U.S. Gulf: The prompt granular urea market expanded for the week, with trades confirmed in the $257-$274/st FOB range. Full-March transactions fell in the $255-$258/st FOB range, while first-half April sales were quoted at $235-$245/st FOB. Traders put barges for second-half April at $226-$233/st FOB, and full May at $210/st FOB.
Most sources called prills in the $250-$255/st FOB range, above the previous week’s $245-$250/st FOB range.
January urea imports were off 23 percent, to 596,973 st from the year-ago 774,394 st. July-January imports were down 10 percent, to 4.2 million st from 4.64 million st. YTD imports from China are way down at 201,012 st from the year-ago 889,242 st.
Eastern Cornbelt: The granular urea market remained at $295-$305/st FOB for new sales in the Eastern Cornbelt, with the lower numbers reported at Cincinnati, Ohio, and Ottawa, Ill., and the upper end FOB Burns Harbor, Ind. Some sources reported May prepay offers available for $10/st less than current spot offers, depending on location.
Reference pricing for granular urea out of Michigan terminals ranged from $310-$320/st FOB for new business.
Western Cornbelt: The granular urea market had reportedly firmed to $300-$310/st FOB in the Western Cornbelt, up another $5/st from last report, with the low quoted in Iowa out of spot river locations and the upper end in the Missouri market for confirmed new business. “We can hardly keep product in the house,” said one Missouri contact. One source said his location was expecting upriver barges to arrive in 7-10 days.
Northern Plains: The granular urea market was pegged in a broad range at $295-$310/st FOB the Twin Cities for prompt tons, with April shipments quoted at the $295/st FOB level and May reported at $280-$285/st FOB.
North Dakota sources quoted delivered granular urea tons in a broad range as well at $320-$339/st for new business, with prompt terminal pricing reported as high as $335-$339/st FOB in the state on a spot basis.
Northeast: Granular urea pricing in the Northeast was moving up. The low end of the regional range was reported at $290/st FOB Baltimore, Md., from at least two suppliers who are now reportedly offering tons in that market after a lengthy absence. The upper end of the regional range was pegged at $300/st FOB Fairless, Pa., and $305/st FOB East Liverpool, Ohio.
Eastern Canada: The granular urea market was pegged at $450-$480/mt FOB in Eastern Canada, down slightly from last report. “Even though replacement cost has moved up, we are pretty well positioned on urea based on fall costs,” said one regional contact.
China: Industry observers said published prices near $220/mt FOB are too high. As the week ended, traders were calling the market $195-$200/mt FOB. To back up their claim, traders said calls to producers ended with the producers willing to sell in the upper-$190s/mt FOB if the buyer was ready to settle right away.
Sources said part of the new willingness to sell quickly and at lower prices is because the domestic market in China is not performing as expected. Local purchases are reportedly well below last year’s levels. Part of the decline is blamed on bad weather, from additional snowfall to lack of rain. Another part is blamed on lower crop prices.
Without the subsidies the government once supplied, many farmers now are reportedly less willing to buy any reserve quantities of fertilizer. One trader noted that the whole domestic fertilizer season is now operating on a hand-to-mouth basis.
Without the pull of the domestic market, urea supplies are building and producers are not yet cutting back on production. They are, however, looking for ways to clear out the warehouses to make room for the new material.
The lack of new, large-scale granular business following the buying furor for the U.S. has driven down prices. With no big prilled business expected until next month when India comes in the market, prilled prices are also under pressure.
The few deals that were circulating all showed prices under $200/mt FOB. Reportedly, a Korean buyer took 6,000 mt of granular product at just under $210/mt CFR. An order for 22,000 mt of prilled urea reportedly went to Malaysia at $200/mt FOB.
Questions were raised about the Malaysian order, however, with some sources noting that the Malaysian warehouses are already full. Also, said one trader, there are not many buyers in the country who can handle a shipment this size. Usually smaller quantities are ordered for blending.
India: Reserves of urea in India are said to be just above 1 million mt. Sources said that kind of tonnage makes it easy for the Indian government to hold off until the middle of April before it has to call the first tender for the upcoming application season.
Without the reserves, one of the three authorized buying houses would most likely call a tender as soon as the new fiscal year begins on April 1. As things now stand, said one trader, India can easily wait well into the third week of April before calling a tender.
The middle of the month is also when a major fertilizer confab will be held in Beijing. Some industry watchers expect the tender announcement to come just after the event.
One theory is that once a tender is called, the Indian buyer will only take the quantity needed for a short duration. Then another tender will be called, and so on. Sources said if India does not take large quantities with each tender, the accumulating product in China and the rest of the world will maintain a downward pressure on prices.
Middle East: Producers continue to claim their price is $215/mt FOB and that they are sold out for March. No one in the industry is doubting that a spot deal is not possible this month. Most of the market watchers, however, have already turned their gaze to April.
Sources said sales out of the Arab Gulf for April do not look as promising as March business. Big producers such as Sabic and PIC will still have their contracts to ensure a steady flow outward of some material. Also helping the producers may be orders out of Australia. Those sales, however, may not be enough to make things as tight as they currently are.
Once India calls a tender, Iran is expected to provide a healthy portion of the final award. Arab producers may sit this one out, said one observer, rather than get into a pricing war with the Chinese and Iranians.
Egypt continues to turn out material even as prices soften. Earlier selling tenders watched the price drop from the upper-$340s/mt to the low-$330s/mt FOB. Now, said one trader, an Egyptian company concluded another tender loading in late April of 25,000 mt with prices reportedly in the $320s/mt FOB. The Egyptian product is most likely slated for southern European ports.
Bangladesh: Bangladesh plans to import 50,000 mt of urea from the Middle East on government-to-government deals in April and May 2016. Bangladesh Chemical Industries Corp. (BCIC) has issued an international tender for 50,000 mt of granular urea in two shipments from Ruwais, United Arab Emirates (UAE). Bids are due March 21, 2016.
According to a recent Bangladesh Economic Survey for the year 2015, the country imported urea, DAP, and other fertilizer at a cost of US$1.33 billion for FY 2014-15, compared with US$1.02 billion for the previous year. Bangladesh consumed about 2.63 million mt of urea in FY 2014-15, versus 2.46 million mt in FY 2013-14. The country produced only 0. 8 million mt of urea, with the rest imported.
Total consumption of urea, DAP, and other fertilizers stood at 4.8 million mt for FY 2014-15, up from 4.5 million mt in FY 2013-14.