Philippines’ urea imports could slow in 3Q 2025

: Fertilizers
25/08/12

The Philippines' urea demand is expected to soften in the third quarter of the year because of poor rice prices and sufficient urea inventories.

Rice prices in the Philippines have been falling because of ample rice supply. The country posted a record-high 9.08mn t of domestic rice production in the first half of the year. This surpassed previous rice production volumes of 8.53mn t in 2024, and 9.02mn t in 2023, according to the Philippine Department of Agriculture.

Bumper rice harvests in the international market and the lifting of India's rice export ban also contributed to the ample supply. Nationwide rice stocks in the Philippines came in at 2.81mn t as of 1 July, comprising commercial, household and national food authority reserves. An influx of cheaper rice imports led some private traders to purchase rice at 8-10 pesos/kg ($140-175/t), well below production costs of 12-14 pesos/kg ($209-245/t).

The Philippine government suspended all rice imports for 60 days starting from 1 September to stabilise local rice prices and protect farmers from cheaper imported rice. Local premium rice prices rose slightly to 46-57 pesos/kg ($804-997/t) following news of the import ban, while premium imported rice prices in Metro Manila were 42-48 pesos/kg ($734-839/t). Lower rice prices this year could likely still reduce farmers' ability to buy fertilizers, despite this measure.

Inventories

Import demand for urea fertilizers slowed significantly in July and early August, as stocks were enough to meet domestic needs, according to importers. Some farmers also reduced fertilizer application during this period when rice prices were lower.

Total urea imports to the Philippines in January-June rose by 26pc on the year to 395,000t, supported by higher deliveries from Brunei, China and Vietnam. Deliveries from Brunei in the first half of the year rose by 22pc to 58,900t. Imports from China rose to 27,500t compared with just 800t last year, after China opened its export window for bulk urea cargoes. Imports from Indonesia and Malaysia fell by 4pc to 120,500t and by 12pc to 79,000t respectively, but the volumes remained high.

Increased urea purchasing in the first half of the year was largely due to a normal monsoon season this year, compared with drought-like conditions in the year earlier. Any potential carry-over urea stock would also impact the Philippines' fertilizer requirements in the third quarter of the year.

Importers currently face slowing domestic demand as the main urea application season typically ends in August. Bad weather and previous typhoons in the Luzon region could dampen fertilizer demand in August as farmers recover from the crop damage, and delay vessel unloading at some ports. The halt in Chinese exports of small bags of fertilizers will also drive importers to slow their urea purchasing in the third quarter.

By Dinise Chng

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