U.S. Gulf: New NOLA granular prompt barges trades were put in the $160-$168/st FOB range, with sources saying some players were liquidating their positions. Another said there was still enough product in the NOLA market for steady trading. CF exports and trader re-exports are believed to have tightened supplies.
NOLA prills continued to be quiet, and remained at $175-$185/st FOB.
Eastern Cornbelt: The granular urea market was quoted at $200-$220/st FOB in the Eastern Cornbelt, down another $5/st from last report, with the low reported out of spot Illinois River locations and the upper end at Burns Harbor, Ind. Sources pegged the Cincinnati, Ohio, urea market at $205-$210/st FOB.
Urea pricing out of Michigan terminals generally fell in the $240-$245/st FOB range in late May.
Western Cornbelt: The granular urea market had reportedly slipped to $205-$210/st FOB St. Louis, Mo., with the upper end of the Western Cornbelt range quoted at $220-$225/st FOB inland warehouses.
Northern Plains: Sources quoted the Twin Cities granular urea market at $200-$205/st FOB in late May, down some $15-$20/st from the brief mid-month spike that occurred when high water levels on the Mississippi River slowed barge movement.
Sources continued to report delivered urea in the $240-$260/st range in North Dakota, with terminal pricing referenced at $255-$260/st FOB Carrington, N.D. One contact reported some early sidedress demand starting in some sections of the region, and said he expects “a long, drawn-out sidedress season” in the Dakotas.
Northeast: Granular urea pricing had reportedly dropped to $215-$225/st FOB in the Northeast, down $5/st from last report, with the low confirmed at East Liverpool, Ohio. Sources quoted the Fairless, Penn., urea market in the $220-$225/st FOB range for new sales.
On a delivered basis, Pennsylvania sources quoted spot urea offers at the $253/st level in late May, down some $17/st from last report.
Eastern Canada: Granular urea was quoted in the $420-$435/mt FOB range in Eastern Canada, depending on location and supplier, with the low end of the range reflecting a $10/mt drop from last report.
India: The IPL urea tender closed with offers about $20/mt lower than the previous tender just a month ago. The low price for the West Coast was from Comzest at $211.25/mt CFR into Rozy. The lowest offer to the East Coast came from Dreymoor at $212.25/mt CFR into Gangavaram. Eighteen companies put forth about 1.6 million tons in firm offers and 90,000 mt in options.
Sources said the offers were not surprising given the steady slide in global prices for the past month. The only respite came last week during the IFA conference in Marrakesh, when some traders were accused of hyping the market.
Muntajat from Qatar was the only Arab Gulf producer to offer tons directly. Sources said the offering price of $215/mt FOB for 30,000 mt ensured the company would not be included in any second-round talks. Fertil and Fertisul sent their rejects to IPL for not participating.
A tabulation of the tender follows:
| Offering Company | Quantity (mt) | Price
US$/mt CFR |
Discharge Port | Remarks | |
| Firm | Optional | ||||
| Comzest | 60,000 | 211.43 | Rozy | ||
| 40,000 | 211.25 | New Mangalore | |||
| 60,000 | 211.70 | Mundra | |||
| 25,000 | 213.50 | Kandla | |||
| 30,000 | 212.33 | Pipavav | |||
| 60,000 | 222.50 | Gangavaram | |||
| New Horizon | 40,000 | 211.70 | Pipavav | ||
| 45,000 | 211.43 | Mundra | |||
| Keytrade | 42,000 | 211.98 | Mundra-Kandla-Pipavav | ||
| 214.98 | Gangavaram | ||||
| Dreymoor | 115,000 | 212.25 | Gangavaram | ||
| 213.35 | Krishnapatnam-Vizag-Kakinada | ||||
| 212.97 | Pipavav | ||||
| 213.17 | Mundra-Hazira | ||||
| 213.32 | New Mangalore | ||||
| 213.67 | Adani Tuna – Kandla | ||||
| Swiss Singapore | 80,000 | 212.33 | Rozy-Pipavav | ||
| 60,000 | 222.50 | Krishnapatnam | |||
| Transagri | 182,000 | 213.90 | Rozy | ||
| 214.10 | Mundra | ||||
| 215.50 | Kandla | ||||
| 214.50 | Pipavav | ||||
| Transglobe | 60,000 | 214.40 | Mundra | ||
