Global Fertilizer Market Weekly Update (CW23) May 25 – May 31, 2026

I. Market Overview

This week, the global fertilizer market was primarily driven by four key factors: disruptions to shipping through the Strait of Hormuz, surging raw material prices, China's newly issued urea export quota combined with India's latest urea tender, and the conclusion of India's annual potash contract.

The urea market received policy support from export approvals and international demand, while production growth remained limited and agricultural demand entered a temporary seasonal lull. Sulfur and sulfuric acid prices continued to surge, placing significant cost pressure on phosphate fertilizer producers and forcing some manufacturers to reduce output. In the ammonia market, shipping disruptions and the European Union’s Carbon Border Adjustment Mechanism (CBAM) created a structural shortage of global spot supply. Meanwhile, the settlement of India’s annual potash contract established a new benchmark for international pricing, reinforcing Asia’s growing influence in global potash price formation, while China's strategic inventory replenishment increasingly acts as a key support for global prices.

II. Urea: China Export Quotas and Indian Tender Support Prices

China officially released its urea export quota on May 26, followed by India launching a new urea import tender on May 27. The tender seeks 900,000 tonnes for India's west coast and 800,000 tonnes for the east coast, with the latest shipment date set for July 20. The simultaneous implementation of export quotas and Indian demand has provided strong support to market sentiment.

Domestic urea prices in China, which had previously stabilized after a prolonged decline, began to recover. As of May 27, ex-works prices were approximately RMB 1,750/t in Shandong, RMB 1,800/t in Henan, Anhui, and Hebei, and RMB 1,740/t in Shanxi. By June 1, spot prices had strengthened further to around RMB 1,780–1,840/t, reflecting a firm but range-bound market.

The second batch of China's export quotas for 2026 is estimated at nearly 2 million tons, including an additional 400,000-tonne allocation. Valid from June through August, the quota system includes export floor pricing and shipment controls aimed at maintaining orderly export activity.

On the supply side, China's urea output reached approximately 6.6 million tons in May, only marginally higher than April. Ongoing plant maintenance, temporary outages, and limited new capacity additions are expected to reduce June production to around 6.4 million tons. Additional capacity scheduled for June and July remains relatively limited, making significant production growth unlikely in the near term.

Demand remains mixed. Although June and July traditionally coincide with fertilizer demand for corn, soybeans, and late-season rice, current agricultural activities are focused on wheat harvesting, resulting in a temporary pause in purchasing. Compound fertilizer producers and industrial consumers continue to procure only on a need-based basis.

Looking ahead, export shipments and port inventory accumulation should provide price support. However, seasonal demand weakness and relatively high inventories may limit upside potential. The market is therefore expected to remain firm within a relatively narrow trading range.

III. Sulfur and Sulfuric Acid Surge as Middle East Supply Disruptions Intensify

The continued disruption of shipping through the Strait of Hormuz, combined with restrictions on sulfur exports from the Middle East and tighter sulfuric acid supply globally, pushed international sulfuric acid spot prices above USD 500/t.

June sulfur prices continued to move higher. Qatar raised its June sulfur FOB quotations, while CFR prices into China approached multi-year highs. Domestic Chinese sulfur prices also surged significantly, extending strong gains recorded earlier this year.

Phosphate fertilizer production is the world's largest consumer of sulfuric acid, accounting for approximately 54% of global sulfuric acid demand in 2024. At the same time, nearly half of globally traded sulfur relies on Middle Eastern shipping routes. With major transportation channels disrupted, raw material shortages continue to widen.

Rising sulfur and sulfuric acid costs are increasingly squeezing phosphate fertilizer producers. Major industry participants have already begun reducing production. Mosaic reported that soaring sulfur costs largely offset the benefits of higher sales volumes, leading the company to cut phosphate fertilizer output in Brazil and North America. Meanwhile, Morocco's OCP Group, the world's largest phosphate exporter, initiated maintenance programs earlier than planned and adopted production controls.

The Chinese sulfuric acid market also strengthened significantly. By late May, prices for 98% sulfuric acid had risen to approximately RMB 1,800-2,100/t, the highest level for the period in nearly three years. Planned maintenance outages have reduced supply, while phosphate fertilizer demand and industrial consumption from sectors such as titanium dioxide continue to provide support.

Over the longer term, the shipping crisis is accelerating the restructuring of global phosphate fertilizer capacity. Expansion projects in Morocco, Canada, and the United States are gaining momentum as producers seek to reduce dependence on Gulf-region supply chains, potentially reshaping global phosphate trade flows.

