India Urea Tender Lands Below $450 as China Reopens Exports

India’s urea tender, opened on June 8 by state-owned National Fertilizers Ltd, drew bids under $450 per tonne for 1.7 million tonnes, substantially lower than the $935 to $959 the country paid in its April inquiry. The decline follows China’s decision to issue fresh export quotas for the nitrogenous fertiliser after a months-long ban. The bids arrived weeks before urea is typically applied at the start of the kharif sowing season.

On volume, the same story. Aditya Birla Global Trading put in the lowest landed offer of $444.9 per tonne for the East Coast, and Ameropa Asia the lowest for the West Coast at $449.3. Total bids from about 34 firms reached 6.25 million tonnes, against a 1.7 million tonne requirement. Industry sources tied the decline directly to China reopening its export tap. Several importing countries that had deferred purchases also shifted to cheaper nitrogen alternatives, they said.

The Tender That Halved the Price

Issued on May 27 and opened on June 8, the latest tender is the second urea purchase inquiry India has floated since the Iran war that began on February 28 disrupted gas and fertiliser flows through the Strait of Hormuz. Indian Potash Ltd ran the first, in April, paying a heavy premium because few markets were willing to match India’s prices. Both tenders were calibrated to land urea at the back end of the kharif application window.

By contrast, the April bids were dominated by suppliers from the former Soviet Union, North Africa, Nigeria, Oman and South-East Asia. The June bid book, at 6.25 million tonnes from about 34 firms, was well above the 1.7 million tonnes on offer. Chinese producers are now expected to dominate East Coast supply, with the tender split 800,000 tonnes for the East Coast and 900,000 tonnes for the West Coast. Both grades are prilled or granular urea containing 46% nitrogen.

Shipments under the new tender must leave origin ports by July 20 and bids remain valid until June 18. That window lines up with the back end of the kharif planting cycle, when the bulk of urea is applied. The price quotes and bid volumes in the latest tender were published by the Indian Express on June 11.

Why China Opened the Taps

China banned exports of several fertiliser categories in March to protect its own farmers from a price surge triggered by the closure of the Strait of Hormuz. The ban came on the heels of the Iran war that began on February 28 and disrupted flows of LNG, a key feedstock for both urea production and shipping. India asked Beijing to release cargoes in March. In late May, Beijing moved. The quota notification and producer confirmations in late May cleared the way for the June tender. Several industry sources and social media accounts put the total allocation at around 1.5 million metric tonnes, though Reuters said it could not independently verify the figure.

Under a quota system, the issuance of fresh Chinese export permits signals Beijing is comfortable with domestic supply. Domestic urea prices in China remain well below international levels, which gives Chinese cargoes a built-in cost advantage. An Indian importer said the new quotas, even if partial, change the calculus of a market that had priced in months of supply scarcity. China’s General Administration of Customs and the National Development and Reform Commission did not immediately respond to requests for comment when contacted by Reuters in late May.

We will prefer Chinese supplies in the current situation as shipments are far more predictable. They do not have to pass through the Strait of Hormuz and are therefore more likely to be delivered on time.

A senior official with an Indian fertilizer-producing company, quoted by Reuters, May 27, 2026.

The Subsidy Bill That’s Still Climbing

The price drop offers partial relief on the import side, but the bigger fiscal pressure is a fertiliser subsidy bill on track to nearly double in the current fiscal. The government budgeted Rs 1,70,799 crore for fertiliser subsidy in 2026-27, but a Finance Ministry official told the Indian Express this week that the bill could touch Rs 3,40,000 crore, well above the previous record of Rs 2,51,339 crore in 2022-23.

At about 45% of India’s total fertiliser consumption, urea is also the single biggest line item in the import bill. Imports alone ran to 11.17 million tonnes in 2025-26, valued at $5.16 billion. The cost-plus-freight price for the April tender was more than double the $410 to $420 per tonne India paid a year earlier, which is why the budgeted figure now looks unrealistic.

Government data from the Controller General of Accounts shows India spent Rs 22,033 crore on fertiliser subsidy in April, roughly 13% of the full-year estimate, in the first month of the fiscal. The revised estimate for 2025-26 itself was breached: the actual subsidy last year came in at Rs 2.11 lakh crore, Rs 24,920 crore more than the revised estimate. That would be the highest subsidy bill on record. Cheaper urea does not by itself fix the bill, but it caps how much further it can climb before kharif sowing ends. The latest subsidy projection and the underlying import-cost math were reported by the Indian Express earlier this week.

