U.S. Gulf:
Granular prompt barge trades moved down last week, with many sources citing wet weather across rice country that was impacting movement. Barges were called $160-$165/st FOB, according to most sources, versus the week-ago $166-$172/st FOB.
While some were still calling prills quiet, others said new Libyan product was garnering stiffer numbers, with sources now calling the market $180-$188/st FOB.
Eastern Cornbelt:
Granular urea pricing had reportedly slipped to $195-$197/st FOB Ottawa, Ill., and $195-$200/st FOB Cincinnati, Ohio, at the low end of the range. Out of inland terminals, sources quoted the upper end of the regional urea market at the $215/st FOB level at mid-month.
Western Cornbelt:
Missouri sources said the first pass of topdress urea on rice was winding down in the state, with the second pass likely to start soon. Urea remained at $195-$210/st FOB in the Western Cornbelt, with the lower end of the range reported in the St. Louis, Mo., market and the upper end in Iowa on a spot basis.
Northern Plains:
Minnesota sources quoted the granular urea market at $195-$205st FOB for the week, with the lower end confirmed in the Twin Cities market. Truck-DEL urea into North Dakota was pegged at $210-$230/st in late June, depending on location, while reference pricing at Carrington remained in the $245-$250/st FOB range.
Great Lakes:
The granular urea market was quoted at $200-$240/st FOB in the Great Lakes region, down some $15-$30/st from last report, with the low confirmed by Wisconsin sources on a spot basis and the upper end out of Michigan terminals.
Northeast:
Granular urea was quoted at $220-$235/st FOB in the Northeast, up slightly from last report, with the low confirmed at East Liverpool, Ohio, and the upper end FOB Baltimore, Md.
Ukraine:
Cherkasy Azot, part of the Ostchem Group, which in turn is owned by Group DF, has resumed production of urea, ammonium nitrate, and UAN after a more than three-month forced stoppage, Interfax reported, citing Group DF’s press service. According to the press service, Cherkasy Azot planned to bring the three units up to full capacity by June 20.
Work to restart operations at Ostchem’s Rivneazot (Ukraine’s sole CAN producer) and Severodonetsk Azot Assoc. is also underway. Group DF said output from the restarted plants would be aimed primarily at satisfying the demand of the country’s farmers.
The restart is timely as Ukraine’s Interdepartmental Commission on International Trade (ICIT) last month introduced antidumping measures on imports of urea and UAN from the Russian Federation (GM May 26, p. 1). Russia hitherto has been a major supplier of both urea and UAN to the country. Ukraine already applies antidumping measures on imports of Russian ammonium nitrate.
The three Ostchem operations were forced to stop production after state-run Naftogaz cut off the supply of gas to the plants. They have a current combined production capacity of about 350,000 mt/m of nitrogen fertilizers, according to Group DF.
Pakistan:
Exports from Pakistan have picked up. Sources reported the lowest offers into a Sri Lanka tender that closed June 20 were from Pakistan. Valency offered 18,000 mt at $233.99/mt CFR bagged on a sight basis. Quantum offered $241.43/mt CFR bagged with 270 days credit. Sources said the netback to Pakistan was $210-$215/mt FOB. The bagged product will be loaded into containers for shipment to Sri Lanka.
During the first quarter, the government gave urea companies permission to export 300,000 mt by the end of April. The government then extended the export period until the end of October, and is allowing the export of about 1 million mt during that time frame.
Prices have steadily declined since exports were allowed. In the first quarter, prices were in the low-$240s/mt FOB. By May, industry watchers were calling the market in the mid-$180s/mt FOB, with producers saying the price was really $220/mt FOB. The current drop to the $210-$215/mt FOB range, said one trader, is just another sign of the softness in the global urea market.
China:
Prices remain stable, with prills still at a higher price than granular. Sources said the domestic market remains strong enough to maintain these prices. Granular is pegged at $210-$218/mt FOB, while prills are at $230/mt FOB.
A large part of the strength in the domestic market is reduction in supply, said one trader. Production of urea in the country is about at 60 percent of rated capacity.
Producers are looking more to the domestic market than exports, said one trader, mostly because the netback is better. Proof of the lack of interest in exports comes from reports that the amount of urea sitting at ports for export remains very low. Sources peg the current stockpiles at nearly 560,000 mt.
