U.S. Gulf: Granular prompt barges spanned a broader range last week at $180-$187/st FOB. Sources said that the week began at the low end of the range and worked its way up to $186-$187/st FOB by week’s end. October was called $180-$185/st FOB.
Very little was heard on prills, with the market remaining in the $200-$205/st FOB range.
Eastern Cornbelt: The granular urea market was reported at $215-$230/st FOB in the Eastern Cornbelt, with the low end of the range confirmed in the Cincinnati, Ohio, market and the upper end out of Illinois River terminals on a spot basis.
Western Cornbelt: Granular urea pricing was reported at $215-$225/st FOB out of most terminals in the Western Cornbelt, with the St. Louis, Mo., market pegged at the $220/st FOB level for new business.
Sources reported urea pricing FOB Catoosa/Inola, Okla., in the $215-$220/st FOB range for any available tons at mid-month.
Northern Plains: Granular urea was quoted solidly at the $220/st level FOB the Twin Cities. Delivered tons were pegged at $235-$255/st in the Northern Plains, depending on location, with the upper end reported for Canadian tons shipped to western North Dakota.
Great Lakes: The granular urea market was pegged at $225-$255/st FOB in the Great lakes region, with the low in Wisconsin on a spot basis. Michigan sources pegged the urea market at $250-$255/st FOB out of warehouse locations in the state, with pricing to U.S. customers FOB Courtright quoted at the $235/st level last week, up $15/st from early August levels.
Northeast: Granular urea pricing was pegged at $225-$235/st FOB in the Northeast, down $5-$10/st from last report, with the low at East Liverpool, Ohio, and the upper end FOB Fairless, Pa.
India: The waiting is over as MMTC called for a tender to close Sept. 22, with shipping to conclude by Nov. 4. Industry watchers were surprised when MMTC reverted to the traditional open-ended format rather than calling for specific tonnage to specific ports.
Sources said MMTC officials were talking about importing 1-1.5 million tons of product in this tender. These same sources doubted, however, that so many tons could be purchased because of the price differences between India’s traditional urea suppliers.
Iran is expected to once again dominate the tender. Sources speculate the price could be around $195-$197/mt CFR. At that price, the Chinese suppliers would have to drop their netback price about $10/mt, something they have indicated they are reluctant to do.
Other suppliers, including Arab producers and west-of-Suez producers, must also seriously drop their prices to be competitive with the expected Iranian offers.
If it all boils down to Iran, one trader said the best India could get is 500,000 mt, but most likely 350,000-400,000 mt. Other sources agreed that the lower numbers are the most likely awards to be issued to Iranian suppliers through trading houses. If that is all MMTC takes, sources said, another tender will have to be called by mid-October to ensure a steady supply of urea for local distributors.
Dreymoor continues to have problems getting India to accept two cargoes of granular urea, one from Egypt and the other from China. The company appealed and is now awaiting an umpire ruling. Sources said the dispute is over the condition of the granular product rather than its chemical composition.
Sources expressed concern over India’s action. One trader noted that in the past, issues over caking or the chemical composition of the product were the main reasons for a challenge. Another trader said that if the Indian government continues to challenge imported product on strict technical grounds, some suppliers and traders will stop doing business with the country.
The government continues to promote the idea of increasing domestic production. The latest announcement is that groundbreaking for a plant in Madhya Pradesh is expected later this year. The new facility output, which will be rated at 1.3 million mt/y, should be up and running by 2019.
Middle East: Sources expect Iran to run the table in the MMTC/India tender. Arab producers in the area and North African suppliers are expected to sit out the tender.
The last bit of public business from the Arab producers puts the price at $193-$196/mt FOB. At that level, sources said the product would not be competitive into India against the Iranian product.
One trader noted that Arab producers would most likely be unwilling to be aggressive in the tender because any lowering of the public price would directly affect the formula-based contracts that are the lifeblood of most producers in the Gulf.
For now, four key international traders are handling the bulk of Iran’s exports, and there are no apparent attempts by other trading houses to step in to compete. Sources said many international traders are still leery about doing business with Iran. Even though the international sanctions against the country have been lifted, sources said there are still enough sanctions from the U.S. that make banks nervous about backing deals with Iran.
The Egyptian price is holding steady at $196-$197/mt FOB. Sources said the pending European business is helping hold up the price.
Black Sea: Prices remain steady at around $192/mt FOB. Sources said the main basis for support is coming from European buyers getting ready to purchase for the next season.
The CIS product is in direct competition with Egypt’s plants. Sources noted, however, that the 500,000-600,000 mt demand in Europe between now and March 2017 will be adequate to provide both supplying nations with enough orders to hold the line on pricing.
Nepal: A tender for 25,000 mt of urea will close Sept. 26. The tender calls for bagged product to be delivered to Nepalese warehouses. Sources expect the price to be determined by the results of the MMTC/India tender, which closes Sept. 22.