IV. Ammonia: Global Supply Remains Under Severe Pressure

The ammonia market continues to face pressure from two major challenges: disruptions in Middle Eastern shipping routes and the implementation of the European Union's CBAM carbon tariff mechanism.

In the first quarter of 2026, EU ammonia imports reportedly fell by 42% year-on-year, while import demand weakened across much of Asia. Spot availability remains tight, creating a structurally undersupplied market.

Since January, the EU has formally required importers to account for product carbon emissions under CBAM, significantly increasing the cost of imported ammonia. European buyers accumulated substantial inventories during 2025 and are currently focused on consuming existing stocks rather than increasing imports.

The Middle East normally accounts for approximately 20-30% of global ammonia trade. However, shipments to Europe have been severely disrupted since late February. Escalating insurance premiums for vessels operating in conflict-affected waters have further reduced trading activity, making Gulf-origin ammonia less competitive despite limited availability.

Asia is experiencing similar pressures. India's ammonia imports fell by approximately 61% month-on-month in March. During recent fertilizer tenders, available ammonia supply reportedly covered less than half of demand requirements, highlighting the growing supply deficit.

On the positive side, June TTF natural gas futures increased by approximately 3.5%, helping stabilize ammonia prices in Northwestern Europe and preventing further declines.

Although the EU has introduced its Fertilizer Action Plan, including initiatives aimed at diversifying ammonia sources and establishing green ammonia corridors linking the Middle East and Africa with Europe, these remain long-term projects and offer little immediate relief.

Natural gas prices and shipping developments in the Strait of Hormuz will continue to dominate market direction. Tight global ammonia availability is likely to persist in the near term.

V. Potash: India's Contract Establishes a New Global Benchmark

After months of uncertainty, the global potash market entered a new phase following the conclusion of India's annual potash contract on May 18.

India secured a contract price of USD 383/t CFR for muriate of potash (MOP), representing an increase of more than 10% year-on-year and the highest contract level in nearly a decade. The agreement is approximately USD 15/t higher than China's annual contract price, underscoring the current strength of global supply conditions.

In recent years, new global potash capacity additions have fallen short of expectations, while major producers have maintained disciplined supply management. Combined with ongoing shipping uncertainties, this has transformed what was once a temporary market imbalance into a longer-term source of price support.

Across Asia, procurement activity has accelerated. Indonesia launched a tender for 75,000 tonnes of standard red MOP, attracting offers in the range of USD 450-460/t CIF. Belarusian supplier BPC reportedly secured the majority of the volume. Bangladesh has also increased its 2026 potash import target to 950,000 tonnes, signaling stronger demand growth.

Asia's agricultural demand and strategic inventory-building efforts are increasingly shaping global price direction, reducing the historical dominance of North American and European benchmarks.

China has become a critical stabilizing force in the global market. Since late 2025, China has maintained an active strategic inventory replenishment program. Potash imports during the first quarter of 2026 reached record levels for the period, while April imports remained elevated at approximately 1.2 million tons. Steady agricultural consumption, growing industrial demand, and an expanding national reserve system continue to support global prices.

Regional performance remains uneven. Brazil has entered its seasonal demand slowdown, while the United States continues to experience stronger-than-expected spring fertilizer demand and relatively tight inventories. CIS exporters have generally adjusted pricing upward following the Indian contract settlement.

Looking ahead, the approaching Northern Hemisphere fertilizer application season and renewed Southeast Asian purchasing activity provide further upside potential. With supply-demand fundamentals remaining tight and Asia's pricing influence strengthening, potash prices are expected to remain well supported.

VI. Market Outlook

Global fertilizer markets remain highly sensitive to geopolitical developments and shipping conditions in the Strait of Hormuz.

Sulfur and sulfuric acid prices are expected to remain elevated, keeping pressure on phosphate fertilizer production and supporting continued supply discipline. Urea prices should remain broadly stable to firm, supported by export activity and Indian demand, although seasonal consumption patterns may limit significant gains. Ammonia markets continue to face persistent supply constraints driven by shipping disruptions and carbon-related trade barriers. Potash appears to have entered a new upward cycle, supported by Asian demand growth and China's ongoing strategic inventory accumulation.

Key indicators to monitor in the coming weeks include developments in Strait of Hormuz shipping conditions, final settlement prices from India's urea tender, China's export shipment pace, and sulfur market movements. Over the medium to long term, market participants should closely watch global phosphate capacity expansion, implementation of EU fertilizer policies, and the progression of the Northern Hemisphere fertilizer season when planning procurement, inventory management, and export strategies.

Global Fertilizer Market Weekly Update (CW23) May 25 – May 31, 2026