Coal-Based Urea Becomes China's Weapon Against Fertiliser Market Turmoil

Global fertiliser market volatility through 2026 reveals widening disparities among countries. While many nations face price surges and supply disruptions, China remains relatively stable. The key to this resilience lies in its fertiliser production structure, particularly urea, which is coal-based rather than natural gas-dependent as is common in many countries. When Middle East conflicts disrupt global supply chains, this approach serves as a buffer protecting China’s domestic agricultural sector from external pressures. According to Reuters on Wednesday (22/4/2026), around 78 per cent of China’s urea production comes from coal, an energy source abundant domestically. This structure makes China less reliant on energy imports, especially natural gas, the commodity most affected by global conflicts. In contrast, gas-dependent countries must contend with rising production costs amid energy price spikes. Prices have even risen by about 70 per cent due to these supply disruptions. However, within China, prices remain relatively stable. This is because domestic production is unaffected by global energy market dynamics, unlike gas-based producers who are highly sensitive to price fluctuations. In 2026, China’s urea fertiliser production is projected to reach a record 76.5 million tonnes. This figure even surpasses domestic needs, with a surplus of around 10.5 million tonnes. This surplus gives the government room to manage supplies flexibly, including holding back exports to maintain domestic price stability. In the current volatile global market conditions, this policy is being reinforced. China has even postponed post-spring export decisions until May 2026 to ensure domestic conditions remain under control. Additionally, the government relies on national fertiliser reserves. The release of stocks is being done at least 15 days earlier than the normal schedule to anticipate demand surges during the planting season.