Urea prices in Europe have risen sharply due to supply disruptions from the Middle East

The European urea market experienced a sharp price increase in early March due to a sudden supply shock caused by supply disruptions from the Middle East. The region accounts for around 35% of global seaborne exports, so any logistical constraints are immediately reflected in the European market.

Following the disruption of shipping in the Strait of Hormuz, a significant portion of the spot market has effectively disappeared. European importers, who traditionally rely on supplies from North Africa and the Persian Gulf, have been left with limited alternatives.

At the start of the week, granulated urea prices in France were around €545/t FCA, but within a few days they had risen to €630-635/t. Individual deals for small lots were concluded at prices of up to €660-665/t, while suppliers from the UK temporarily suspended their offers.

Additional pressure on the market is exerted by uncertainty over gas supplies to Egypt after the suspension of exports through Israeli pipelines, which threatens the production of one of the key suppliers to Europe. At the same time, France and Germany have recorded increased purchases against the background of the beginning of the spring agricultural season.

According to market participants, in the short term, prices may increase by another 8-12% over the coming weeks. At the same time, a correction of up to 30% is not ruled out within a two-month horizon, provided that logistics stabilize and there are no further production losses.

In the medium term, the market may remain relatively stable if the current situation is limited to logistical disruptions and does not develop into a full-fledged production crisis.