U.S. Gulf: Prompt granular barges were called $228-$238/st FOB for the week. Moving barges were reported higher. Barges to ship in May were called $210-$225/st FOB.
Prompt prills were reported in short supply, with available product put at $240/st FOB. Tons for two weeks out were called lower at $225/st FOB.
Eastern Cornbelt: Granular urea was unchanged at $275-$295/st FOB in the Eastern Cornbelt, with the upper end inland and the low reported at Cincinnati, Ohio, and other river locations.
Western Cornbelt: Granular urea was pegged at $275-$295/st FOB in the Western Cornbelt, with the low reported in the St. Louis, Mo., market and the upper end in Iowa. “We have seen 2-3 hour lines since Monday at some St. Louis terminals,” said one contact. “But supply is good. Focus is much more on logistics and getting product moved than price.”
Northern Plains: Granular urea had reportedly slipped to $280/st FOB the Twin Cities, down $10-$15/st from late-March pricing levels. Urea pricing in the Dakotas was down as well, with the market in North Dakota quoted at $310-$315/st DEL or FOB, depending on location.
“Expectations continue to be for an above-average run on urea, especially with the possibility of some switching away from ammonia due to some delays,” said one contact. “There remains reluctance to purchase product further ahead of actual demand due to the market structure.”
Northeast: Granular urea pricing in the Northeast was quoted at $290/st FOB Fairless, Pa., and East Liverpool, Ohio, with the upper end of the regional range reported at $305/st FOB Baltimore, Md.
Eastern Canada: Granular urea pricing was quoted in a broad range at $420-$470/mt FOB in Eastern Canada, down $10-$30/mt from last report, depending on location.
China: The strength in the domestic market, along with the MMTC/India urea tender, gives producers more arguments to resist efforts by traders to accept lower prices. In fact, producers are arguing for – and getting – slight price increases in the few export tons being booked.
Prills are pegged at $215-$220/mt FOB, with granular $5-$10/mt higher. Sources said that with the right amount of pressure a buyer could get prilled or granular product at the same price, but it would be in the higher range of prills at best.
Sources said additional demand from the domestic market is prompting more producers to pull material back from the ports. The domestic price is so strong, said one trader, that even the extra transportation cost is easily handled. One source said the domestic price is about $10/mt higher than the top export price.
For many producers the issue is not just making a profit, but rather survival. Many of the older facilities are selling product just at the production cost. For some, the export price already is below their break-even point. Fortunately for many of these plants, local governments arrange for hidden subsidies, such as cheaper utility costs.
Industry watchers said most of the traders who will be participating in the MMTC tender are not taking positions with producers ahead of the tender closing. Many apparently will be putting in their prices, and then, if awarded, will start shopping around for a producer willing to handle the quantity.
As a result of this strategy, said one trader, offers of Chinese material are expected to be limited to one or two cargoes from each trader. No one, the source said, wants to get caught exposed with too many tons and no buyer.
Some sales to Latin America and Australia are helping strengthen global prices, even though the buyers are not specifically looking at Chinese suppliers. The tighter Chinese market is allowing the Arab Gulf producers to either hold firm on their prices or occasionally move up the price.
India: Traders around the world spent the last few days of the week fine-tuning their offers for the MMTC tender.
Sources said the price will determine how many tons the Indians take. Reportedly, there are about 1.2 million tons already on hand once the rains start. Purchases at this time will add to buffer stockpiles, which will ease concerns of farmers and politicians that sufficient urea is on hand.
Industry watchers said the Indians will be looking to the offers backed by Iranian material to lead the way in pricing. The last bit of business reported out of Iran had an Indian West Coast equivalent price of $220/mt CFR. At that level, the Chinese product will have to come down about $15/mt – something Chinese producers are currently loathe to do.
For the Indians, said one source, leading with the Iranian product could be a good move. He noted that Iran should be able to offer 200,000-300,000 mt in this tender. With the large reserves already on hand, buying that amount of tonnage would be enough to ensure a good start of the application season.
The other positive impact the Indians could get by buying only Iranian tons in the first tender is that the next tender will be further away from the influence of the hot Chinese domestic market. Chinese producers will be focusing on exporting their material, and may be more willing to sacrifice selling a few tons at a high price for selling a lot of tons at a lower price.
Middle East: Producers have apparently received more inquiries from Brazil and Australia. These calls, along with the tighter Chinese urea market, gave Arab producers stronger arguments for holding firm against any price reduction.
Sources said the sales into Brazil are coming in with approximate netbacks in the $213-$215/mt FOB range.
Reports that Algeria will start shipping 100,000 mt of granular urea to the U.S. were met with little surprise. Sources said the ending of the European season meant the tons would have to go somewhere. One trader said the large quantity indicates the U.S. still has strong demand for granular urea. He put the onus on cotton and rice producers.
One cargo of 20,000 mt from Algeria handled by Trammo was pegged at $220/mt FOB.
Sources speculated that Iran could be a price leader in the MMTC/India tender. Sales from Iran have gone from $195/mt to $205/mt FOB in the past several weeks. Sources said the latter price reflects a $220/mt CFR or less price into India’s West Coast.
If the Iranian producers agree to this level, sources said the Chinese producers will either be forced to lower their prices by more than $10/mt or sit out this tender.
Latin America: New interest in Brazil apparently prompted new sales. Sources peg the latest price into Brazil at $232-$233/mt CFR, for a netback to the Arab Gulf of right around $215/mt FOB.
Sources said the Brazil interest alone is not enough to move the market because there is plenty of urea available, but a contributing factor is the source and destination of the cargoes. China does not play a major role in eastern South America, but the Arab Gulf, Yuzhnyy, and the Baltics do. Limited spot tonnage from these areas, combined with aggressive producers looking to take advantage of China’s strong market, could be the prime motivator in higher prices.
Sources said the uptick in prices affected a tender by Incofe that was to close late last week. The Guatemalan trader was looking for 15,000 mt of prilled urea, but scrapped the plan because the price was too high for the end users.