We raise our 2025F Middle East urea price forecast by 7% to USD375/tonne (+11% YoY) due to (1) higher-than-expected Q1 prices at USD404/tonne, (2) higher-than-expected international gas prices (in Q1: Dutch TTF +69% YoY, Henry Hub +73% YoY) which reduce urea supply from Europe, (3) strong demand from India, and (4) China’s extended export delay. Current CME futures also support our 2025 forecast with implied 8M 2025 prices of USD387/tonne. 

Similarly, we raise our 2026F forecast by 6% to USD350/tonne (-7% YoY). However, we maintain our 2027-29F assumptions at USD330/tonne for each year (12% lower than our 2025F forecast). Overall, we raise our Middle East urea price assumption by 3% during 2025-29F. We maintain our view that Middle East urea prices will normalize (decrease) to their 2012-2021 average of USD321/tonne following our expectation for a fading effect from the Russia–Ukraine conflict and China’s supply disruption. 

We raise our ASPs for DPM and DCM during 2025-29F on average by 2.6% and 0.9%, driven by our 3% higher projection for Middle East urea prices on average. The higher ASP increase for DPM reflects its stronger Q1 2025 ASP performance—up 10% YoY vs DCM’s 3%—driven by faster domestic price growth compared to exports.

We apply respective 7%/4% lower Brent/FO price assumptions during 2025-29F on average following our Oil & Gas – April Update. These lower DCM’s average 2025-29F input gas prices by 4.9%, while lowering DPM’s by only 0.1% as (1) DPM’s gas price is purely benchmarked to fuel oil (FO) prices (which we expect to fall less than Brent oil prices in 2025F) while DCM is benchmarked 50%/50% with FO/Brent, and (2) we raise DPM’s 2028/29F gas prices due to potential use of more expensive gas sources.

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