U.S. Gulf: Prompt granular barges continued to trend downward last week. While most put new business in the $200-$212s/t FOB range, others said prices were taking another dive on Thursday to sub-$200/st FOB levels. By late Thursday, some players were calling prompt as low as $195/st.
Prills were called $220-$225/st FOB.
Urea imports were up 30 percent in March, to 1.33 million st from the year-ago 1.03 million st. July-March imports were off 7 percent, however, to 6.1 million st from 6.54 million st.
Eastern Cornbelt: The granular urea market remained at $265-$280/st FOB in the Eastern Cornbelt, with the low confirmed at Cincinnati, Ohio, and Ottawa, Ill., and the upper numbers out of inland locations.
Western Cornbelt: Sources reported steady movement of UAN and urea in pre-emergent applications on corn. “It’s been an amazing spring that allowed us to make up the shortfall from last fall,” said one regional contact, who expects his business to “achieve almost 100 percent of our annual projected sales.”
The granular urea market remained at $270-$285/st FOB in the Western Cornbelt, with the low out of spot river locations and the upper end inland.
Northern Plains: The granular urea market at the Twin Cities had reportedly slipped to $260-$265/st FOB, down $15-$20/st from last report. Delivered pricing in the Dakotas had fallen as well, to $295-$310/st, with the FOB Carrington, N.D., market pegged at $297/st for limited tons.
Great Lakes: Granular urea pricing had reportedly slipped to $295-$300/st FOB Michigan terminals, down $10-$15/st from last report. Urea pricing in the Wisconsin market was quoted at $280-$290/st FOB, depending on location.
Michigan sources said there is still a long way to go for spring fertilizer work, both for preplant and sidedress applications. A Wisconsin source reported steady demand, noting that planting progress varied widely across the state, with “some growers done, some halfway, and some just starting.”
No supply or logistics problems were reported in the region at mid-month, thanks to the stop-and-go fieldwork pace. “When it rains, we catch up on supply and the price drops,” said one source.
Northeast: Granular urea pricing was quoted at $275-$295/st FOB in the Northeast, with the low at East Liverpool, Ohio, and the upper end FOB Baltimore, Md. Southern Pennsylvania sources also quoted delivered urea tons at the $302/st level from terminals in Pittsburgh.
India: The next urea tender could come as early as the end of this month while the industry meets in Moscow at the annual IFA conference. Sources said any tender that includes June and July shipments would most likely be a replication of the MMTC that recently closed.
Sources said Chinese domestic demand remains strong enough that producers are looking at a better netback selling within the country rather than exporting. The summer application is expected to be strong enough to provide a steadying factor to Chinese prices. As a result, the producers have no incentive to lower their prices in the next tender.
Without China’s lead in price reduction, sources said Iran will most likely set the price tone for the next tender. Traders with Iranian backing led the way in the last tender and are expected to do so again, but the price is not expected to be lower than last time.
If the price remains the same, the tender could easily be dominated by Persian and Arab product. Sources even expect to see FSU urea tossed in once again, reflecting a stable price in Yuzhnyy. Chinese cargoes will then round out the orders from the other producers for a take of just under 1 million mt.
The closure of the Mangalore Chemical plant was seen by sources as a blip on the radar rather than a major issue. The plant closed because of limited water resources in the area. The company said it would restart once the water situation improves.
The monsoon rains are beginning to fall in parts of India. Government offices project stronger rains than in the past several years, returning the average rainfall to traditional levels. The weather predictions point to a strong urea application season.
China: Product remains dear at the ports as producers look to the tail end of the spring application season and anticipate good sales for the upcoming summer season.
Sources report that nothing under $220/mt FOB for prills is available. Some granular offers are coming in at a few dollars above the $220/mt FOB.
Sources said the producers are anxious to sell, but not enough to lower prices. More than 1 million tons were diverted from the ports to the domestic market, according to traders. The cost of the move was easily absorbed in the domestic price. May spot material is gone, according to sources, and any discussions of June cargoes start in the mid-$220s/mt FOB for prills and granular.
Traders said if the producers can hold off lowering their price for the rest of this month, they will be starting the summer applications and facing another Indian tender. While the June application season is not as large as the spring season, sources said demand appears to be strong enough that producers will not be under any pressure to lower prices for June-July shipments.
Middle East: Producers remain confident that they will not have to lower prices any time soon. Quotes for June spot sales are still at $218-$220/mt FOB for granular. The problem, said one trader, is that no one can find a buyer at that price.
Rumors of a June sale at $192/mt FOB circulated in the industry this week, but no one could name the seller or trader handling the deal. Sources said the price most likely came from a buyer looking at sales to Vietnam or current U.S. barge prices, and then working the math back for an Arab Gulf-equivalent price.
Contracted sales are lower than $218/mt FOB, but those are all based on long-term deals. Spot prices out of the region remain higher than the contract price.
Sources speculated that when the next India tender comes up, Iran will most likely lead the pricing, with China and then the Arab producers following.
Sources said prices have softened in Egypt to under $230/mt FOB. A selling tender is slated for sometime next week. Sources said the bids could be aggressive. At the same time, producers could play hard ball in an effort to move prices up.
Southeast Asia: The rains are just beginning in Thailand and Vietnam. Sources said the lateness of the seasonal rains could lead to a 20 percent reduction in urea consumption this year. One trader noted that the first application of the season has already been missed in Thailand.
Agricultural experts in Thailand discouraged farmers from planting any crops until the rains started. Sources said the experts are not sure if rice and other crops will be able to recover now that the rains are starting.
Indonesia held to its price of about $215/mt FOB for prilled urea. Granular product is still being offered at $221/mt FOB for contracted sales. Spot granular cargoes are being offered at $230/mt FOB.
Sources say a handful of 5,000-6,000 mt cargoes have been loaded and shipped to Vietnam.
Pakistan: The government announced that it would not be importing any urea under public tenders this year. It will still take some imported urea, though mostly from Saudi Arabia under government-to government deals.
The special arrangements, combined with the domestic production, means TCP will not need to conduct a tender or two to fill demand. Reserves of 1.2 million mt were built up when the government released more natural gas to the urea industry. Sources said the plants were able to operate at nearly full capacity. At the same time, demand so far this year dropped 13 percent compared to the same period last year. The combination gave the country an unprecedented set of reserves.
The government took advantage of the large reserves and lower production costs for the producers to cut the price to farmers. The price was RS37,000/mt (US$353/mt) to the farmer. The new price is RS35,800/mt (US$342/mt). Sources told local media that the price could fall even more, depending on demand and domestic output.