China’s exports of the key fertilizer ingredient urea have slowed to a trickle during the first half of 2024, with shipments plunging 86.2% from a year ago. This sharp decline is a result of Beijing’s intervention aimed at cooling domestic prices, which is threatening to squeeze global supply.
China is the world’s largest producer of urea, accounting for about a third of global supplies. However, since 2021, the Chinese government has imposed measures including export quotas and lengthy inspection requirements to protect domestic supply.
This year, Beijing stepped up export restrictions further, after asking major fertilizer trading firms to limit total exports in 2024 to 944,000 metric tons. As a result, urea shipments in June slowed to 70,000 metric tons, a 67% decline from a year ago. For the January to June period, urea exports plunged to just 140,000 tons.
“The government strengthened control over urea exports during the first half of the year to ensure supply and stabilize prices. Everyone is now paying attention to when the export controls can be slightly relaxed,” said Gavin Ju, principal fertilizer analyst at CRU Group.
The concerns over rising government intervention and unreliable Chinese supplies have prompted Asian fertilizer buyers to turn to producers in other countries, such as Russia, Vietnam, Egypt, and the Middle East.
China’s export restrictions are not limited to urea. The country’s exports of di-ammonium phosphate (DAP) during the first half of 2024 have also dropped 37% from a year ago to 1.51 million tons, while mono-ammonium phosphate (MAP) exports were virtually unchanged at 930,000 tons. The Chinese Agricultural Means of Production Association (CAMPA) has warned that export policies for phosphate may also tighten due to a surge in domestic prices.
The sharp decline in China’s fertilizer exports is a significant development that is likely to have far-reaching implications for the global agricultural market, as the country’s dominant position in the industry is being challenged by its own policy decisions.