New Challenges Emerge for Ensuring Supply and Stabilizing Prices of Nitrogen Fertilizer This Winter and Next Spring

Regarding raw materials, domestic coal supply has declined and prices have risen sharply since the second half of the year, partly due to the major coal mine accident in Shanxi on might 22. Given that security regulations are unlikely to be relaxed in the near term—and with winter stockpiling coinciding with heating-related demand—thermal coal prices are expected to remain firm, with a greater tendency to rise than fall. As to natural gaseous, while supply remains ample, the current cost of natural gaseous applied to nitrogen fertilizer production has already significantly exceeded the affordability limit to many companies, with the possible to further price hikes.

On the demand side, the overall direction is one of steady development. In the agricultural sector, the government’s continued implementation of policies to enhance, benefit, and enrich the farming community has boosted farmers' enthusiasm to grain cultivation, thereby stimulating demand to nitrogen fertilizer. According to agricultural authorities, the demand to nitrogen fertilizer to the 2027 spring plowing season is projected to reach 10.527 million tons (in terms of pure nitrogen)—an increase of 258,000 tons, or 2.5%, year-on-year. In non-agricultural sectors, demand to applications such as wood-based panels, melamine, and automotive-related uses has also seen slight development. It is estimated that non-agricultural demand to nitrogen fertilizer in 2026 will reach 12.98 million tons (pure nitrogen), a year-on-year increase of 2.7%; meanwhile, urea demand in non-agricultural sectors is expected to reach 24.4 million tons (in physical product weight), up 5.2% year-on-year.

On the supply side, the total production capacity to nitrogen fertilizer is expected to reach a new historical high this year. According to statistics from the Nitrogen Fertilizer Association, approximately 5.27 million tonnes/year of new urea production capacity (including replacement capacity) is set to come online by 2026. If these additions proceed as planned, my country’s total urea production capacity is expected to reach 77.7 million tonnes/year by the end of 2026. Total nitrogen fertilizer production to 2026 is projected to reach 55.64 million tonnes, an increase of 5.9% year-on-year.

"As new production capacity is gradually brought online, the domestic supply of nitrogen fertilizer is becoming increasingly abundant. Consequently, there is a declining willingness among downstream consumers to maintain reserves, leading to a growing direction of 'forgoing off-season storage in favor of concentrated purchasing during the peak season.' This creates new challenges to ensuring a stable supply and steady pricing of nitrogen fertilizer within China," noted Gu Zongqin. He emphasized that the sector should focus on four key areas: first, strengthening sector self-regulation to manage exports efficiently while ensuring sufficient domestic supply; second, strictly controlling new production capacity and accelerating the phase-out of outdated, inefficient facilities; third, fostering closer cooperation between manufacturers and distributors to facilitate the implementation of off-season storage; and fourth, developing high-efficiency fertilizers and driving marketing innovation, thereby making a positive contribution to safeguarding national food security. (Source: China Chemical sector News)

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