Philippines Urea Imports May Slow in 3Q 2025
Philippines Urea Demand to Soften Amidst Rice Price Slump and Healthy Inventories
Table of Contents
The Philippines’ urea fertilizer market is bracing for a slowdown in demand during the third quarter of 2024, driven by declining rice prices and ample existing inventories. A confluence of factors, including record domestic rice production, increased imports, and government intervention, are contributing to this anticipated softening.
Rice Market Dynamics Impacting Fertilizer Demand
A surge in rice supply is putting downward pressure on prices across the Philippines. The country achieved a record-high domestic rice production of 9.08 million tonnes in the first half of the year, surpassing the 8.53 million tonnes recorded in 2023 and 9.02 million tonnes in 2024. This significant increase, as reported by the Philippine department of agriculture, is further bolstered by robust international harvests and the recent lifting of India’s rice export ban.
as of July 1st, nationwide rice stocks totaled 2.81 million tonnes, encompassing commercial, household, and National Food Authority reserves. The influx of cheaper rice imports has seen some private traders purchasing rice at 8-10 pesos/kg ($140-175/t), considerably below the production cost of 12-14 pesos/kg ($209-245/t).
In a move to stabilize local prices and protect farmers, the Philippine government implemented a 60-day suspension of rice imports, effective September 1st. While this measure has led to a slight increase in local premium rice prices – rising to 46-57 pesos/kg ($804-997/t) – the overall lower rice prices throughout the year are expected to curtail farmers’ ability to invest in fertilizers.
urea Inventory Levels and Import Trends
Philippine importers report a important slowdown in urea import demand in July and early August, citing sufficient existing stocks to meet current domestic needs. The lower rice prices also prompted some farmers to reduce fertilizer submission during this period.Despite this anticipated slowdown, urea imports during the first half of 2024 increased by 26% year-on-year, reaching 395,000 tonnes. This growth was fueled by increased deliveries from key suppliers including Brunei, China, and vietnam. Brunei’s deliveries rose by 22% to 58,900 tonnes, while imports from China surged from 800 tonnes last year to 27,500 tonnes following the opening of China’s export window for bulk urea cargoes. Imports from Indonesia and Malaysia remained substantial, despite declines of 4% (to 120,500 tonnes) and 12% (to 79,000 tonnes) respectively.
The increased purchasing activity in the first half of the year was largely attributed to a return to normal monsoon conditions,contrasting with the drought-like conditions experienced in the previous year. Any carry-over urea stock from the first half will further impact the Philippines’ fertilizer requirements in the third quarter.
Challenges for the Third quarter
Importers are now facing slowing domestic demand as the main urea application season typically concludes in August.Recent adverse weather conditions, including typhoons in the Luzon region, have caused crop damage and are likely to further dampen fertilizer demand and disrupt vessel unloading at key ports. Moreover, China’s halt in exports of small bags of fertilizers is expected to encourage importers to further slow their urea purchasing in the coming months.