Global urea prices continue to weaken going into the second half of 2014, with oversupply from Chinese exporters dominating the market. The dramatic growth in Chinese urea exports has been facilitated by a combination of a substantial Chinese supply overhang, reduced export tariffs, and weak Chinese coal prices.
Trade data for January to May 2014 shows that increasing Chinese exports are significantly altering global AS trade flows. Export volumes to markets in Central America and to Turkey in particular have risen dramatically year-on-year but Chinese sellers are still unable to penetrate the Brazilian and US markets due to grade and quality concerns.
The Chinese urea industry is the largest and most pivotal market in the global nitrogen sector and arguably it is the least well understood. In recent years, Chinese export tariffs have insulated international urea markets and prices from developments in the Chinese market, but this is now changing, prompting much speculation among industry analysts.