We raise our 2025F Middle East urea price forecast by 5% to USD395/tonne (+17% YoY) due to higher-than-expected H1 prices of USD402/tonne, driven by (1) tight Iranian/Egyptian/EU supply due to gas shortages and increasing gas prices, (2) high demand from India, and (3) rising geopolitical tension in the Middle East region.
We raise our 2026-29F Middle East urea price average forecast by 13% to USD380/tonne (implying a 4% lower figure vs 2025F, but 18% higher than the 2012-21 average), mainly driven by (1) surging EU tax on imported fertilizer from Russia/Belarus (rising from 6.5% to nearly 100% by 2028, effective from July 1, 2025) and (2) rising carbon tax applied on other countries (several fertilizer manufacturers warned of a USD70/tonne tax increase) (see page 3).
We raise our ASPs for DPM/DCM during 2025-29F on average by 7.8%/6.1%, driven by our (1) estimated stronger-than-expected H1 2025 prices (our observation in Q2 2025: Middle East prices +17% YoY, domestic ASP +10% YoY), and (2) 13% higher Middle East urea prices on average for 2026-29F.
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