| Ameropa | 48,000 | 215.89 | Kandla | ||
| 36,500 | 217.61 | Hazira | |||
| 30,000 | 217.87 | Mundra | |||
| Helm | 55,000 | 216.50 | Kandla | AED 795/mt | |
| Koch | 47,500 | 218.25 | Mundra | ||
| 46,300 | 223.07 | Krishnapatnam | |||
| Amber | 45,000 | 218.75 | Mundra-Kandla | ||
| 65,000 | 221.25 | Gangavaram | |||
| 222.25 | Kakinada-Vizag-Krishnapatnam-Karaikal | ||||
| Allied Harvest | 45,000 | 218.80 | Mundra-Kandla | ||
| 222.80 | Krishnapatnam-Gangavaram | ||||
| Midgulf | 63,000 | 219.75 | Mundra-Kandla-Pipavav | ||
| 220.75 | Krishnapatnam-Gangavaram-Karaikal-Vizag-Kakinada | ||||
| CHS Europa | 44,000 | 221.73 | Kandla | ||
| Continental | 30,000 | 30,000 | 224.95 | Adani Tuna | |
| Aries | 170,000 | 225.00 | Krishnapatnam | ||
| 232.00 | Kakinada | ||||
| 227.00 | New Mangalore | ||||
| Dragon Fertilizers | 60,000 | 231.78 | Gangavaram | ||
| 233.66 | Mundra-Kandla | ||||
| 232.48 | Krishnapatnam | ||||
All told, IPL ended up giving awards to six companies for a total of about 510,000 mt by May 31, and then closed the tender. Sources said the buyer closed the tender once it booked the tonnage it needed this time around. Had the second-round talks been more difficult or if they needed more tons, said one trader, IPL might have held off on its final set of purchases up until validity on the offers expired June 2.
Prices range from the lowest prices on the East and West Coasts. A list of the final awards follows:
| Offering Company | Quantity (mt) | Discharge Port |
| Comzest | 110,000 | Mundra |
| 45,000 | Adani Tuna | |
| 40,000 | Hazira | |
| New Horizon | 60,000 | Pipavav |
| Transglobe | 50,000 | Kakinada |
| Transagri | 50,000 | Krishnapatnam |
| 50,000 | Adani Tuna | |
| Dreymoor | 50,000-55,000 | Gangavaram |
| Keytrade | 42,000 | Adani Tuna |
Indian urea buyers will go quiet until July, said sources. The tonnage from this tender has a ship-by date of July 12. Sources said there is no reason for another tender to start until all the material from this tender has been loaded and is on its way to India.
Sources also said there was not much reason for the tender to be called when it was. They said the country had plenty of material on hand from domestic production and from the last tender, which netted about 1 million tons. One industry watcher pointed out that anything to do with urea is fraught with political complications, and perhaps calling the tender was the safest and easiest thing to do to avoid complaints from local politicians, who claim that not enough was being done to ensure plenty of urea for the current application season.
The government changed its expectations for imported urea. The government bean counters now say that imports from tenders should not have to exceed 5.5 million tons this year. This is down about 500,000 mt from previous estimates. Indian importers have so far secured about 1.6 million tons in tender purchases.
Sources said the lower estimate comes from a combination of reduced demand and increased domestic production. Sources said the neem-coated urea required of domestic production helps slow release of the nutrients, thereby allowing farmers to apply less urea.
The reduced expectations mean importers will only have to secure 500,000-600,000 mt each month for the rest of the year, instead of the previously estimated 900,000-1 million mt.
Middle East: The netback in the IPL/India urea tender puts the price at $195-$199/mt FOB into the Arab Gulf. This level is being backed up by a sale to Thailand. The Thai business was pegged at $215-220/mt CFR.
The only Arab producer to directly offer tonnage in the IPL/India tender was Muntajat of Qatar. The price for its 30,000 mt was $215/mt FOB, which sources called way out of line. One trader said the company tried to justify its offer by pointing to a deal last week at $208/mt FOB. Several sources said the $208/mt FOB deal appeared to be a long position designed to hype the market. In the end, the product was not sold to India.
