Will US Gulf urea prices fall below $350/short ton before January 2027?

Urea at $450/ST is supported by multiple structural factors: Chinese export restrictions (4-6M tons), Strait of Hormuz risk premium (~35% of traded urea), and strong global agricultural demand. A drop to $350 requires unwinding of multiple supports simultaneously. Management expects a H2 correction but $350 represents a ~22% decline from current levels. Historical urea volatility shows $100+ moves are possible in 6-month windows but typically require a catalyst. The Chinese quota and geopolitical risk premium are the two pillars — both would need to weaken for $350. The most likely path is a seasonal correction to $380-420 range, not a full reversion to $350.

The Dec 2025 to Feb 2026 move from $350 to $450 was rapid (+$100 in 2 months), which suggests much of the current premium is speculative/fear-driven rather than fundamental. Prices were at $350 just 4 months ago, demonstrating this level is achievable without catastrophic conditions. Management's explicit warning of an H2 correction is unusual — commodity executives rarely volunteer bearish guidance unless they see real softening. If the correction normalizes toward the Dec 2025 level, $350 is the target. The key question is whether the Q1 2026 surge was a temporary spike or a new floor. I weight it as partially temporary.

The question asks if prices fall BELOW $350, not TO $350. This is the floor of management's mid-cycle range, not the center. Multiple supply constraints would need to loosen: China would need to increase exports meaningfully, Strait of Hormuz tensions would need to ease, and delayed capacity would need to come online. While any one of these could happen, all three converging in H2 2026 is less likely. The agricultural demand cycle provides a floor — global nitrogen demand grows ~1-2% annually, and 2026 planting season demand should support prices through Q3 at minimum. A temporary dip below $350 is possible during seasonal lows but sustained pricing below $350 is unlikely unless China materially relaxes exports.

Current pricing at $450/ST has significant support from Chinese export restrictions and geopolitical risk premium. However, management's explicit correction warning deserves weight — they have the best visibility into order books and customer behavior. The Dec 2025 price of $350 shows this level was recently achieved. A correction from $450 toward $380-400 is the base case for H2 2026, with $350 being the downside tail. Probability of touching $350 at any point is higher than staying below $350, but the question only requires one touch below. I estimate a 30-35% chance of a brief dip below $350 during seasonal weakness in Q4 2026.

The global nitrogen market has structural tightness that management acknowledged — 'new capacity has been delayed, global production has not maintained historical levels and demand continues to grow.' This structural backdrop makes a price drop to $350 difficult without a major catalyst change. The most likely scenario for sub-$350 is a Chinese export surge combined with Strait of Hormuz de-escalation — both happening in the same H2 timeframe is improbable. The committee's analysis emphasizes that the base business is sound even at lower prices, but that doesn't mean prices are likely to reach those levels. Agricultural demand seasonality supports Q3 prices; Q4 is the vulnerability window.

Three scenarios could produce sub-$350 urea: (1) China relaxes exports to 7M+ tons — plausible but not base case (20-25% probability), (2) Strait of Hormuz risk premium collapses on diplomatic breakthrough — possible but geopolitically unlikely (15-20%), (3) Global recession suppresses agricultural input demand — low probability in 2026 (10-15%). For any single scenario, sub-$350 is possible. The question is whether any materializes AND has enough magnitude. I weight the China scenario most heavily — if China exports surge, global prices could easily reach $350. But Chinese policy has been consistent for several years.

Urea at $450 with Chinese restrictions and Hormuz risk. Management expects H2 correction. $350 was the price 4 months ago. Multiple supports would need to weaken. Seasonal correction to $400ish more likely than full reversion to $350. About 25-30% chance of touching $350 briefly.

Commodity prices are inherently volatile and can move $100/ST in weeks. The Dec-Feb surge from $350 to $450 proves rapid moves happen. The reverse is equally possible if Chinese exports increase or demand softens. Management's correction warning adds weight. I lean slightly higher probability than peers because commodity markets overshoot in both directions.

Global nitrogen market fundamentals are tight per management. Chinese export restrictions persist. Agricultural demand provides floor. H2 seasonal weakness is real but $350 is below where the market traded for most of Q4 2025. More likely we see $380-420 as the correction target. $350 requires a negative catalyst beyond seasonal patterns.