Global Urea prices followed an upward trajectory during the second half of December 2024 driven by multiple factors. The approaching planting season increased demand, while a shortage of Urea, exacerbated by severe weather disruptions across key production regions, created significant supply constraints. Inadequate weather conditions, including delayed production and logistical challenges, further strained the market. These factors led to a widening disparity between demand and supply, pushing prices higher.

In the European Urea market, prices experienced a notable surge despite a decline in ammonia prices, which typically serves as a key feedstock for Urea production. The impact of lower ammonia prices on Urea pricing remained limited, as other market factors outweighed this development. The primary driver behind the price increase was persistent restocking activity in preparation for future demand. Manufacturers and distributors sought to replenish inventories in anticipation of upcoming agricultural seasons and potential supply chain uncertainties. Additionally, the weather phenomenon "Dunkelflaute," characterized by reduced solar and wind energy generation, has raised concerns over the potential escalation of electricity costs. This could lead to higher production costs, further tightening the supply of Urea. Moreover, the situation could heighten political tensions and disrupt energy and transportation logistics, compounding the challenges for Urea supply chains. As a result, the combination of these factors is expected to sustain upward pressure on Urea prices in the European market.

In the Asian market, Urea prices followed an upward trajectory, with India being the most impacted region. The announcement of India’s Urea tender, which closed on December 19 and called for shipments by January 2025 for up to 1.5 million tonnes, triggered a significant price increase across the board. The heightened demand spurred by the tender, combined with the urgency of delivery schedules, put upward pressure on prices in India and neighboring regions.

Similarly, South America saw a similar price uptick, primarily due to supply disruptions in Iran. Ongoing gas supply issues in Iran have substantially reduced Urea production, impacting key export destinations such as Brazil and Turkey. This reduction in Iranian supply has intensified competition for alternative Urea sources, further driving up prices in these regions. Consequently, both Asian and South American markets are experiencing heightened price pressure due to tight supply conditions and increased demand.

According to ChemAnalyst, Urea prices are expected to rise globally due to anticipated increased fertilizer demand for the upcoming winter planting season. The seasonal surge in agricultural activity, combined with existing supply constraints, is likely to drive up prices, with tight supply and strong demand shaping market dynamics.