China is loosening its ban on urea exports, a move likely to ease international prices that have been buoyed by the recent tension in the Middle East.
Limits on exports of the fertilizer will be relaxed from this month, according to people familiar with matter. Chinese companies will still be subject to quotas and, in some instances, minimum prices for shipments, said the people, who asked not to be named as they’re not authorized to talk to the media. Exports to India will still be restricted, they said.
China’s Ministry of Commerce didn’t immediately reply to a fax seeking comment.
Urea, the world’s most commonly used nitrogen fertilizer, provides one of the essential nutrients that underpin global food production. As recently as 2023, China was the world’s biggest exporter of urea, but a ban on overseas shipments was put in place last June to cut domestic prices to aid farmers and bolster food security.
Urea prices in New Orleans, a global benchmark, jumped more than 15 per cent last week as the Israel-Iran conflict led to production cuts in the Middle East, a major exporter of the fertilizer. Urea production relies on natural gas as a key feedstock, and a cut in supplies of the energy source from Israel also curtailed production in Egypt.
So far, the quota for urea exports has been set at about 2 million tonnes for the near term, according to Gavin Ju, an analyst at CRU Group in Beijing.
“The original intent of the policy was to secure domestic supplies and stabilize prices at a level that farmers could afford,” he said. “Local prices have remained within a reasonable range. So taking into consideration affordability for farmers and profits for urea companies, it makes sense to loosen controls on exports.”
Urea prices in Shandong, a top producing province, fell to the lowest in more than seven years in January and have remained subdued since then, well below international prices.
“It is good news for the international market, too,” Ju said. “It will provide some relief to the extremely tight global supplies.”
India is a major urea importer, although it has been trying to become more self-sufficient in recent years. Relations between Beijing and New Delhi have been strained since 2020, when clashes between soldiers along the border left at least 20 Indian and an unknown number of Chinese troops dead.
Shares of Yara International ASA, a global fertilizer exporter based in Norway, fell as much as 3 per cent following the Bloomberg report on China relaxing the ban.
More stories like this are available on bloomberg.com