China Issues Urea Export Quotas as Iran War Drives Global Fertiliser Crunch
China has issued export quotas for urea fertiliser, unlocking fresh global supply of one of the world’s most widely used crop nutrients after the Iran war triggered severe disruptions to international fertiliser markets. Sources with direct knowledge of the matter confirmed the decision to Reuters on Tuesday, May 27, saying the move could help ease soaring global prices. TimesLIVE
Two Chinese urea producers confirmed to Reuters they had received export quotas but declined to provide further details. An Indian importer also said the Chinese government had issued a notification permitting urea exports, though no specifics were disclosed. TimesLIVE
China’s General Administration of Customs and National Development and Reform Commission did not immediately respond to requests for comment. TimesLIVE
The Decision and What It Signals
Urea exports are managed by a quota system, and the issuance of quotas is a signal that Chinese authorities are confident there is enough supply domestically to release some for export. The move reverses a policy put in place just weeks after the Iran conflict began. TimesLIVE
China, one of the world’s largest fertiliser exporters, banned exports of many categories in March to protect domestic farmers from the surge in prices triggered by the closure of the Strait of Hormuz, through which a large share of global fertilisers and their inputs usually flow. TimesLIVE
Several fertiliser industry sources and social media accounts said approximately 1.5 million metric tonnes of urea will be allocated, though Reuters could not independently verify the total volume. TimesLIVE
China exported 4.9 million tonnes of urea in 2025, below its historical range of 5 million to 5.5 million tonnes, which usually accounts for about 10% of global urea exports, according to StoneX, a consultancy. TimesLIVE
India Among Biggest Beneficiaries
Domestic urea prices in China remain well below international levels, and the new export quotas are likely to be welcomed in particular by India, which imported more than 40% of its urea, a nitrogen-based fertiliser, and diammonium phosphate, a widely used phosphate-based fertiliser, from the Middle East last year. TimesLIVE
In March, India asked China to allow the sale of some urea cargoes as the US-Israeli war on Iran disrupted gas supplies and threatened fertiliser production, Bloomberg News reported. TimesLIVE
A senior official with an Indian fertiliser-producing company told Reuters the shift was welcome. “We will prefer Chinese supplies in the current situation as shipments are far more predictable,” the official said. “They do not have to pass through the Strait of Hormuz and are therefore more likely to be delivered on time.” TimesLIVE
The routing advantage is significant. Over 30% of global urea — which is produced from natural gas — is exported from Gulf countries through the Strait of Hormuz. With that corridor disrupted, China’s land- and sea-routes to South and Southeast Asian markets now offer an alternative that bypasses the conflict zone entirely. Wikipedia
Regional and Global Impact
Urea futures had risen to as high as $684 per tonne, the highest since October 2022, and were more than 70% higher this year as the war in the Middle East severely disrupted global fertiliser markets. The conflict drove a sharp spike in natural gas prices, a key input for urea production, and restricted flows through the Strait of Hormuz, which handles about a third of global fertiliser shipments. tradingeconomics
Analysis by Kpler, a data and analytics company, shows that as much as one-third of global fertiliser trade could be disrupted if the closure of the Strait of Hormuz persists. Al Jazeera
Asian countries are the most heavily dependent on Gulf fertiliser exports, receiving 35% of Gulf urea exports, 53% of sulphur exports, and 64% of ammonia exports, according to Kpler. These exports are particularly vital for key agricultural markets, particularly India, Brazil, and China, with significant volumes also going to Morocco, the United States, Australia, and Indonesia. Al Jazeera
Production in India and Bangladesh was also hit by plant shutdowns and maintenance amid limited LNG supplies, compounding the shortage. tradingeconomics
Background
Global urea markets had been operating under stress conditions since 2022, when the Russia-Ukraine fertiliser disruption removed one of the world’s largest fertiliser exporters from normal trading patterns. Russia produces significant volumes of urea, ammonia, and other nitrogen-based products, and its effective exit from mainstream international trade created supply gaps that Persian Gulf producers stepped in to fill. Discovery Alert
When the US-Israeli campaign against Iran commenced on February 26, 2026, China’s export licensing regime restricted urea and other fertiliser exports within three weeks. Qatar’s state-run energy firm QatarEnergy halted output at the world’s largest urea plant after LNG facilities were attacked and gas output was shut down. Small Wars JournalAl Jazeera
China accounts for approximately 25% of global fertiliser production. Its decision to restrict and then selectively re-open exports therefore carries direct consequences for food prices in importing nations across Asia, Africa, and the Americas. Small Wars Journal
What Happens Next
The total volume of urea to be released under the new quotas had not been officially confirmed as of May 27, with industry sources citing an approximate figure of 1.5 million metric tonnes pending verification. India, which formally requested Chinese urea shipments in March, is expected to be among the first buyers to act on the new quotas. According to Morningstar analyst Seth Goldstein, nitrogen fertiliser prices could roughly double from prevailing levels and phosphate prices could climb by about 50% if the Hormuz closure persists, Reuters reported. Whether China expands its quota allocations to other fertiliser categories banned in March will depend on how domestic prices and supply levels develop in the coming weeks. TimesLIVEAl Jazeera