Sources are now putting the Arab urea market at $197-$200/mt FOB. The netback from the IPL/India tender affects the price out of Iran more than the Arab producers, said one trader. Sources said it is clear, however, that the days of $200/mt FOB and higher for urea from the area are gone.
Iranian producers are expected to supply about 400,000 mt in the IPL tender. Sources said Iran usually has about 300,000 mt available each time, but the extended ship-by deadline offers Iranian producers the opportunity to dip into third-quarter production to cover a cargo or two. In addition, said one trader, new Iranian production is slated to be up and running by the end of this month.
Egypt squeezed a few more dollars out of buyers in a move not replicated by other sellers. Sources reported a sale of $208/mt FOB to a buyer for tons to cover a short sale into Europe. One trader described the sale as a short to top off a larger deal.
China: Sources noted the almost complete absence of China from the IPL/India tender. While some tons were offered and awarded, Chinese product no longer plays a dominant role in determining the price of urea.
The softness of the global market for many producers has pushed the netback price into China below their break-even point. One trader said this level for the more efficient producers is close to $180/mt FOB, and for others as high as $250/mt FOB. Under the best scenario, the netback from the West Coast pricing in the latest tender has a netback of just under $200/mt FOB.
Chinese producers have been running at reduced rates for some time now. Sources this week put production at just under 60 percent of rated capacity.
Once the producers refused to chase Iranian producers for the lowest price into India, sources said prices in China have stabilized. Reduced output and a strong domestic season are also helping to hold prices. Sources reported that demand from prills provides a solid floor for pricing. While most international traders continue to call the prill market $215-$220/mt FOB, one trader pointed to a growing tightness in some local markets that has pushed prices up a few bucks, to just above $225/mt FOB.
While prills remain the darling of the buying set, sources said granular remains out in the cold. Domestic demand for granular is almost non-existent, said one source. Likewise, international demand is off. Granular prices continue to hover just above $210/mt FOB.
Indonesia: Sources reported that some international traders have signed offtake deals with Kaltim, but with severe reservations.
A conflict between the Indonesian producer and the international trading community flared up after awards were made for traders to handle exports on a formula basis based on published prices. After the awards were made, Kaltim tossed in one more requirement that the formula-based system must not allow prices to dip below $225/mt FOB.
In the ensuing weeks, sources said the floor was lowered to $220/mt FOB, although one trader said even this price is too high for the current market. Even with the threat of financial loss, however, some traders appeared to be ready to sign on if some price-averaging arrangement could be worked out.
The traders and the Indonesians are playing a game of chicken, said one trader not involved in the process. Reserves of granular urea are building up in Indonesia during a period of limited demand. At the same time, traders could miss out on having product when they need it if the Indonesians pull back.
Rumors circulated of a small prilled urea cargo of 5,000-6,000 mt being sold for about $223/mt FOB. The material is reportedly bound for Vietnam or the Philippines. Sources said the buyers had to go to Indonesia because of the lack of Chinese product available for export at global market prices.
Pakistan: The government reported that the country is in “more than good shape” for the current application season. Urea demand is expected to be about 3 million tons, with current reserves and expected domestic production to reach about 4 million tons.
The anticipated excess is what is prompting Pakistan’s government to allow the urea producers to offer tons for sale offshore. So far this year, the government has authorized the sale of 600,000 mt, with producers arguing for licenses to sell 1 million mt.
The current subsidized price for urea in Pakistan is pegged at $260.93/mt.
Bangladesh: The country continues to import urea from the Middle East on state-to-state deals. Bangladesh Chemical Industries Corp. (BCIC) has invited international tenders for 50,000 mt of granular urea in minimum bulk offer quantities of 25,000 mt from Ruwais, U.A.E., for delivery in 50 kg bags at the outer anchorage of Chittagong Port. Bids are due on June 12.
Meanwhile, according to BCIC’s website and local media, the government has decided to keep four domestic urea plants idled to divert gas to power plants during the current heat wave.
Bangladesh Finance Minister Abul Maal Abdul Muhith on June 1 proposed that the government construct 13 new buffer godowns and a urea formaldehyde-85 (UF-85) plant in different districts of the country to guarantee adequate fertilizer supply and distribution. The proposal is part of the government’s 7th Five-Year Plan, and also includes a zero duty rate on fertilizer imports in the coming fiscal year.