U.S. Gulf: NOLA granular prompt barges dug in their heels just a bit last week, with trades reported at $166-$172/st FOB, up from the prior week’s $164-$170/st FOB.
In the meantime, prills were called $176-$180/st. A mid-June Libyan vessel is expected in the Gulf and should be testing the market soon.
Eastern Cornbelt: The urea market remained at $205-$225/st FOB in the Eastern Cornbelt, with the lower end of the range confirmed at Cincinnati, Ohio, and out of terminals in southern Illinois, and the upper end at Burns Harbor, Ind.
Western Cornbelt: The granular urea market was pegged at $215-$230/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and the upper end out of spot terminals in the Iowa market.
Sources quoted the Minneapolis, Minn., urea market in the $220-$230/st FOB range for the week, up slightly from the prior week, with barge movement on the Mississippi River remaining slow due to high water.
Southern Plains: Heavy rainfall raised water levels on the Arkansas River in early May, bringing barge traffic to a halt and depleting fertilizer inventories at Catoosa/Inola, Okla. Limited barge movement had reportedly resumed at midweek with restrictions on speed and tow sizes, but sources said the supply problems will persist.
“It feels like this problem will hang on at least two more weeks without any more big rains,” said one contact. Another source said overall inventories at Inola on May 16 were estimated at 35 percent.
Spot urea prices were moving as a result of the tight supplies. Sources quoted the granular urea market at $230-$240/st FOB Catoosa, up $20-$25/st from just three weeks earlier, with one source describing inventories as “okay” at midweek. The low end of the regional range was quoted at $225/st FOB Houston at mid-month.
South Central: The urea market in the South Central region ranged broadly from $195-$215/st FOB at mid-month, down $15-$20/st from last report, with the low confirmed at Convent, La., and the upper end at Little Rock, Ark. Other spot prices included $205/st FOB Memphis and Caruthersville, Mo., for new sales.
Wet field conditions have delayed the start of rice topdressing, but several sources said they expect urea movement to begin as soon as fields dry out. “Farmers are trying to get excess water off the fields so they can make their first application,” said one contact. “We expect the window to be short and fast when the ground dries. Some of the rice and corn that is emerged is showing signs of yellowing, so it needs some nitrogen and sulfur.”
Southeast: Sources pegged the granular urea market at $230-$240/st FOB port terminals in the Southeast, down a full $25-$30/st from last report, with the low end of the range confirmed in the Savannah, Ga., market for new sales.
India: India Potash Ltd. called a urea tender on May 18 to close on May 29. The tender was expected, but not for another week or so.
Sources said IPL most likely called the tender to allow discussion during the IFA conference in Marrakech next week. One observer pointed to the 12-day period between the announcement and the closing of the tender. Normally the Indian buyers give one week for offers to be submitted. The closing date, said one trader, is long enough after the closing of the IFA event to allow sellers plenty of time to digest the information they gleaned at the conference and then prepare their offers.
The tender call specified that 60 percent of the offers must be for West Coast unloading. Sources said this makes sense, because the rains will start in the west and move eastward as the monsoon season progresses. All awards must be shipped by July 10.
Sources said the IPL agents will be looking for prices lower than the $229-$231/mt CFR level that MMTC paid last month. The main players in this tender are expected to come from Iran and the Arab producers.
One trader said there are few sales on the books of the Arab producers for late June. At the same time, Iran is expected to have at least 300,000 mt available to offer in the tender. The combination of Arab and Persian producers with excess tons is leading industry watchers to see tender prices lower than last month.
India needs to import just under 1 million tons each month through October to ensure sufficient reserves are on hand. As the fiscal year started last month, the government predicted that imports will be able to drop to 6-6.5 million tons from the 7-8 million tons in previous years. The expectation of fewer imports comes from increased domestic production and reduced demand.
The Indian government has been aggressive in pushing companies to open new urea plants or upgrade previously shuttered facilities. Besides offering financial support to opening plants, the government has worked to ensure a steady supply of natural gas and other inputs.
The requirement is that all domestic urea be neem coated. The coating allows for a slower release of the nutrients, thus driving down the demand from individual farmers.
