Europe's Urea Market in 2026: Gas Costs, Russia Tariffs, CBAM and Import Relief

Why is European urea so expensive to produce?

Because European plants buy gas at market prices that are far above those in exporting regions. The World Bank's European natural gas price averaged $28.50 per million British thermal units in October 2026, against $2.96 in the United States ^[1]. Dutch TTF futures fell to €86.80/MWh in early November after trading above €100 ^[2].

Gas is the main cost of making ammonia and urea, so these prices pass straight through. A Nobel Trading report cited by UkrAgroConsult estimated that the cost of producing urea in northwest Europe rose to $740 a tonne in late October from $678, after TTF passed €90/MWh on 20 October ^[3]. In September, with TTF around €66.50, an efficient European plant needed about $605 a tonne ex-works to break even ^[4]. Both figures are well above the World Bank's Middle East urea price of $420 a tonne for October ^[1].

That gap explains why Europe imports much of its nitrogen. The EU imported 5.9 million tonnes of urea, 2 million tonnes of ammonia and 6.7 million tonnes of nitrogen mixtures in 2024 ^[5]. Ammonia prices have also risen: northwest Europe ammonia was quoted at $710–730 a tonne CFR in early November ^[6].

What tariffs does the EU now apply to Russian fertiliser?

The EU introduced additional duties on fertilisers from Russia and Belarus on 1 July 2025: €40 a tonne for nitrogen products such as urea and €45 for certain compound fertilisers, on top of the existing 6.5% duty ^[7]. The second step came on 1 July 2026, raising the additional duty to €60 a tonne for nitrogen fertilisers and €70 for selected compounds ^[8]. By 2028 the additional duties will reach €315–430 a tonne, depending on the product ^[8].

Volume thresholds can bring the highest rates forward. If cumulative imports from the targeted countries exceed 2.7 million tonnes in 2025–26, 1.8 million tonnes in 2026–27 or 0.9 million tonnes in 2027–28, higher duties apply immediately ^[7].

The measure matters because Russia was a large supplier. In 2024 Russia was the EU's second-largest urea supplier, with 1.72 million tonnes out of about 6.2 million tonnes of non-EU urea imports ^[7]. Argus, writing for the Gulf Petrochemicals and Chemicals Association (GPCA), estimated that the first €45 step alone equalled about 9% of average European urea prices in the first half of 2025 ^[7].

What did the EU suspend in May 2026?

To ease the 2026 price shock, the EU Council agreed on 22 May to suspend customs duties on key nitrogen fertilisers, including urea and ammonia, for one year ^[5]. The Commission estimated that this would save farmers and industry about €60 million in duties ^[5]. Russia and Belarus are excluded, and the suspension is limited by a quota based on 2024 import volumes ^[5]. The Commission will monitor the market and may propose to extend or change the measure after the first year ^[5].

The suspension helps suppliers that do not already enjoy duty-free access under trade agreements. Algeria and Egypt, which together exported about 7 million tonnes of urea in 2024, already have duty-free access to the EU ^[7].

How much does CBAM add to urea imports?

2026 is the first year of the definitive phase of the Carbon Border Adjustment Mechanism (CBAM), in which importers of fertilisers and other covered goods become liable for the carbon content of what they import. The charge is phased in: in 2026 only 2.5% of free allocation is removed, rising over time until free allocation ends in 2034 ^[9,10].

The cost depends on the emissions value used. Using default emission values and a carbon price of €82.32, CBAM Guide estimates 2026 costs of €43.17 a tonne for Egyptian urea, €44.84 for Algerian, €49.82 for Russian and €153.75 for urea from countries without a specific default ^[10]. For Egyptian urea, the cost rises to about €77.33 in 2030 and €115.57 in 2034 if the carbon price stays the same ^[10].

Using actual plant data cuts the bill sharply. The think tank Sandbag calculated that an average Egyptian plant would pay about €16.19 a tonne and an efficient one about €7.39, and concluded that, with 80% pass-through, CBAM's effect on European urea prices would be only about €1.4 a tonne in 2026 ^[9]. Its view is that European prices are set mainly by the carbon and gas costs of local producers, not by the CBAM charge on imports ^[9]. Estimates of a much larger price impact measure the importer's cost under default values, not the market price.

Where is Europe's urea coming from now?

Mainly from North Africa, with prices to match. Egyptian granular urea rose to about $535 a tonne FOB in November contracts ^[11], and the Australian Fertilizer Corporation reported that Egyptian sales at that level were likely bound for Europe ^[12]. Egypt is now cutting gas to fertiliser plants: Reuters reported a new 33% reduction notified to producers on 8 November, after an earlier 20% cut ^[13]. Less Egyptian output would leave Europe more dependent on other suppliers.

Delivered prices in Europe reflect this. Indicative granular urea in France was assessed at €550 a tonne FCA on 6 November ^[14].

What does this mean for European farmers?

Higher costs for nitrogen than in most other regions, at least until gas prices fall. Tariffs on Russian product will rise each year, CBAM charges will increase as free allocation is phased out, and Egyptian supply is uncertain. The one-year duty suspension and CBAM's small initial price effect offer limited relief.

What to watch

• TTF gas prices, the main driver of European production costs ^[2,3].
• Russian import volumes against the 2026–27 threshold of 1.8 million tonnes ^[7].
• Whether the duty suspension is extended after May 2027 ^[5].
• CBAM benchmark changes for goods imported from 1 January 2027 ^[10].
• Egyptian gas allocations to fertiliser plants ^[13].

Alupetra follows gas, urea and fertiliser trade into Europe from Istanbul, London and Dubai; Alupetra does not deal with sanctioned parties.