We maintain our average Middle East urea price forecast for 2024F at USD320/tonne (-10.5% vs 2023 and ~20% higher vs the pre-COVID level). The average Middle east urea price in 9M 2024 was USD331/tonne (-5% YoY). In Q3 2024, Middle East urea prices rose to an average of USD341/tonne (+9% QoQ, -7% YoY), driven by: (1) India’s urea import tender of ~2.5 million tonnes, with prices ranging from USD364 to USD390 per tonne; (2) escalating geopolitical tensions in the Arab Gulf, affecting key producers such as Saudi Arabia, Qatar, and Iran; and (3) increasing natural gas prices. Looking ahead to end-Q4 2024, Bloomberg Intelligence expects that India may only purchase fewer than 500,000 tonnes, potentially tempering the price rise in Q3.  

We maintain our forecast for an average Middle East urea price of USD350/tonne (+9%) in 2025F. According to industry players, the price of urea could rebound ~9% in 2025F. We expect 9% YoY growth in urea prices in 2025F due to (1) a projected 3% YoY decline in total global exports to 53.7 million tonnes, driven by lower exports from Russia (-1%) and others offsetting a 20% YoY increase from China, and (2) an anticipated rise in gas prices. Additionally, the World Bank forecasts a 46% YoY increase in the Henry Hub gas price. These factors outweigh a 3% YoY projected decline in the Newcastle coal price, according to Bloomberg consensus. 

For 2026-2028F, we maintain our projection of USD330/tonne, which is 6% lower vs our 2025F forecast, partly driven by our projected 4% decline in the Brent oil price from USD78/bbl in 2025F to USD75/bbl for 2026-2028F.

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