Pakistan: The Economic Coordination Committee of the government has approved an additional export of 300,000 mt of urea by the end of the year. The move also extended the export period for urea from the initial end date of April 30, 2017.
Permission to export urea first happened last year, when lower demand and stepped-up domestic production combined with aggressive imports to create an excess of product. This year, imports are expected to be cut completely. Domestic production only just started to cut back in the past few weeks. Demand remains weak because of poor weather conditions.
The government would like the offshore sales to earn a profit. Sources said sales to African buyers in late April and early May had netbacks around $230/mt FOB, which was high enough for the bean counters.
Offers of Pakistan material in last week’s Sri Lanka CFC tender indicated netbacks below $210/mt FOB. While no awards had been made in the CFC tender at press time, sources said any deal involving Pakistan tons will be difficult to fulfill unless the Pakistani producers and government alter their pricing ideas.
The hard currency earned from the exports has been a major consideration by the government and the companies handling the sales. The government has also been looking at ways to save money on the subsidies paid for urea.
The CEO of Engro suggested to local media that the government should consider simultaneously dropping the sales tax and subsidies on urea. Ruhail Mohammad said the two values cancel each other out.
China: Producers continue to hold to their ideas of prills at about $215/mt FOB and granular at $210/mt FOB, depending on the quality of the product.
Sources said some Chinese producers may end up backing traders in the IPL/India tender, but most are expected to sit out this round. If the Indians are successful in securing prices lower than last month’s tender, the netback will be below current levels for prills. Sources said there is little incentive for the producers to aggressively go after the business. They point to better netbacks from sales into Southeast Asia and a steady stream of domestic buying. The reduction in output is also helping hold up prices.
Once the Indian business is concluded, sources said Chinese producers will look to buyers in eastern Asia. Sources already report inquiries coming from South Korea with netbacks that hold the line on prices.
Middle East: Industry watchers expect Iran and a few Arab producers to dominate the IPL/India tender that closes on May 29.
The Indian buyer wants 60 percent of the deliveries to be into Indian West Coast ports, giving the Persian and Arab product an edge over China. Iran is expected to be the price setter for this tender, with Arab producers following closely enough to secure awards.
Sources said few sales are on the Arab producers’ books for late June and early July. Most of the contracted business is expected to be concluded by the end of June, leaving July dependent on a few formula-based cargoes and spot business. At the same time, production is expected to be at normal levels, leaving producers with growing reserves.
Egyptian urea prices rebounded back above $190/mt FOB during the week. Sources said several small-cargo sales were concluded into Turkey, with a few buyers covering shorts into Europe.
Indonesia: Talks are continuing between urea traders and producers. The Indonesian manufacturers continue to call for a formula-based system and a floor price.
Initially the producers called for a floor of $225/mt FOB. Last week the number was reduced to $222-$223/mt FOB, and this week sources said the new offer was at $220/mt FOB. One trader noted, however, that $210/mt FOB is too expensive in the current market. Talks are expected to resume after the IFA conference.
Nepal: The Agriculture Inputs Co. started importing urea sooner than in previous years. Urea for Nepal usually enters through an Indian port and then by rail. So far, AIC has about 60,000 mt booked for delivery into the country by mid-June. The government-owned company said these two cargoes will be more than enough to get the upcoming application season started next month.
Demand for urea in Nepal this year is pegged at 700,000 mt. Urea makes up about 65 percent of fertilizer needs for the land-locked country.
Bangladesh: As a part of its import plan, Bangladesh will import 50,000 mt of urea from the Middle East on state-to-state deals. Bangladesh Chemical Industries Corp. (BCIC) has invited tenders for 50,000 mt of bulk granular urea (minimum offer quantity 25,000 mt ) in shipments from Ruwais, U.A.E., and delivered in 50-kg bags at Chittagong Port. Bids are due on May 24.
Meanwhile, according to BCIC’s website and local media, urea production at a number of plants has been disrupted since the beginning of May because natural gas has been diverted to power plants to maintain power supply to domestic consumers during the summer.