Fertilizer Market Analysis in Early December 2025: Cost Push Combined with Tight Supply–Demand Balance Keeps Prices Firm at High Levels

In early December 2025, China’s fertilizer market entered a critical phase characterized by across-the-board cost increases and a continued tight supply–demand balance.

Rising prices of raw materials such as sulfur and sulfuric acid have pushed up costs for phosphate fertilizers and potassium sulfate. Meanwhile, the potash market remains firm at high levels, supported by concentrated supply and rigid winter stocking demand.In the international market, a pattern of strong demand coexisting with uncertainty has emerged, with India’s contract negotiations and regional tender activities becoming key variables influencing the overall market.

Under the interaction of multiple factors, the fertilizer market as a whole is operating under a pattern of cost-driven price increases and volume control amid supply–demand negotiations.

I. Raw Material Market: Broad-Based Price Increases Dominate as Cost Support Continues to Strengthen

In early December, the four core raw materials—phosphate rock, sulfur, sulfuric acid, and synthetic ammonia—all showed rising or firm trends. Cost pressure continues to be transmitted downstream, becoming the primary driving force behind fertilizer price increases.

(1) Raw Material Market Developments

• Phosphate Rock:

In southern producing areas, prices remained stable with upward bias. Outbound shipments from Guizhou were limited, Sichuan mines showed reluctance to sell, and outbound volumes in Hubei declined due to mining quota restrictions. Stable operating rates of downstream phosphate fertilizer plants provided basic support.

In northern markets, conditions were mixed: prices in Hebei stabilized at low levels amid recovering downstream demand, while Liaoning saw sluggish shipments and weaker prices due to subdued demand.

Firm yellow phosphorus prices provided additional support to phosphate rock dedicated to yellow phosphorus production.

The imported phosphate rock market remained stable, with Chinese buyers purchasing on a need-based basis and no significant price fluctuations observed.

• Sulfur:

Port inventories stood at 2.25 million tons (slightly higher week-on-week). Traders’ reluctance to sell reduced circulating supply, pushing transaction prices steadily higher.

Supply expansion by major domestic refineries remained limited, and tight availability persisted. Downstream replenishment demand was stable, with positive acceptance expectations.

On the international front, an Indonesian supplier concluded a 50,000-ton sulfur deal at CFR USD 540–545/ton for January shipment. Prices remained elevated, import replacement costs stayed high, and overall market sentiment pointed to limited downside and strong upward bias.

• Sulfuric Acid:

Prices continued to rise nationwide, with increases of RMB 40–100/ton. High prices of pyrite and sulfur significantly lifted production costs.

On the supply side, maintenance shutdowns at plants in Central and East China reduced output. In South China, higher pyrite costs combined with maintenance tightened supply; Shandong saw cost pass-through from sulfur; Yunnan was supported by tight availability. Prices rose across regions in tandem.

On the demand side, operating rates edged slightly lower but overall support remained adequate. Regional price adjustments varied based on supply– demand dynamics and transportation conditions. In the short term, prices are more likely to rise than fall.

• Synthetic Ammonia:

The price center moved upward, with improved downstream demand driving low-end prices higher.

Maintenance at some plants reduced supply, easing sales pressure. In Central China, maintenance outages stimulated price increases, with short-term supply contraction remaining evident and prices staying firm. In some regions with good sales, further upside potential remains. Due to transportation radius constraints, regional price disparities continue to exist.

(2) Key Characteristics of the Raw Material Market

The tight supply–demand balance in sulfur is difficult to break. The resonance between high international prices and tight domestic availability has become the strongest cost-side driver.

Sulfuric acid and synthetic ammonia prices are being jointly pushed higher by rising costs and supply contraction, with clear upward trends and stronger regional linkage.

II. Potash Market: Tight Supply–Demand Balance Persists, Prices Remain Firm at High Levels

Supported by tight supply, rising costs, and rigid winter stocking demand, China’s potash market continues to operate at high price levels. Potassium chloride and potassium sulfate show differentiated competitive dynamics.

(1) Potassium Chloride: Concentrated Supply + Winter Stocking Support Keep Prices Stable and Volumes Tight

The market is characterized by concentrated port inventories, restricted border trade, and insufficient rail transport capacity.

