Urea Retreats While Phosphates Hold Firm: A 2026 Market Divergence
Published August 16, 2026
India’s latest tender and the possible return of Chinese exports are weighing on urea sentiment, while high sulphur input costs keep phosphate markets comparatively firm.
At first glance, fertilizer markets may seem to move together. Right now, they do not. Urea is feeling the weight of additional export supply and aggressive tender competition. Phosphate fertilizers are holding up better because sulphur and sulphuric acid remain expensive.
For anyone buying, selling or distributing fertilizer, that split matters. A softer nitrogen market does not automatically mean lower DAP and MAP prices. The cost pressures and supply signals behind each product are increasingly different.
India’s tender brought the split into focus
On 29 July 2026, Rashtriya Chemicals and Fertilizers announced a tender for up to 1.7 million metric tonnes of urea: 1.0 million tonnes for India’s west coast and 700,000 tonnes for the east coast. The tender closed on 11 August, with shipment requested by 24 September.
A tender of that size naturally brought more suppliers to the table. It also turned attention back to China. If Chinese producers return with meaningful export volumes, buyers will have more origins to compare and more room to negotiate for prompt cargoes east of Suez.
Big Indian tenders produce eye-catching numbers, but those numbers need context. India buys exceptional volumes and tender business is not the same as a normal bilateral sale. Freight, timing, origin, credit and specification can all change a supplier’s real netback.
Cargo sampling remains an important quality check when large urea volumes move through a tender.
Why the market is watching Chinese exports
China is the global urea market’s swing supplier. A few additional cargoes can sharpen competition in South Asia and Southeast Asia. A sustained return can influence offers from the Middle East, Russia and Central Asia as buyers compare more origins for the same delivery window.
The downside case is easy to see. Continued Chinese exports, steady plant operations and quiet seasonal demand would keep pressure on offers. Export controls, plant outages, gas constraints, stronger farm demand or freight disruption could slow that pressure.
Phosphates are telling a different story
DAP and MAP face a less dramatic but more stubborn set of pressures. Sulphur and sulphuric acid are essential to phosphate production. When those inputs stay expensive, producers cannot easily follow urea prices lower, even if demand softens in some regions.
Company reporting helps explain the pressure. ICL said higher sulphur costs reduced first-quarter 2026 operating income. Nutrien reported a full-year 2025 P₂O₅ operating rate of 80%, up from 78% in 2024. These figures do not create one global production-cost number. They do show why operating performance and raw-material economics need to be examined separately.
Sulphur and sulphuric acid costs feed directly into the economics of DAP and MAP production.
Sulphur remains the key variable
Middle East sulphur benchmarks reached exceptional levels in July 2026. Kuwait Petroleum Corporation set its July price at USD 950 per tonne FOB Kuwait, while ADNOC’s July official selling price reached USD 1,000 per tonne FOB Ruwais. Even after a correction, a high sulphur base can continue to support phosphate production costs.
For a phosphate buyer, a small sulphur correction is not enough on its own. The useful questions are how far prices fall and how long the relief lasts. If sulphuric acid, ammonia, freight and financing remain firm, the benefit may be limited.
A practical outlook for buyers and exporters
Urea: sentiment remains vulnerable to additional Chinese supply and competitive tender pricing. Watch export policy, producer operating rates, Indian follow-up demand and natural-gas availability.
Sulphur: the market is correcting from unusually high levels, but the absolute cost base remains important for downstream phosphate producers.
DAP and MAP: high sulphur and sulphuric acid costs limit the scope for a sharp correction, although affordability and seasonal demand can still cap the upside.
What to monitor next
Over the next few weeks, watch Chinese export volumes, business concluded after India’s tender, producer gas availability, Middle East sulphur postings and phosphate operating rates. Delivered demand in South Asia and Latin America will matter too. Most importantly, compare full delivered economics instead of relying on one headline benchmark.
Sources and methodology
Tender details: Profercy, 29 July 2026.
Phosphate operating data: Nutrien 2025 results and 2026 guidance.
Raw-material cost context: ICL first-quarter 2026 results.
July sulphur benchmarks: Argus Media on KPC and
This commentary was prepared from public information available on 16 August 2026. Market indications can change quickly and are provided for general information, not as a firm offer or trading recommendation.
