Conclusion
The previous piece argued that the fertilizer constraint does not vanish — it moves. Where it moved is nitrogen. So nitrogen's balance is the next thing to examine.
The conclusion first. The acute phase has peaked. But the structure remains — and every escape route on the phosphate side merges into nitrogen. And Japan carries a weakness of its own that is rarely discussed: the last domestic foothold of its nitrogen supply is quietly thinning.
Where Japan's Nitrogen Comes From
Urea imports run at 256,000 tonnes a year: Malaysia 74%, Vietnam 10%, Saudi Arabia 5%, China 3%, with domestic production at 3% (about 9,000 tonnes). It draws less attention than phosphate's 72% dependence on China, but a 74% concentration on a single country is actually higher. And as the preceding pieces showed, it is diversification of the change-the-counterparty kind — the resource that sets the price, natural gas, has not changed.
The other pillar is ammonium sulfate. For decades Japan produced more than it consumed and even exported it — because it comes off as a byproduct of caprolactam, the nylon feedstock. But the chemical majors have begun shutting domestic caprolactam and ammonia production, and the domestic supply base of ammonium sulfate itself is now wobbling (Norinchukin Research Institute, July 2025). A structure that rode on nitrogen nobody made for fertilizer's sake thins out together with the industry's retreat — the fragility of byproduct dependence.
Ammonia imports run at 200,000-300,000 tonnes a year, part of which goes into ammonium sulfate and compound fertilizer.
Japan's nitrogen, in short, stands on two legs: urea dependence on a single country, and a shrinking byproduct base at home.
The Acute Phase Has Peaked
Start with international prices. Urea for India ran up to roughly $890 a tonne in April. At June's tender (1.7 million tonnes) it drew oversubscribed bids around $445 — nearly half. Northeast Asian prices fell 15.8% month on month in July. Hormuz freight premiums have eased, and Russia, Indonesia, Malaysia, Egypt and Oman have filled the gap. Indonesia has approved its 2026 export licences.
And China moved first — on urea. After an eight-month effective halt, quotas of 1.5-1.6 million tonnes for June-August (plus roughly 400,000 tonnes of intergovernmental supply) were communicated directly to producers — with no official announcement — and exports resumed under a price floor of $660 a tonne FOB. Domestic prices are equivalent to just under $300, so the design protects the home market while capturing only the high prices.
As the previous piece noted, this is also the template for August's phosphate decision.
The Structure That Remains
Passing the peak is not the same as coming down the mountain.
The Gulf accounts for 36% of world urea exports (2023-25), and its largest suppliers were Iran and Qatar. Repairing Qatar's Ras Laffan complex runs in years. 34% of world urea trade and 23% of ammonia trade transit Hormuz (IFA), and natural gas makes up 60-80% of nitrogen's production cost (ditto). As long as gas is expensive, nitrogen is expensive. Europe's nitrogen sits at the margin of the global cost curve and stops when gas spikes; South Asian producers depend on Gulf LNG.
In Russia, strikes continue on the Azot plants that make nitrogen fertilizer and nitric acid — because nitric acid is also a feedstock for explosives. One of the world's major nitrogen-producing regions is being struck intermittently.
New capacity is coming: about 4.6 million tonnes a year of additional ammonia over the next two years, Qatar's plan to double urea capacity from 6 to over 12.4 million tonnes, and the Mitsui-ADNOC low-carbon ammonia project at Ruwais (1 million tonnes a year) possibly joining in 2027. But none of it lands before 2027. The IFA demand scenarios run at -1 to -2% for 2026/27 (-4% in the deep scenario), converging on 124 Mt N by 2030 — demand is inelastic, pressed against a tightened supply.
Every Escape Route Merges Into Nitrogen
This is the thesis of the piece. Re-examine the phosphate-side solutions counted so far, from nitrogen's side, and they all point the same way.
The TSP shift. Morocco's OCP answered expensive sulfur by switching its mix to TSP, which uses no ammonia. But MAP and DAP carried nitrogen bundled in; TSP carries none. The nitrogen that came bundled with phosphate drops out — and that demand moves to urea. OCP's ammonia purchases fall, but the field's nitrogen requirement does not disappear. Only the addressee on the invoice changes.
