Hearing gran urea offers down to USD 520-530 cfr Brazil
**China Summary**
On exports, the CNFIA floor price holds at USD 660 FOB prills and USD 670 FOB granular, but the absence of clear policy detail and sharply declining global prices means no business is being concluded at these levels. A CNFIA meeting in Beijing today confirmed the first quota tranche at approximately 2.6 million MT, comprising 1.6 million MT allocated to urea producers, 800,000 MT to distributors, and 200,000 MT to phosphate producers, all requiring shipment before end of September. Cargoes must originate from producers holding self-discipline recognition status and may only be sold through qualifying distributors or proprietary trading arms. The floor price remains unchanged for now, though CNFIA has indicated it will track market trends and adjust if warranted. With global values continuing to fall, the floor remains above where the market can clear.
As of June 3, 2026, the total inventory of China’s urea enterprises stood at 891,400 tons, a decrease of 29,600 tons from the previous cycle, marking a 3.21% month-on-month decline. During this period, the domestic urea enterprises’ inventory saw a reversal from a sustained upward trend to a slight downward trend. The primary reason for this shift was the impact of export news on market sentiment in the previous week. As most major regions experienced improved sales and accumulated pending orders, the pressure on inventory eased slightly. However, the overall market demand remains insufficient, and the inventory levels remain high. Provinces with increased enterprise inventory: Hebei, Heilongjiang, Inner Mongolia, Ningxia, Qinghai, Shanxi, and Sichuan. Provinces with decreased enterprise inventory: Gansu, Henan, Hubei, Jiangxi, Shandong, Shaanxi, Xinjiang, and Yunnan.
Key points from the meeting of the Nitrogen Fertilizer Association this afternoon:
1. Quotas are applied for, approved, and subject to stringent requirements on the platform. Each order is tied to a single contract. Minimum orders for large, medium, and small particles are 200 tons each. For automotive urea, the minimum order quantity is 100 tons.
2. The submission deadline for the first batch of export quotas has been extended to September 30. India will charge an additional USD 20 per ton.
3. The current minimum price cap will be strictly enforced, and it will be adjusted in real-time based on international market conditions moving forward.
In June and July, we will only be able to export half of what we planned. We will adjust our output accordingly based on sales performance.
5. The association has noted the rising costs of urea domestically. Should there be an opportunity to adjust the price cap in the future, it will consider increasing the price cap due to cost support.
6. Enterprises with higher export prices will receive incentives for their next allocation.
7. Those that were left unfinished last year can be continued.
8. Reducing prices domestically is not encouraged, as it could impact the setting of next year’s suggested retail prices.
**Falcon Paper Values**
Morning. Urea values came back under pressure y'day, nullifying any gains/support seen on Monday. Activity focused on Nola, as Q3 paper traded low-$450s to $435, while July Brazil found value again under $520cfr ($531 Mon, $516 Fri). Mkts framed:
*AG*
Jun $515//$560
Jul $522//$540
*Cfr Brazil*
Jun $515//$545
Jul $517//$530 – traded $517
Aug $510//$535
*Egypt*
Jun $550//$625
Jul $525//$590
*cfr Brazil AS*
Jun $250//$270
Jul $250//$275
Aug $250//$275
*FOB China (Comp'd) AS*
Jun-Jul $230//$250
*Nola Urea*
Phys: Prompt traded $445
Paper:
Jun $440//$455
Jul $433//$440 – traded $440
Aug $430//$440 – traded $440
Sep $430//$440 – traded $440
Oct $$430//$440 – traded $445 (500st)
Q3 $435//442 – traded $453, $440, $435, $438
Q4 $435//$445
Q1 $435//$460 – traded $450
*DAP Nola*
Jun $765//$790
Jul $772//$790
Aug $775//$790
Sep $775//$790
*MAP Brazil*
Aug $910///$930
Sep $892//$910
QatarEnergy is closing a sales tender tomorrow, 4 June, basis FOB Mesaieed. Tender details are as follows:
Granular urea in bulk
Quantity: 30-45,000t
Loading: 5-15 June
Deadline for submission of bids: 4 June at 12:00hrs Doha time.
Key points from the meeting of the Morning Trading Association:
1. The quota for distribution companies must be obtained only from self-regulating urea factories (in other words, you cannot purchase products from factories that do not have a quota for exporting urea).
