variable in the global urea price. Its impact can be seen in several ways:

• If China opens exports or increases its export quota, additional supply enters the market, which can put downward pressure on prices, particularly in regions like the Middle East or Asia.
• However, because China has restricted exports in 2025, global supply has remained more constrained, which has prevented prices from falling as much as they might have under free export conditions.
• Reports indicate that China’s urea exports in July 2025 increased by 614% compared to the previous year, but this increase was controlled and conducted within quotas, not reaching free export levels.
• It is also said that China has an export backlog of approximately ~2.56 million tonnes waiting for export allocation. This export reserve could have an immediate impact on prices if exports are liberalized.

Short-Term Impact Analysis:
If China decides to lift restrictions or increase export quotas, the market would see additional supply, which could lower prices, especially if demand from major importers (like India, Brazil) has decreased at that time. However, if China adheres to its restricted export policy, the limited supply from China will be one of the factors supporting prices.

⸻www.Ghlolo.com

Question 4: What risks exist that could disrupt the current analysis?

Answer:

Several important risks could challenge the current urea market analysis:

1. Sudden Liberalization of Chinese Exports: If China decides to increase its export quota or reduce restrictions, more supply would enter the market, and prices could fall sharply.
2. Gas/Energy Disruptions: Urea production depends on natural gas; any sudden increase in gas prices or disruption in supply (blackouts, sanctions, supply reduction) can raise production costs and limit supply.
3. Logistical and Supply Chain Issues: Problems at ports, shipping limitations, port outages, or delays can cause temporary supply reductions and create price spikes.
4. Changes in Importing Countries’ Policies: Tariffs, import restrictions, environmental regulations, or agricultural policies can affect demand or export flows.
5. Weaker-Than-Expected Demand: If farmers cannot purchase as much fertilizer as forecast due to high costs or market conditions, demand will decrease, putting downward pressure on prices.
6. Exchange Rates and Inflation: Currency fluctuations for importers can change the effective cost of fertilizer, impacting demand levels.
7. Geopolitical Events or Sanctions: Wars, sanctions, or international regulations may disrupt exports from certain countries or alter trade routes.

⸻www.Ghlolo.com

Question 5: Based on the above analysis, what is your suggestion for a market entry strategy (buying or selling urea)?

Proposed Answer (Strategy):

Given the current conditions and influencing factors, the suggested market entry strategy should be chosen between conservative and flexible approaches:

🔹 For Buyers (Importers / Large Consumers):

• It is recommended to cover a portion of your needs through long-term contracts (typically for the application season, e.g., the fourth quarter) at fixed prices to protect against the risk of sudden price spikes during high demand periods.
• Leave another portion of your needs for short-term or spot market procurement to take advantage of potential price drops due to Chinese supply or reduced demand.
• When purchasing, be sure to consider delivery terms (FOB, CFR) and freight costs.
• Using derivative instruments (futures, forward contracts) for price hedging is recommended.

www.Ghlolo.com

🔹 For Sellers / Exporters and Traders:

• Utilizing the current window of opportunity (after the India tender) for gradual supply into the market at high prices is a logical strategy.
• However, do not supply all cargo at once—splitting cargoes and supplying in stages can prevent the risk of price declines.
• If you have hedging capability, pre-sell a portion of your production to protect against price drops.
• Closely monitor developments in China’s export policy—as any change in China’s quota or export policy will be a major factor steering the market.

www.Ghlolo.com