Three important urea tenders closed, showing a marked increase in prices. The price increases ranged from $30/mt in India to about $75/mt in Bangladesh.
The first of the tenders to close was BCIC in Bangladesh. The lowest price for the 50,000 mt granular tender that closed Nov. 6 was $412/mt CFR bagged. That compares to $336/mt CFR bagged just a month ago. Traders said prices are usually higher in Bangladesh because of port complications and restrictive bagging requirements.
The next tender to close was TCP in Pakistan Nov. 8. The state-owned buying house called for offers of 100,000 mt. The tightness of the market was exemplified by the fact that only three companies participated in the event. The lowest offer was $344.73/mt CFR. The last TCP tender, in August settled at $311/mt CFR.
The final tender was the much anticipated IPL tender from India. India needs about 2 million mt by the end of the year. Recent tenders have shown a steady rise in prices combined with limited tonnage offered. The lowest price was $339.33/mt CFR. The next two lowest prices were $341.75/mt CFR and $342.99/mt CFR. The last Indian tender showed prices at $309.90-312.50.mt CFR.
The usual suppliers to India are Chinese and Iranian producers. In the latest tender, most of the traders indicated OPEN sourcing for their offers. One trader said at the right price, some material could even come from the Black Sea.
The export window for China closed Nov. 1. Only tons in bonded warehouses are available for export at the lower duty. Sources say the bonded warehouses in China only have about 1 million mt.
Iranian producers are said to have only 200-300,000 mt available for November-December shipment.
The three lowest offers in the IPL tender totaled 350,000 mt, which included 170,000 mt from Iran. Sources say IPL will try to take as many of the remaining Chinese tons as possible, but that would still leave it short for the country’s demand.
Adding to India’s problem are reports that some of the tons in the Chinese warehouses are already booked for Pakistan or Bangladesh.
For political and economic reasons, Pakistan and Bangladesh do not take Iranian material. That leaves the supplies in the Chinese warehouses or the more expensive Arab and CIS producers to fulfill their needs.
For Pakistan the problems of getting a decent price for its product grows each day. The buying house is not allowed to negotiate with the also-rans in tenders. Sources say it will issue an award to CHS Europe for 100,000 mt in the Nov. 8 tender. Another tender was scheduled to close today and three more on the 18th, 20th and 22nd.
With each tender, sources say supply will dwindle and prices will increase.
The Pakistan urea producers have complained that the country could save money if it were to ensure the domestic urea producers had sufficient supplies of natural gas. The producers argue the domestic urea is cheaper to produce than importing material.
The government diverted natural gas away from the industrial sector to placate growing individual consumer needs.