The pressure is not limited to fertiliser. Fuel prices have added an estimated Rs 1.23 lakh crore in revenue foregone from a Rs 10 per litre excise duty cut and OMC under-recoveries. Fertiliser was one of the three items Finance Minister Nirmala Sitharaman has flagged, along with fuel and foreign exchange to buy gold, as pressuring the rupee through the West Asia war.

The Kharif Clock

Across the cropping calendar, urea is generally applied to fields shortly after sowing, which typically begins in late June once the monsoon arrives. Late June is the start. The agriculture ministry has trimmed the kharif urea requirement to 19 million tonnes from 19.4 million tonnes, in part because of the supply shock and in part because of a campaign to push farmers toward lower-dose, soil-friendly alternatives. India had already procured around 40% of its annual urea import requirement at close to double the pre-crisis price before the latest tender opened.

The new cargoes from this tender would be landing at Indian ports in August, in time for the back end of the kharif application window. The fertiliser ministry’s overall stock position is comfortable: 197.56 lakh tonnes of fertiliser is on hand. That is 51% of the 383.9 lakh tonnes the government estimates is needed for the kharif. Prime Minister Narendra Modi has appealed to farmers to cut chemical fertiliser use by 50% to protect soil health and lower import dependence. Agriculture ministry officials have also flagged concerns about fertiliser diversion to industry, where subsidised urea is more profitable to sell than to apply to fields.

Top six urea suppliers to India in 2025-26, in tonnes shipped:

• China: 2.23 million tonnes
• Oman: 1.91 million tonnes
• Russia: 1.64 million tonnes
• Qatar: 0.95 million tonnes
• Indonesia: 0.65 million tonnes
• Saudi Arabia: 0.65 million tonnes

The Risks India Still Faces

The relief in this tender is real but conditional. Sources cited by Kotak Neo warned that China may again impose strict export curbs after August 2026, tightening availability just as India heads into the rabi planting season. The same report notes that India had already committed around 40% of its annual import requirement at close to double the pre-crisis price.

Domestic production is exposed to a different bottleneck. Nearly 85% of the gas used to make urea in India is imported, and more than half of those LNG imports come from West Asia, the same region that is at war. Iran and Hormuz-constrained countries account for around 30% of global urea trade, per market estimates, and the Strait of Hormuz has been largely blocked since February 28. So a fall in import prices does not insulate the subsidy bill from another gas shock. The import bid analysis and China quota warning from Kotak Neo flag the same dependency.

Diversion of subsidised fertiliser from farms to industry is a separate, recurring concern flagged by government officials. The Indian Express quoted one source as asking how a farmer who needs one sack can use five or seven.

There is also a familiar risk that the price floor holds for a few months and then gives way once Chinese producers prioritise their own farmers again. India’s response, beyond the tender, has been to push farmers toward alternatives and to seek more Russian supply, with mixed results so far. Fertiliser Ministry officials have said they do not see signs of fertiliser prices coming down further in the near term.

Frequently Asked Questions

Why did India’s urea tender prices fall so sharply?

Bids in the National Fertilizers Ltd tender opened on June 8, 2026 came in at $444.9 to $449.3 per tonne on a cost-plus-freight basis, substantially lower than the $935 to $959 the Indian Potash Ltd tender cleared at in April. The drop tracks China’s decision to issue fresh urea export quotas in late May after a March ban, and a broader easing of demand as several importing countries deferred purchases after the Iran war price spike.

When will the cheaper urea reach Indian farms?

Shipments under the new tender must leave origin ports by July 20, so the cargoes would land in August. That window lines up with the back end of the kharif application period, after sowing typically starts in late June with the monsoon.

Will the price drop lower the government’s fertiliser subsidy bill?

The drop caps how much further the bill can climb, but it does not roll back what India has already paid. The government budgeted Rs 1,70,799 crore for fertiliser subsidy in 2026-27, and a Finance Ministry official told the Indian Express the bill could touch Rs 3,40,000 crore. India had already locked in around 40% of its annual urea import requirement at close to double the pre-crisis price before the latest tender.

Why is China so important for India’s urea supply?

China was the single largest source of Indian urea imports in 2025-26, shipping 2.23 million tonnes of a record 11.17 million tonnes, ahead of Oman and Russia. Chinese cargoes do not pass through the Strait of Hormuz, which has been largely blocked since February 28, and that predictability is why Indian buyers now prefer them.

Could prices spike again before the kharif season ends?

Industry sources cited by Kotak Neo warned that China may again impose strict export curbs after August 2026. India’s domestic production, meanwhile, depends on imported LNG for nearly 85% of its feedstock, and more than half of those imports come from West Asia, the same region at war.