India's last urea tender quotes price 50% lower than Apr as China opens up

The price fall could come as relief to farmers and government on subsidy

Amid the gloom surrounding India’s fertiliser subsidies for 2026-27 (FY27), there is some light at the end of the tunnel.

 

India’s latest tender floated by state-run National Fertilisers Limited (NFL) to import 1.7 million tonnes of urea quoted bids at prices as low as $445-449 per tonne (CFR) for deliveries on the East and West Coasts.

 

This is over 50 per cent lower than the price finalised in the last international tender floated in April.

 

The price quoted in the tender floated by Indian Potash Limited in April  was settled at $935(West Coast)-959 (East Coast) per tonne for supplies of 2.5 million tonnes of urea.

   

Sources said the price crash happened because China decided to open up its urea exports which had been under control since March.

 

“At least on the East Coast of India, a large chunk of the supplies will be coming from China due to geographical proximity,” a senior industry official said.

 

In total, against the tender to purchase 1.7 million tonnes of urea, bids equivalent to around 3.17 million tonnes were received for supply to the East Coast. And, bids equivalent to another 3.07 million tonnes were received for supplies to the West Coast.

 

In total, bids amounting to around 6.24 million tonnes were received from almost 34 firms against the tender for 1.7 million tonnes.

 

“A similar thing also happened in 2022 when the landed price of urea touched almost $1000 per tonne due to the Russia-Ukraine war. Then, there was a sudden fall in rates due to enhanced supplies,” the official added.

 

He said the situation may remain comfortable until August 2026 after which China could again start imposing stringent curbs on imports.

 

The latest price drop should bring a major relief to the government, which is grappling with a rising fertiliser subsidy. This is due to a spike in the landed price of urea and a sharp escalation in the cost of liquefied natural gas (LNG) due to the West Asia crisis.

 

India, according to some estimates, imports around 30 per cent of its annual urea from West Asia. Almost 50-60 per cent of LNG supplies come from the same region.

 

According to an Indian Council for Research on International Economic Relations (ICRIER) report, in 2024–25, India imported around 5.6 million tonnes of urea, accounting for around 15 per cent of domestic consumption, with key suppliers being Oman, Russia, Saudi Arabia, Qatar and the United Arab Emirates (UAE).

 

More fundamentally, the domestic production of nitrogen fertilisers relies heavily on natural gas as the primary feedstock. The fertiliser sector accounts for nearly 29 per cent of India’s total natural gas consumption. And, more than half of the country’s gas requirements are met through imports.

 

In the same year, India imported about 27 million tonnes of LNG, around 61 per cent of which was sourced from West Asia, particularly Qatar, the UAE and Oman. Almost 85 per cent of the gas used in urea production in India is imported largely from this region, the report said.

 

On Tuesday, a senior official from the Ministry of Finance said that the government’s fertiliser subsidy bill, estimated at ₹1.7 trillion in the Budget for FY27, is expected to double to over ₹3.4 trillion due to the West Asia war.

 

The previous high was ₹2.5 trillion in FY23 after the Russia-Ukraine war broke out.