Urea Prices Still Driven by Market Sentiment, While Ammonium Sulfate Sees Broad-Based Strength

Compared with most other fertilizers, urea stands out for its strong financial attributes. The presence of futures trading and macroeconomic influences means its pricing is shaped not only by supply–demand fundamentals but also by capital sentiment, policy expectations, and market speculation.

During January–February 2026, international nitrogen fertilizer prices rose steadily. A new urea tender issued by India, accelerated domestic seasonal stocking, and renewed downstream purchasing all contributed to market activity. Meanwhile, frequent volatility in benchmark futures contracts created a pattern of “futures leading, spot following.” However, closer analysis suggests that the recent price increase has been largely sentiment-driven.

Urea production remains relatively high, industrial demand has yet to expand significantly, and agricultural stocking progress is still moderate—insufficient to absorb the large domestic supply. Export restrictions also remain in place. As a result, spot market fundamentals provide weaker support than futures market performance might suggest.

Market attention is now focused on the results of India’s new tender in late February and the actual pace of spring agricultural demand. Under policies aimed at ensuring supply stability and domestic price controls, upward momentum in urea prices is expected to remain limited. In the short term, prices are likely to fluctuate within a narrow range at elevated levels, supported by producer price resistance and bullish futures sentiment but capped by regulatory constraints. Downstream buyers are advised to purchase based on actual needs and avoid chasing high prices.

In contrast, ammonium sulfate has entered a clear upward cycle in both volume and price, supported by firm demand from compound fertilizer producers, industrial users, and rising export orders. Mainstream factory prices have increased by approximately RMB 180–200 per ton compared with the beginning of the month, with no significant bearish factors currently in sight.

The underlying drivers of ammonium sulfate strength appear more solid. First, compound fertilizer and blended fertilizer producers are building inventories in advance to meet formulation requirements, sustaining strong procurement demand. Second, export orders from Southeast Asia, South America, and Europe continue to support shipments, contributing to ongoing port inventory reductions. Orders at major production hubs are already scheduled through late February, while some pricing factories are holding back sales in anticipation of further price increases. Market sentiment remains strongly bullish, and prices are expected to stay firm through early March.

Unlike urea, ammonium sulfate pricing is driven primarily by spot market dynamics rather than financial factors. Its price movements closely track enterprise order books, inventory levels, and downstream demand. However, because ammonium sulfate has a relatively low unit price and high industry concentration, bargaining power is largely controlled by a few leading producers. As a result, price transmission is rapid and direct. Major producers have already established aligned pricing at key ports, further narrowing downstream negotiation space.

Overall, the market is showing a clear dual-track divergence. Urea prices remain highly sensitive to financial sentiment and policy signals, resulting in volatility. Ammonium sulfate, supported by rigid demand and concentrated pricing power, is demonstrating more stable and sustained strength.

Looking ahead, urea prices are expected to continue fluctuating within a narrow range after the holiday period, while ammonium sulfate is likely to maintain a firm upward trend. This divergence is unlikely to reverse in the near term, constrained by policy controls and export quota management for urea, while ammonium sulfate remains supported by strong demand from compound fertilizer producers, corn processing industries, and overseas buyers.