Reserves at the port-side warehouses have been dropping because producers are calling back the tons for the domestic market. One trader said the strength of the domestic market over the global market is clear when holders of the product are willing to pay for transportation costs first to the ports and then back inland.
The government reportedly is still on track to reduce all exports in the next three to five years. Efforts have stepped up to ensure older, less efficient plants that are already closed are not re-opened.
Sri Lanka:
The Sri Lanka ministry of agriculture closed a urea tender for 18,000 mt June 20. The material is slated for August delivery.
Valency came in with the lowest price – on a sight basis – at $233.99/mt CFR bagged. Quantum had the lowest price for offers offering 270 days’ credit at $241.43/mt CFR bagged. Both offers were backed by Pakistan material.
Sources said freight is about $18/mt. That, plus another $10/mt for the bags, puts the top edge of the Valency offer at $215/mt FOB in Pakistan. Sources reported that at this level, more Pakistani material is being offered to buyers in Thailand, putting Pakistan in direct competition with Arab Gulf producers.
The ministry of agriculture closed another tender June 20 for 18,000 mt of granular urea for August delivery.
Middle East:
Sales from the Arab Gulf remain limited to cargoes under contract. Sources report that the gap between what buyers are reporting and what producers are claiming remains large.
Thailand, for example, continues to argue it is paying about $215/mt CFR, while its main supplier – Saudi Arabia – claims its price is $220/mt FOB.
The only spot deal recently – between Oman and Keytrade – is now being questioned by some traders. The $206/mt FOB reportedly paid by Keytrade will not work in any buying market, said sources. Traders pointed to a lack of buying interest in Australia, which is usually buying extra spot material at this time. The other buyer that might be interested – Thailand – is asking for prices well below even the break-even point.
Sources said if a buyer came in with a firm bid just under $200/mt FOB, any producer in the area would most likely agree in a heartbeat. Traders are calling the market in the mid-$190s/mt FOB, but without a new spot deal to back up their claims, the industry is falling back on stories about the Oman-Keytrade deal.
Prices were lower than expected in the Egypt/MOPCO auction that closed June 22. The tender was originally for 25,000 mt of granular urea to be shipped during the first half of July, but ended up at 40,000 mt. The final negotiated price was $192/mt FOB.
The price is about $15/mt lower than the last public sale and $8-$10/mt lower than previously discussed prices. Sources reported many bids in the $180s/mt FOB. Sources said MOPCO was lucky to nail down the price it did. At the same time, the industry sees the low bids in the auction as a harbinger of lower prices.
Just before the tender closed, sources said the absence of a strong buyer in the market means there is little demand for product. India is not expected back into the market until mid-July, at the earliest. European buyers are said to be fully stocked, with no need for additional tons. The only remaining possible home for the Egyptian product appears to be Africa, but even there, buyers seem to be taking a hiatus.
India:
Sources reported that stockpiles are growing even as the last of the tons from the previous tender are being shipped. The ship-by date from the tender is July 10. Sources said no new tender calls are expected until after that date.
To add to the uncertainty, sources said demand for urea appears to be slowing. Industry watchers said one contributing factor is the spotty rainfall. Some areas are getting enough rain to move the season forward, while other areas are behind. Another factor causing reduced demand, said one source, is the neem coating on domestic urea. The coating causes the nutrients to enter the soil more slowly, thereby reducing the farmers’ need for more urea.
Mexico:
Offers in the GF Trading tender for 70,000 mt of granular for Mexico were higher than the company expected. They have asked offering companies to look over their prices and submit revised offers by the end of the day June 23.
The lowest offers were $225-$227/mt CFR, well above the GF target.
The tender called for offers in two lots, one of 30,000 mt to be shipped July 8-12. The second lot of 40,000 mt is to be shipped July 10-15. Both cargoes are to be unloaded in western Mexican ports.
Nepal:
Two tenders will close by this weekend. STC of Nepal closes a tender for 30,000 mt of granular product June 23. The second, by AICL, closes another 30,000 mt tender June 24.
Indonesia:
The producers have yet to seriously move away from the idea of a floor price tied to the market price for their export contracts. Sources said the Indonesians have begun to move, however. One trader noted the latest offer would put the floor at $220/mt FOB, down slightly from the $223/mt FOB offered earlier this month.