The nitrophosphate route. The Odda process, which needs no sulfuric acid, re-ties phosphate to ammonia — the identical resource as nitrogen. The further that conversion goes, the higher nitrogen demand stacks.
Fuel ammonia. Japan is pushing ammonia co-firing at coal plants — a 20% co-firing demonstration has already run at Hekinan. If it scales in the 2030s as planned, ammonia as fuel joins fertilizer in the same procurement market.
Escape sulfur, escape phosphate, or head for decarbonisation — the landing point is nitrogen. Nitrogen has become the junction of the escape routes. When demand converges on a junction, even if today's peak has passed, the next one tends to be higher.
China's Disasters: This Is Where the Template Comes From
The previous piece argued that disasters cut almost entirely one way — against resumption — for phosphate. For nitrogen the link is even more direct.
China's urea is mostly coal-based and power-sensitive. In 2022, Sichuan's drought drained the hydropower system and forced electricity rationing on chemical plants. And the origin of the current export-restriction era was nitrogen itself — in the autumn of the July 2021 Henan floods and an energy crisis, urea futures spiked, and export inspections began that October. The template — a summer of disasters becomes an autumn of restrictions — was set by urea, not phosphate.
The rains that began on 4 July are assembling the same conditions this year. With the price-floor mechanism now in place, tightening would likely appear not as a full halt but as smaller quotas and a higher floor.
What to Watch
Spring pricing. Whether Zen-Noh's November prices bring imported urea down — the test of whether the international halving reaches Japanese shelves.
China. Whether quotas continue past September, and the level of the floor. The tally of disaster damage.
Gas. JKM and European gas prices — 60-80% of nitrogen's cost is set here.
Qatar. Ras Laffan repair reports and progress on the urea-doubling plan.
Japan's foothold. Whether the retreat from domestic caprolactam and ammonia production continues; domestic ammonium sulfate volumes.
And the one move that works whichever way this falls: reduce purchased nitrogen itself. Legume rotation and rhizobia fix atmospheric nitrogen in the field; microbial symbiosis can supply up to ninety percent of what a crop needs. In an era when nitrogen has become the junction of the escape routes, the only road that avoids the junction is this one.
Whichever way it falls, the result will be written here.
Related
- Blog The Fertilizer Crisis, Three Months In — the previous piece; the moving constraint and the three-way sorting
- Blog In the Same Week, Three Reckonings Draw Near — China's disasters and the placement of judgment
- Blog Phosphate Fertilizer Will Become Unobtainable in Japan — the phosphate-side forecast. 25 April 2026
- Phosphorus and Farming Chapter 5: Soil Microbes as Strategy — rhizobia and mycorrhizae; the case for reducing purchased nitrogen
References
- Norinchukin Research Institute, on nitrogen fertilizer production and consumption (July 2025) — https://www.nochuri.co.jp/report/pdf/n2507re1.pdf
- MAFF, "The Situation Surrounding Fertilizer" (April 2026) — import shares
- China reopens urea exports with $660pt price floor (Profercy) — https://www.profercy.com/insights/china-reopens-urea-exports-with-660pt-price-floor
- India issues 1.7mt urea tender ahead of monsoon sowing (Fertilizer Daily, 28 May 2026) — https://www.fertilizerdaily.com/20260528-india-issues-1-7mt-urea-tender-ahead-of-monsoon-sowing-as-domestic-production-shortfall-deepens/
- Indonesia approves urea export licences for 2026 (Argus) — https://www.argusmedia.com/en/news-and-insights/latest-market-news/2776095-indonesia-approves-urea-export-licences-for-2026
- IFA Medium-Term Fertilizer Outlook 2026-2030 (6 May 2026) — https://www.fertilizer.org/wp-content/uploads/2026/05/2026_IFA_Medium_Term_Outlook_Report_English.pdf
- Qatar to double urea output by 2030, blue ammonia on-track for 2026 (Quantum Commodity Intelligence) — https://www.qcintel.com/ammonia/article/qatar-to-double-urea-output-by-2030-blue-ammonia-on-track-for-2026-38596.html