In a significant development for Indian agriculture, the country’s latest tender for importing urea has attracted offers priced over 50% lower than just two months ago. The sharp decline offers clear evidence that the severe supply strain following the outbreak of the West Asia war is finally beginning to ease .
State-owned National Fertilizers Ltd (NFL) floated the tender for 1.7 million tonnes of urea on May 27. When the bids were opened on June 8, the lowest landed (cost plus freight) price quoted was $444.90 per tonne for deliveries to the east coast .
This marks a dramatic reversal from the previous tender floated by Indian Potash Ltd (IPL) in April, which was settled at $935-$959 per tonne following the initial supply shock caused by the closure of the Strait of Hormuz .
China Re-enters Market
Industry sources have attributed the price crash to China partially lifting restrictions on urea exports, after imposing a ban on shipments in March . The return of the world’s largest producer to the global market has significantly increased supply availability.
“China partially lifting export restrictions has not only eased soaring global prices, but also come at the right time with kharif (monsoon) crop plantings underway,” a source was quoted as saying by The Indian Express .
Significant Fiscal Relief
The price drop is also a major relief for the government, which was facing the prospect of a massive subsidy bill. The budget for FY27 had set aside Rs 1.71 lakh crore for fertiliser subsidies, but the war had threatened to push the actual requirement to over Rs 3 lakh crore . The lower import costs will help contain this fiscal burden.
Despite the easing of immediate price pressures, the government and industry remain watchful. Domestic urea production relies heavily on imported Liquefied Natural Gas (LNG), primarily sourced from the Gulf region. Any future volatility in energy markets could still impact domestic production costs .
For now, however, the significant drop in global urea prices signals that the worst of the fertiliser supply crisis may be behind India, offering a stable outlook for farmers in the ongoing Kharif season.