2. The window period for the first batch of export quotas ends on September 30. Exports should be made as soon as possible.
3. The minimum export price will be revised downward.
4. Overcome the restriction that only half can be released in June by releasing it as soon as possible and at a high price.
5. Exports with higher prices will receive preferential treatment regarding the allocation of future quotas.
In China today, the industry produced 219,400 tons of urea per day, an increase of 2,000 tons from the previous working day; compared to the same period last year, this represents an increase of 13,700 tons. The current utilization rate is 91.95%, up by 2.51% from 89.44% last year.
NCIC in Egypt just issued new tender closing on the 9th June
30kt DAP
10kt TSP
3kt CAN
**Freight**
Big spike in fujairah bunker prices today (up to around 1400usd pmt from 1000 yesterday…) lack of availability! expect to hear more in the next day or two if this is going to shoot up further or balance out.
Below is a sample data set that our Freight Analytics is trained on, which arrives in daily. We can see in near real-time, which trade routes are being priced up. The beauty of this data set, is that it shows you those companies that are in need of a vessel outside of their "usual" broker or in-house channels.
**A quick overview of this data shows you:**
a) If you need DAP call Vietnam
b) Amsul is still readily available within China
c) Iranians are pricing up cargoes, so they must have the ability to get out of the straits
d) Nigeria regularly shipping to Ethiopia/Djibouti
e) Pakistan are in the market for Rock
**Open Freight Enquiries 1st June 2026 (SAMPLE)**
ACCOUNT DEAD SEA WORKS
40/65,000 DWT – DELY PORT SAID – BULK FERTS – REDEL INDIA OR CHINA – 17/21 JUNE
40/55,000 DWT – DELY RED SEA – BULK FERTS – REDEL INDIA OR CHINA – 17/21 JUNE
6,000 BULK FERTS – ASHDOD/1 UKRAINE – 24 HRS X/1,500 X – 6/9 JUNE
ACCOUNT GRAIN COMPASS KFT
36/64,000 DWT – DELY NIGERIA – BULK FERTS – REDEL DJIBOUTI – 15/30 JUNE
ACCOUNT INDAGRO
30,000 BULK AMMOSULPHATE – XIUYU/TUTICORIN – 7,000 C/8,000 X – 1/10 JUNE
ACCOUNT L.S.I.
50,000 DWT – DELY ADABIYA RANGE – BULK UREA – REDEL BANGLADESH – 10/15 JUNE
35,000 DWT – DELY MOROCCO RANGE – BULK PHOSROCK – REDEL BANGLADESH – 17/20 JUNE
ACCOUNT LOCH SHIPPING INTERMEDIARY FZE U.A.E.
35,000 DWT – DELY MOROCCO – BULK PHOSROCK – REDEL BANGLADESH – 17/20 JUNE
ACCOUNT SILK ROAD
54/61,000 DWT – DELY RED SEA – BULK FERTS – REDEL INDIA – 20/30 JUNE
50/58,000 DWT – DELY TUNISIA – BULK FERTS – REDEL WEST COAST INDIA – 8/13 JUNE
40/58,000 DWT – DELY AQABA-RED SEA – BULK FERTS – REDEL SINGAPORE/JAPAN RANGE – 13/20 JUNE
ACCOUNT TRANSEAS INTERNATIONAL
52/63,000 DWT – DELY SAFAGA – BULK PHOSROCK – REDEL VIETNAM/SOUTH CHINA – 5/15 JUNE
ACCOUNT VB VENTURE
33,000 BULK AMMOSULPHATE – XIUYU/VIZAG OR KAKINADA – 5,000 C/7,000 X – 15/20 JUNE
30,000 BULK DAP – LONGAN/SAGAR & DIAMOND – 2,000 X/2,500 X – 10/15 JUNE
MISCELLANEOUS
50,000 BULK PHOSROCK – AQABA/HAZIRA – 12,000 X/10,000 C-12 HRS – 5/10 JUNE
40,000 BULK PHOSPHATE – HAMRAWEIN/TAICANG – 5,000 C/8,000 C – 13/15 JUNE
30,000 BULK FERTS – AQABA/1 POC – 4,500 X/4,000 X – 7/13 JUNE
10,000 BULK FERTS – AQABA/PIVDENNY – 3,000 X/2,000 X – 13/17 JUNE
9/10,000 BULK PHOSROCK – SAFAGA OR HAMRAWEIN/KARACHI – 4,000 X/2,500 X – 1/10 JUNE
8,000 BULK UREA – BANDAR ABBAS OR ASSALUYEH/DJIBOUTI – 5,000 C/5,000 C – FLEX LAYCAN
3,000 BULK FERTS – TARTOUS/CHORNOMORSK OR PIVDENNY – 1,500 X/1,500 X – 9/14 JUNE
2,000 BULK FERTS – KOPER/MOLFETTA OR BARI – 4 DAYS X – 1/5 JUNE
(ALL THE ABOVE INFORMATION IS GIVEN AS A GUIDE ONLY AND SHOULD BE VERIFIED INDEPENDENTLY)
**Present Cost Economics for Urea in China**
**Overview**
China's urea production margin picture remains deeply split along feedstock lines. Coal-based producers are holding their heads above water. Gas-based producers are not. That divergence is shaping export availability and will continue to do so in the near term.
