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How does China's coal-based urea cost structure shield domestic prices from global spikes?

Wei Zhang
Published on 2026-08-11

How does China's coal-based urea cost structure shield domestic prices from global spikes?
China produces roughly 80% of its urea via coal gasification, with nominal capacity near 74.3 million tonnes per year, about 30% of the world total. Because feedstock is domestic coal rather than imported gas, Chinese prices stayed anchored near 1,750-1,880 RMB/t, with Shandong, the national benchmark, holding at 1,830-1,840 RMB/t. Meanwhile overseas prices rose about 90%, widening the import-export spread to roughly 3,000 RMB. China tightened export quotas to 3.3 million tonnes for the year, down 32.7%, prioritizing domestic farmland. Russia, another major exporter, also restricted shipments.

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  • Priya Kapoor 2026-08-12 12:07
    The spread looks like an export opportunity, but policy is the binding constraint. With quotas capped and phosphate exports near zero through August, the arbitrage is largely theoretical for traders. The practical read: domestic Chinese urea stays cheap, and global buyers must look to Russia, Indonesia or the US for incremental tonnes.
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