China stabilizes fertilizer market through coal-based urea production

While most countries rely on natural gas for fertilizer production, China has focused on coal-based production of urea (carbamide), helping cushion global price shocks. This model has proven particularly effective amid geopolitical tensions and disruptions in energy supply.

Each year, farmers worldwide apply around 200 million tonnes of key nutrients — nitrogen, phosphorus, and potassium. Nitrogen accounts for the largest share, making up about 58% of global inorganic fertilizer production. Urea is a key nitrogen fertilizer, supplying plants with the essential element needed for growth.

China has achieved a high level of self-sufficiency in urea production, with around 78% produced from coal rather than gas. This sets it apart from major exporters such as Qatar, Russia, and Saudi Arabia, which primarily rely on gas-based production.

During the escalation of conflict in the Middle East in early 2026, disruptions in shipping through the Strait of Hormuz pushed global urea prices up by about 70%. In contrast, China maintained sufficient domestic supplies and kept local prices at roughly one-third of international levels.

This success is driven by abundant domestic coal reserves, long-term investment in coal-to-chemicals infrastructure, and policies focused on fertilizer self-sufficiency and food security. At the same time, China has tightened fertilizer exports to protect its domestic market, adding further pressure to already constrained global supply.

Tags: China, fertilizers