Argus Media

Urea Market Outlook

The Argus analyst outlines a sharply tightening urea market as the Middle East conflict curtails export capacity. Disruptions in the Gulf, which normally supplies roughly a third of global urea, have already removed more than 1.5 million tonnes from the market, while Iranian output has also stalled. Price spikes are now commonplace: Australian urea is up about 70% from pre‑conflict levels, and other import‑dependent regions are seeing 50‑60% increases. South Asia is especially vulnerable; India, which sourced 85% of its urea‑related gas from the Gulf, has already lost close to a million tonnes and is issuing a 2.5 Mt tender to cover the shortfall. Plant outages surged, with roughly 20 new shutdowns recorded in March alone. The outlook hinges on two variables: the timing of Chinese export resumption and the reopening of the Strait of Hormuz. Argus models a May restart for Chinese shipments, but any delay would exacerbate the deficit through the northern‑hemisphere summer. Even when the Gulf route clears, about 1 Mt of urea sits in storage under long‑term contracts, and elevated shipping and insurance premiums will keep costs high. For growers and fertilizer traders, the market’s structural tightness translates into higher input costs, potential crop‑mix shifts, and heightened price volatility. Regions like Australia may trim wheat acreage in favor of lower‑nitrogen crops, while South Asian producers scramble for alternative supplies amid lingering geopolitical uncertainty.