**Feedstock Costs**
Coal is unchanged at CNY 1,000/t with zero week-on-week movement. Natural gas sits at CNY 2.34/unit, also flat. Synthetic ammonia, the intermediate product common to both routes, has nudged up 0.81% to CNY 2,230/t. The ammonia move is marginal but worth watching if it sustains.
**Urea Production Margins**
Urea at the plant gate has risen 3.37% to CNY 1,840/t. That price gain flows very differently depending on your feedstock. Coal-route producers are booking a margin of CNY 198/t, up 14.45% week on week. That is a meaningful improvement and keeps the coal-based segment incentivised to run. Gas-route producers, by contrast, are sitting on a
loss of CNY 153/t, down a further 11.56%. Gas-based production is structurally uneconomic at current settings. Those plants have no reason to increase run rates and every reason to curtail.
**Full Production Costs by Route**
Looking at full production costs across the three main routes helps contextualise the margin picture. Fixed-bed coal process costs are estimated at CNY 1,650 to 1,750/t. Coal gasification (water slurry) is the most competitive coal route at approximately CNY 1,500/t, reflecting the efficiency gains from newer entrained-flow bed technology. Gas-based
urea sits at CNY 1,800 to 1,850/t. With urea currently priced at CNY 1,840/t at the plant gate, the gasification route is comfortably profitable, fixed-bed is marginally in the money, and gas-based production is right at or fractionally below breakeven depending on the specific plant and gas tariff. It is worth noting that third-party data from SteelUnion (December 2025) places these costs somewhat higher: fixed-bed at CNY 1,917/t, coal water slurry at CNY 1,526/t, and gas-based at CNY 1,978/t. The gasification figure is broadly consistent across both sources. The fixed-bed and gas-based figures diverge, likely reflecting differences in methodology, regional coal pricing, and reference period. Readers should treat the figures as indicative of the cost order-of-magnitude rather than precise plant-level data.
**Downstream Markets to Urea**
Both key downstream segments are showing severe margin compression despite relatively stable output prices. Compound fertiliser is priced at CNY 3,420/t (flat week on week) but the processing margin has collapsed 41.67% to just CNY 49/t. Melamine tells a similar story: price down 0.86% to CNY 5,783/t, with the margin down 50.86% to CNY199/t. In both cases, cost push from urea is outpacing any ability to pass through price increases downstream. Blenders and melamine producers are being squeezed hard.
**Aquifert View**
The coal-gas split matters for the global urea market. China's exportable surplus depends heavily on how many tonnes are running profitably. Coal-route capacity is incentivised; gas-route capacity is not. Net-net, available export volume remains constrained by the gas-route drag even as coal-route producers push on. Downstream margin compression
adds a further layer: if compound fertiliser and melamine producers cut output in response to squeezed margins, domestic urea demand softens, which could release more tonnes for export. That dynamic bears watching into Q3.
**F/X**
The rupee ended Monday almost exactly where it started, closing at INR 94.99 per USD versus INR 95.00 on Friday. MSCI rebalancing flows gave it a lift early on but corporate hedging demand ground that away through the afternoon. Near-term range looks like INR 94.50 to 96.00. The real focus is Friday's RBI policy decision. Markets are pricing a faster, more aggressive hiking cycle than the RBI's own guidance implies. BofA reckon that's overdone and are fading it via 1-year INR NDF OIS. Worth watching.
