Friday’s Insider: China, China, China!!!

The fertilizer market — and mainly urea — was surprised on the last day of April by a rumour that China would be returning to the urea export market with approximately 3–4 million tonnes between the second half of May and September inclusive. Needless to say, all market participants caught their breath while trying to digest the news.

Let’s take a broader view and analyse what might be behind this possible move by the Chinese government.

Before the imposition of tariffs, China was a major exporter to the United States. In 2017, Chinese exports to the U.S. were valued at approximately $430.3 billion, accounting for about 19% of China’s total exports. The U.S. imported a wide range of goods from China, including electronics, machinery, furniture, toys, and textiles.

However, trade dynamics have shifted significantly due to the imposition of tariffs. Starting in 2018 and escalating in the following years, the U.S. implemented multiple rounds of tariffs on Chinese goods. By April 2025, these tariffs had reached up to 145% on various Chinese imports. This sharp increase has led to a notable decline in Chinese exports to the U.S. For instance, container shipments from China to the U.S. have decreased by at least one-third.

What does this mean for China? Losing one of its major trade partners will undoubtedly result in reduced income for the national budget. In other words, China needs to identify alternative revenue streams to fill the gap caused by the imposition of tariffs. As one of the world’s major fertilizer producers, resuming exports could be part of the solution. However, over the past three years, China has been more concerned with ensuring fertilizer affordability in its domestic market than focusing on exports. Unsurprisingly, just the rumour of possible urea exports caused local prices to spike, despite the application season nearing its end.

So, it looks like China faces a double-edged sword: export revenues versus high local prices. What will the country choose?

P.S. When I was preparing this article, one of my contacts said to me: “It seems that you don’t understand the real thinking of the Chinese government. They don’t care about urea or other fertilizer exports. The goal is to allow vested interests to gain huge wealth in the financial market through price fluctuations.”

I don’t think anyone can fully understand China’s moves, and I’m certainly not pretending that I do. But I am trying to see the bigger picture behind each one.

Have a great weekend, everyone.

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About the Author of “Friday’s Insider”: Ilya Motorygin is the co-founder of GG-Trading and brings 30 years of experience to the fertilizer industry. Renowned for his comprehensive problem-solving skills, Ilya expertly manages deals from inception to completion, overseeing aspects such as financing, supply chains, and logistics.