China retains stable supply of fertilizers

Rising tensions in the Middle East could drive up costs for China's agricultural sector by hiking global energy and fertilizer prices, although the country's domestic food supply remains stable, according to officials and industry experts.

The impact of the conflict is expected to be transmitted largely through disruptions to fertilizer production, energy transportation and global commodity markets, said Li Guoxiang, a researcher at the Chinese Academy of Social Sciences' Rural Development Institute.

About one-fifth of the world's fertilizers are produced in the Gulf region, with roughly 46 percent of global urea supply originating there, Li said. Any disruption to shipping through the Strait of Hormuz, coupled with a surge in oil prices, could force fertilizer plants reliant on natural gas to cut production or shut down.

Reduced supply would likely push fertilizer prices higher, increasing farming costs or prompting reduced usage, potentially affecting crop yields and food prices, Li added.

China has already seen some short-term market reactions.

Domestic grain prices briefly rebounded following the initial escalation of tensions, while fertilizer and diesel prices also edged up.

However, analysts and industry officials say the country's strong domestic production capacity has helped mitigate the impact. China maintains a high level of self-sufficiency in fertilizers, supported by government regulation and reserves.

"Overall, grain and fertilizer markets have gradually returned to stability, which supports the prospects for another good harvest this year," Li said.

China's fertilizer supply remains ample, particularly for urea and compound fertilizers, according to industry data. Coal-based production accounts for nearly 80 percent of the country's urea capacity, resulting in a largely self-reliant system.

From the beginning of the spring planting season, urea producers have been operating at close to 90 percent capacity, higher than the same period in 2025, said Fu Chunhua, deputy director of the China Agricultural Means of Production Association.

At a major production base in Linyi, Shandong province, a factory is producing between 3,000 and 4,000 metric tons of high-nitrogen fertilizer daily, with sales volumes at similar levels, according to a company manager.

Across Shandong, fertilizer application for spring farming has been largely completed, with stable supply and prices. Nitrogen fertilizer prices have remained steady, while compound fertilizer prices have risen by 10 to 15 percent compared with levels before the Chinese New Year holiday.

National data shows only modest increases. The average ex-factory price of domestic urea rose 0.12 percent month-on-month and 1.69 percent year-on-year in early April, while compound fertilizers rose 1.78 percent month-on-month and 14.17 percent year-on-year.

China's reserve system has also played a stabilizing role.

Fertilizer stockpiles built during off-seasons are released during peak demand periods to curb price fluctuations.

In Shandong alone, a supply and marketing cooperative managed reserves of 170,000 tons, distributing them ahead of the spring planting rush to ease market pressure.

Distribution networks have also improved efficiency. In some areas, digital platforms now allow farmers to input field data and receive tailored fertilizer recommendations, with orders fulfilled through nearby supply outlets.

Large-scale farmers have taken additional steps to hedge against volatility. Many secure fertilizer supplies months in advance, often immediately after the autumn harvest, insulating themselves from seasonal price swings.

Despite stable supplies, rising energy prices remain a concern. China's highly mechanized agricultural sector depends heavily on fuel, and higher diesel costs could increase both production and transportation expenses, potentially affecting grain prices later in the year.

Li said the duration and intensity of the Middle East conflict remain uncertain, highlighting the need for stronger monitoring and early warning systems.

Authorities should improve market oversight and guide public expectations to prevent panic, he said, while guarding against misinformation about global food shortages.

If input costs rise sharply, policymakers could consider temporary subsidies for farmers, including support for fertilizer and fuel expenses, to maintain planting incentives and safeguard food production.

Contact the writers at zhaoruixue@chinadaily.com.cn