The dollar had a quietly eventful Monday. The dollar index edged up 0.18% to 99.195 after last week's 0.4% slip, with direction dictated almost entirely by Middle East noise. The U.S. struck Iranian air defences over the weekend, Iran hit back at a U.S. air base, and Tehran briefly paused back-channel negotiations entirely. Trump then claimed he'd secured a pledge from Hezbollah not to attack Israel, which trimmed some of the safe-haven bid. Net result: not much movement, a lot of uncertainty. The euro slipped 0.26% to USD 1.1632. Sterling held flat at USD 1.3457.
The broader dollar thesis hinges on Hormuz. If the strait reopens and oil comes off, the dollar weakens and risk currencies outperform. If it stays shut, energy inflation stays elevated, the Fed tightens, and the dollar holds. Simple enough in theory. Harder to trade when Tehran is stopping and starting talks on a daily basis.
On the Fed, markets have flipped from pricing cuts to pricing hikes since the conflict began in February. Friday's payrolls print will be the next data point. Consensus is 85,000 jobs added in May with unemployment steady at 4.3%. Jerome Powell, whose term as Fed Chair formally ended last month but who remains on the Board, used a Sunday speech to warn against politicisation of monetary policy. That tells you something about the environment he is operating in.
In Japan, all eyes are on BoJ Governor Ueda's Wednesday speech ahead of next week's rate decision. No internal consensus yet, but a pause in the bond purchase taper is gaining traction behind the scenes. The yen is at 159.71 per USD, uncomfortably close to the 160 level that triggered intervention last time around. As one FX strategist put it: 160 is where they draw the line.
**GRAINS**
Soybeans took a beating on Monday. CBOT July futures settled down 6 cents at USD 11.80-3/4 per bushel, with benign U.S. Midwest weather doing most of the damage. Traders are sitting on their hands ahead of the USDA weekly crop progress report due later today. The first soybean condition ratings of the season are expected to show 68% of the crop in good-to-excellent condition. That is a comfortable number and the market knows it.
The one bright spot was soyoil. Middle East tensions flared again, Brent crude pushed above USD 95/bbl on renewed U.S.-Israeli-Iranian hostilities, and soyoil rode the crude rally to a four-year high, settling up 1.37 cents at 79.09 cents per pound. Soymeal had no such luck, ending USD 3.30 lower at USD 326.50 per short ton.
The USDA confirmed private sales of 60,000 MT of old-crop and 132,000 MT of new-crop U.S. soybeans to undisclosed buyers. Decent volumes but the market shrugged.
Canola and rapeseed tracked the vegoil complex higher. ICE July canola rose USD 5.70 to USD 776.60/MT, with November up USD 13.60 to USD 786.30. Euronext rapeseed gained 0.81%. The Canadian dollar weakened, offering some additional export competitiveness on the canola side.
In short: weather is friendly, crops look good, and the only thing keeping the complex from a harder sell-off is geopolitical noise out of the Gulf keeping crude and vegoils elevated.
PAPER VALUES – FALCON
Morning. Urea paper saw a more supportive tone emerge y'day – July Brazil & AG traded in the $530s (Brazil $516cfr on Fri), while Nola values moved up into the $465-$470 range across June/Q3 months (up $20-$25 from trading levels on Fri). Mkts framed:
*AG*
Jun $535//$575
Jul $530//$570 – traded $535
*Cfr Brazil*
Jun $530//$565
Jul $530//$555 – traded $528-31
Aug $520//$570
*Egypt*
Jun $550//$630
Jul $530//$600
*cfr Brazil AS*
Jun $250//$275
Jul $250//$275
Aug $250//$280
*FOB China (Compacted) AS*
Jun-Jul $230//$250
*Nola Urea*
Phys: Loaded traded $460; Fh June $467
Paper:
Jun $455//$465 – traded $470
Jul $450//$468 – traded $465
Aug $450//$470
Sep $455//$475 -traded $465
Q3 $455//475 – traded $470(300st)
Q4 $450//$470
Options: Q3 Nola $420 P traded $10
*DAP Nola*
Jun $765//$790
Jul $765//$790
Aug $760//$785
Sep $765//$781
*MAP Brazil*
Aug $910///$930
Sep $892//$910