Port inventories have slowly risen to around 2.45 million tons, but supplies are highly concentrated among a few major traders. Actual market release volumes remain limited, keeping circulating supply tight.

On the domestic side, small and medium-sized producers have entered winter maintenance periods, making supply reductions increasingly evident. Large producers continue stable production to fulfill annual targets. Official list prices remain stable, while actual transactions are conducted on a case-by-case negotiation basis.

On the demand side, winter stocking in northern regions is progressing steadily, mainly driven by demand for granular potassium chloride. Rising compound fertilizer prices have created rigid procurement needs. Inquiries and transactions remain active, with prices fluctuating at high levels.

Border trade potash remains constrained by rail capacity. Since November, imports via China–Europe freight trains have declined significantly, further strengthening port pricing authority. High-end offers have seen limited deal, but overall trading of high-priced cargo has slowed, with transactions mainly in small lots.

(2) Potassium Sulfate: Cost-Driven Price Increases with Limited Downstream Acceptance

Prices have risen slowly under cost pressure, reflecting process differentiation and supply–demand negotiations.

Mannheim-process producers face high potassium chloride and sharply rising sulfuric acid costs, resulting in widespread negative margins. Production enthusiasm has weakened, forcing price increases. However, downstream compound fertilizer producers remain cautious due to cost pass-through pressure, focusing mainly on executing previous orders. Plant inventories remain low.

Resource-based potassium sulfate producers maintain stable operating rates, with official prices largely unchanged. Trader quotations vary due to logistics costs and regional supply–demand differences. Overall prices are lower than Mannheim products, forming a clear price advantage.

III. Phosphate Fertilizers: Cost Pressure Forces Price Increases, Enterprises Suspend Quotations

Driven by sulfur prices reaching new highs, phosphate fertilizer costs have surged significantly, leading to notable increases in actual transaction prices.

Under mounting cost pressure, most producers have suspended quotations and order taking. Some plants have adjusted operating rates or reduced output to control losses.

Downstream demand shows a pattern of rigid demand follow-up with cautious sentiment. Industrial demand for low-grade MAP and DAP recovered gradually after a short adjustment, but mainstream procurement remains cautious. New transactions are mainly small-lot purchases to meet immediate needs.

IV. International Market: Strong Demand Intertwined with Uncertainty

The global potash market is characterized by core demand support alongside disruptive variables, indirectly influencing the Chinese market.

• Demand support: Strong demand from key markets such as Brazil and Indonesia continues to underpin international potash prices and encourages suppliers to raise offers.

• Tender activity: International tenders remain active. An Indonesian importer closed a 190,000-ton potassium chloride tender on December 11 (180,000 tons of standard red/white KCl, delivery in February–March, to be awarded via electronic auction). Tender outcomes will influence regional price trends.

• Uncertainty factors: Capacity expansions and policy adjustments add uncertainty. Although the Carbon Border Adjustment Mechanism effective from January 1, 2026, does not directly apply to potash, it may indirectly affect prices through supply chain costs. The core focus remains on India’s 2026 potash contract negotiations. If concluded at higher levels, they may push up international prices and create a positive “demand–price” feedback loop.

V. Market Outlook: High-Level Firmness to Continue, Focus on Three Key Variables

In the short term, China’s fertilizer market pattern of cost-driven price increases and tight supply–demand balance is unlikely to change. Prices are expected to remain firm at high levels.

• Persistently high sulfur and sulfuric acid prices will continue to transmit cost pressure.

• The potash market will remain tightly balanced, supported by concentrated port inventories, domestic winter maintenance, and restricted border trade.

• Phosphate fertilizers face clear upward cost pressure, though demand constraints may limit transaction volumes.

Looking ahead, close attention should be paid to three key variables:

1. Progress of India’s 2026 potash contract negotiations, which will directly influence international prices and market sentiment in China;

   
   

2. Outcomes of international tenders (Indonesia, etc.), whose awarded prices may serve as regional price benchmarks;

   
   

3. The pace of winter stocking demand release in China—stronger-than-expected procurement would further reinforce price support, while weaker demand could trigger short-term corrections.