U.S. Gulf: While prompt granular barge prices continued to run up last week, they topped out at $252-$255/st FOB and then began to retreat. The low was called $244-$245/st by late Thursday. February trades last week were reported at $257/st FOB and March $260-$262/st FOB.
Prill price ideas continued to move up and were called $240-$248/st FOB. March was reportedly quoted as high as $270/st FOB.
Eastern Cornbelt: Cornbelt sources reported some concerns about spring availability of urea, citing a significant reduction in import volumes and delays in the startup of new domestic production. As a result, urea prices were on the rise. Sources pegged the market at $285-$290/st FOB Cincinnati, Ohio, and Ottawa, Ill., with the low for prompt tons and the upper end for prepay. Out of inland terminals, the market was quoted at $290-$295/st FOB for prompt and up to $300/st FOB for prepay.
In the Great Lakes region, urea prices were quoted at $300-$325/st FOB for the week, depending on location and time of delivery, with the upper end reflecting spot pricing out of Michigan terminals.
Western Cornbelt: Granular urea was quoted at $280-$295/st FOB in the Western Cornbelt, up another $5/st from last report.
Sources pegged the St. Louis, Mo., urea market at $280-$290/st FOB for prompt bids, depending on supplier, with reports of April tons being offered at the $285/st FOB level at that location. An Iowa contact pegged the terminal market at $290-$295/st FOB for new business in late January.
Urea pricing FOB Catoosa, Okla., was reported at $280-$285/st FOB.
Northern Plains: Granular urea pricing had reportedly firmed to $285-$290/st FOB the Twin Cities, and up to $330/st FOB Carrington, N.D. Dakota sources quoted delivered urea in a broad range at $320-$350/st in late January, “depending on where it’s going and who is selling it.”
Northeast: Granular urea pricing in the Northeast was pegged at $285-$300/st FOB, up $15-$20/st from last report, with the low reported at Fairless, Penn. The East Liverpool, Ohio, urea market was quoted at $290/st FOB for prompt and $300/st FOB for prepay.
Eastern Canada: The granular urea market was quoted at $435-$465/mt FOB in Eastern Canada, depending on location, with reports of limited availability in the region.
Middle East: Even though prices are moving up in the world, a recent sale by Abu Qir in Egypt of 20,000 mt of granular product at $260-$262/mt FOB has industry watchers puzzled. This represents more than a $20/mt drop.
A $282/mt FOB deal from Algeria for a European buyer and $280/mt FOB from the Arab Gulf to Australia added to the confusion about the Egyptian deal. Industry sources are calling the Abu Qir deal an outlier that has raised more questions about how the deal was structured than about the overall health of the urea market.
There are also reports that at least one cargo that was bound for the U.S. was diverted to Brazil at the last minute. Sources said the diversion was made to take advantage of a $20/mt bonus in the sales price between the two destinations.
Sources report stockpiles by the Arab producers in the Gulf are tight. Producers are not anxious to step up production. At present, said one trader, output is balanced nicely with demand, with a slight advantage to the producers. Kicking up production would most likely soften prices at a time when many still see the market as a bit wobbly.
Sources reported the paper market out of the Arab Gulf already shows a bearish attitude on prices. The differences are so significant that one trader called the current state of the market “way out of whack” with the predictions. February granular reportedly is being discussed at $260-$265/mt FOB, March at $250-$260/mt FOB, and April in the upper $240s/mt FOB.
Even though demand has been strong from the U.S. and Australia, sources said that demand will soon ease off. Likewise, more indications are coming out of India that a tender call could be pushed back to late February. Southeast Asian buyers are holding off making large commitments until they see changes in prices.
Confirmed sales in the low-$280s/mt FOB have indicated to some buyers that a softening may be coming. Going into this week, Arab producers in the Gulf were still talking about hitting $290/mt FOB. Now, however, the emphasis seems to be on holding what gains have been made in the past 60 days.
An Iranian producer reportedly sold 60,000 mt of prills to China at $240/mt FOB. The deal reportedly involved little financing, allowing for the producer to offer a price well off the usual Persian-Arab price differential of $10-$15/mt.
China: The country is in shutdown mode as the Lunar New Year approaches this weekend. Just as the offices started to close, however, a deal for $280/mt FOB for granular product was made. Sources suggested the tonnage was heading to Australia.
The Chinese government is giving the country a week off to celebrate the Lunar New Year of the rooster. This so-called Golden Week was officially to begin today, Jan. 27. However, sources reported many people began taking time off work as early as Tuesday. International traders reported being told to call back after Feb. 6, when most people will be back at work.
It is traditional for Chinese to visit their hometown and family members during the Lunar New Year. For many in the developed coastal regions, these trips mean hours of travel on overtaxed rail and bus lines. Even the domestic airlines are already reporting overbookings and crowded airports.
Offices that process deals, shipping documents, or financial instruments are either closed or so understaffed that nothing is expected to be accomplished next week. Likewise, port-side staff, from customs agents to stevedores, will be greatly reduced. Ships with imports or exports during the next week are expected to be processed and loaded at a much slower rate than any other week of the year.
India: Sources report urea stockpiles are sitting at just under 2 million tons. This amount, said one trader, means India will not need to call a tender until late February at the earliest.
The reserves in the country were recalculated after demand dropped in December because of the demonetization policy that tossed the distribution of urea in chaos. Now that new lines of credit for farmers have been established and sales have resumed, the domestic industry has taken a hard look at actual urea needs. As a result of that hard look, sources said the national demand level is lower than earlier predicted.
A tender call in late February would also allow the industry to know more about the government spending intentions for urea for the next fiscal year, beginning April 1. Usually by late February or early March most of the numbers in the budget are firmed up, with only a few tweaks taking place before the new fiscal year starts.
Pakistan: The government is going ahead with its plan to export up to 300,000 mt of urea by the end of April.
The move has been under discussion for almost six months. Once the final decision was made earlier this month, a government panel got busy setting up the details of how the exports will take place.
Two private-sector urea producers – Fauji and Engro – will handle the exports. The official trading house – TCP – had been lobbying that it should handle the exports because it handles all imports. In the end, the government went with the producers.
The move to export came because offtake was not as great as anticipated. The country imported material as well as increased domestic production. Currently, the country has a surplus of more than 1 million tons. Many of those tons are imported product, which do not receive subsidy support from the government, making them more difficult to sell against the domestic urea.
The government subsidizes domestic urea to the tune of Rs4,000/mt (US$38/mt) against a fixed price of US$228-$229/mt.
The State Bank of Pakistan will monitor the exports under a plan similar to the way it monitors sugar exports. At the same time, the Fertilizer Review Committee will keep tabs on the domestic urea price in case a spike in pricing occurs. If prices move up too rapidly, the committee has the authority to stop the exports.
The most likely market for the urea is India. Sources said the logistics of shipping material from Pakistan to India are simple, even though bulk loading time is a bit slower than that of other routine urea providers and spillage rates are a bit higher. However, politics may also play a part in any Pakistan-India deal. The animosity between the two governments dates to their founding almost 70 years ago. However, one trader noted that if the price is right, Indian buyers will most likely be willing to forego any political squabbles.
Pakistan’s prime minister’s office also reversed an earlier announcement that subsidies for urea would not be paid for the rest of the fiscal year. The initial pronouncement said the end in subsidy payments occurred because the budgeted funds for subsidies ran dry before the fiscal year ended. The latest announcement assured farmers they would still be able to receive subsidized urea throughout the year.