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The domestic urea market ended its downward trend in November 2025 and entered a period of recovery. Driven by a combination of favorable factors such as steady increase in demand, reduced supply, and higher export volumes, the market continued to heat up toward the end of 2025, experiencing a strong start in early 2026. As of January 4, the prevailing transaction price of urea in the domestic market had exceeded 1,700 yuan per ton, representing a 9% increase compared to the lowest price reached in the market in October 2025. “In 2025, the annual price fluctuations of spot urea narrowed significantly, while the volatility in the futures market dropped from 33.14% in 2024 to 22.45%. This change fully demonstrates the effectiveness of the policies aimed at ensuring supply and stabilizing prices in regulating the market, as market volatility has been effectively curbed. ”A relevant official from the Henan Petrochemical Association said that it is unlikely to see a significant increase in urea prices in the short term, but there is room for a gradual upward trend in the future. Demand is increasing steadily, supporting a recovery in the market. According to a relevant official from the Henan Petrochemical Association, in November 2025, a new batch of urea export quotas was allocated, totaling around 600,000 tons ； In the middle of that month, winter storage activities in the northeastern region got underway on a full scale, and these two positive factors helped to boost activity in China’s urea market. Entering December 2025, as industrial demand continued to rise and reserve demand was realized in large volumes, the price of urea further increased. Among these factors, the operating rate of the compound fertilizer industry increased steadily in early December 2025. Coupled with low inventory levels of urea prior to that time, the necessary purchases and stock replenishment by compound fertilizer manufacturers provided key support for the rise in urea prices. Comprehensive estimates show that domestic urea consumption will reach around 5.38 million tons by December 2025, representing a month-on-month increase of 27.49% and a year-on-year increase of 37.15%. Senior market analyst Shao Huiwen said that the operating rate in the industrial sheet industry might decline in the near term, while that in the compound fertilizer industry is expected to show an upward trend followed by a downward one; overall, market demand will experience slight fluctuations in the short term. However, as the demand for fertilizers to promote plant growth in agriculture enters a period of replenishment, the price of urea in January 2026 is likely to show an upward trend followed by stability. In the medium to long term, the steady upward trend in urea demand will not change. Apart from the essential needs in agriculture, the industrial sector will become the key driver of demand growth. In terms of automotive urea, thanks to the full implementation of the National VI emission standards, consumption volume exceeded 5.8 million tons in 2023, doubling compared to 2020; it is expected to maintain an average annual growth rate of 6%–8% through 2026 as well ； Demand in the field of industrial denitration is also expanding steadily. The process of upgrading power generation, steel, cement and other industries to achieve ultra-low emissions is accelerating, which is driving a gradual replacement of liquid ammonia by urea; it is estimated that the annual increase in demand could reach 150,000 to 200,000 tons by 2026. Reduced supply helps firms maintain firm prices. Data from Longzhong Information shows that domestic urea manufacturers’ inventory levels have been declining for three consecutive months; the inventory amounts from October to December 2025 were 1.5543 million tons, 1.3639 million tons, and 1.0689 million tons respectively. Among them, in December 2025, domestic urea manufacturers suffered losses due to maintenance activities amounting to approximately 1.1105 million tons, a increase of 107,400 tons compared to the previous period, representing a growth rate of 10.7%. Cui Huajie, the person in charge of operations at Henan Ruiyuan New Energy Chemicals, analyzed that against the backdrop of companies continuing to reduce their inventory levels, there will be a temporary tightening in the supply of urea in December 2025. On the one hand, urea manufacturers in the southwestern region as well as some companies in central China have entered a period of shutdown for maintenance, resulting in a significant reduction in production capacity ； On the other hand, with the upgrade of environmental protection warnings in certain areas, some urea production facilities were forced to operate at reduced capacity. Coupled with temporary maintenance work on individual facilities due to failures, the daily production volume of urea in China dropped to around 190,000 tons, representing a decline of 5%. As supply constraints further stimulate downstream companies’ demand to restock, new orders for urea manufacturers continue to increase, and these companies become increasingly determined to maintain high prices. Meanwhile, December 2025 remains within the period of reserve demand, and the pace of downstream reserve replenishment provides strong support for an upward trend in market conditions. Furthermore, some of the export quota shipments assigned in November 2025 were shipped in bulk to the ports in December, further reducing the amount of urea available in the domestic market and thus contributing to an upward trend in urea prices. Export growth provides momentum; domestic and international markets are interconnected. Statistics show that in the first 11 months of 2025, China’s total export volume of urea reached 4.6161 million tons, a 1,663.22% increase compared to the same period the previous year. Among them, the release of the fourth round of urea export quotas effectively alleviated the imbalance between supply and demand of urea in the domestic market, serving as an important factor that drove market trends. On December 16, 2025, India issued a new tender for urea, with a procurement volume of 1.5 million tons. The deadline for submitting bids was January 2, 2026, and the latest possible delivery date was February 20. Before the tender announcement, the FOB price of large-grain urea in Southeast Asia was 385 dollars; once the tender process started, suppliers quickly raised their prices to 400 dollars. Affected by this news, urea futures prices rose as well, which in turn boosted confidence in the domestic spot market. Companies accelerated their inventory reduction efforts, providing solid support for the urea market. However, industry experts warn that while the urea market shows signs of recovery at present, there is a need to be cautious about the pressure arising from the gradual increase in domestic urea supply in January. If downstream demand fails to keep up, the market may face pressure for slight price adjustments; yet, thanks to the steady demand from agriculture and the operational status of compound fertilizers, the room for price changes in urea is relatively limited. Looking at the longer term, three key factors need to be closely monitored in order to understand the trend of the urea market in the medium to long term. The first of these is the actual pace at which new production capacity is brought online; if the scale of capacity addition exceeds expectations, it could further increase supply pressures in the market ； The second factor is the degree of relaxation in export policies; the scale of export quotas and the pace at which they are allocated will directly affect the supply-demand balance in the domestic market ； Third is the pace of the low-carbon transition; rising carbon costs and the promotion of green products will exacerbate differences in profitability across the industry, with leading companies likely to see their competitive advantages grow even further.