Urea Production Costs and Gas in 2026: Which Producers Still Make Money?

What does it cost to make a tonne of urea?

Mostly gas. Urea is made by turning natural gas into ammonia and then combining ammonia with carbon dioxide. Gas is both the feedstock and the fuel, so a plant's gas price largely decides its cost.

Gas prices now differ enormously by region. The World Bank's US natural gas price averaged $2.96 per million British thermal units (MMBtu) in October 2026, against $28.50 in Europe ^[1]. Egypt raised the floor price of gas for fertiliser producers to $8.5/MMBtu in April, and some producers' effective cost was above $9 ^[2].

As a rough guide, if a plant uses about 22 MMBtu of gas per tonne of urea (our assumption for an efficient modern plant), gas alone would cost about $65 a tonne at $2.96, about $190 at $8.5 and about $630 at $28.50 (our calculation). Real costs also include capital, labour, carbon and logistics, but the ranking is clear.

Market estimates confirm it. A Nobel Trading report put the cost of producing urea in northwest Europe at $740 a tonne in late October, up from $678 ^[3]. In September, an efficient European plant needed about $605 a tonne ex-works to break even with Dutch TTF gas around €66.50/MWh ^[4]. TTF was €86.80/MWh in early November ^[5].

Who is making money?

North American producers with cheap gas. CF Industries, the largest US nitrogen producer, reported third-quarter net earnings of $436 million and adjusted EBITDA of $833 million, against $353 million and $667 million a year earlier ^[6]. Its gas cost was $2.88/MMBtu ^[6]. In the first nine months, adjusted EBITDA reached $3.01 billion, up from $2.07 billion ^[6].

Interestingly, CF's urea price was not the main driver. Its average granular urea price was $423 a ton in the third quarter, lower than $450 a year earlier, while ammonia rose to $532 from $418 ^[6]. Higher volumes and ammonia prices did more of the work. The company said only about half of the Middle East's average urea exports had left the Gulf since the conflict began, and that it expects the supply-demand balance to stay favourable for low-cost North American producers ^[6].

Fertiglobe, with plants in Egypt, Algeria and the UAE, also did well in the first half. Its adjusted EBITDA more than doubled to $371 million in the second quarter, and urea utilisation across its plants reached 92% in the first half, with record rates in Egypt and Algeria ^[7]. Its own-produced sales volumes fell 3%, which it attributed to UAE export shipment constraints ^[7].

Who is being squeezed?

European producers. Yara's third-quarter EBITDA excluding special items fell to $675 million from $804 million, and net income to $199 million from $320 million, as higher gas prices and delayed demand weighed on margins ^[8]. Yara adjusted European output in response to gas prices and used its global network to supply customers ^[8]. CF Industries estimated that 37% of Europe's nameplate ammonia capacity was offline or running at reduced rates in October ^[6].

Gulf producers that cannot ship. SABIC Agri-Nutrients, the largest Saudi producer, reported third-quarter net profit of SAR 484 million, down 62.48% on the year, and nine-month profit down 37.34% to SAR 2.09 billion ^[9]. The company cited lower sales volumes and higher selling and distribution costs because of supply chain disruption, and used alternative routes through the Red Sea ports of Yanbu and NEOM ^[9]. Its profit did rise 27.70% from the second quarter as stalled shipments cleared ^[9].

Egyptian producers facing gas cuts. Egypt's urea is selling at high prices, around $535 a tonne FOB in November contracts ^[2], but producers are getting less gas. Reuters reported a new 33% cut to gas supplies on 8 November, after an earlier 20% cut ^[10]. Higher prices may offset lower volumes for a while, as an industry source told EnterpriseAM ^[2], but output is falling.

How do costs set the urea price?

In a tight market, the price tends to settle near the cost of the most expensive supplier the market still needs, usually European or other high-cost plants. When Gulf supply is cut, more demand falls on these plants, and prices rise towards their costs.

In 2026, however, demand weakness and Chinese exports pulled prices below European costs for much of the year. The World Bank's Middle East urea price was $420 a tonne in October ^[1], and Middle East granular was $440 FOB on 6 November ^[11], well below Europe's estimated $740 production cost ^[3]. That is why European plants are cutting output instead of setting prices.

Ammonia shows the gas link more clearly. The Yara–Mosaic November ammonia contract settled at $645 a tonne CFR Tampa, up $95 from October, on rising European gas prices and curtailed production ^[12].

What could change the picture?

• A Hormuz reopening would restore low-cost Gulf supply, lift volumes for SABIC Agri-Nutrients and Fertiglobe's UAE plant, and pressure prices ^[6,9].
• Lower European gas would let Yara and others restart capacity ^[5,8].
• Restored Egyptian gas would add exportable urea close to Europe ^[2,10].
• Chinese export policy remains the swing factor for prices below European cost levels ^[4].

What to watch

• TTF and Henry Hub gas prices, which set the cost gap between Europe and the US ^[1,5].
• European ammonia curtailments, as tracked in producer reports ^[6,8].
• Gulf producers' fourth-quarter volumes, especially via Red Sea routes ^[9].
• Egyptian gas allocations for fertiliser plants ^[10].

Alupetra follows gas, ammonia and urea markets from Istanbul, London and Dubai; Alupetra does not deal with sanctioned parties.