U.S. Gulf:
The rally in NOLA granular urea prices proved to be short-lived, as some had predicted. Prompt trades last week were called $226-$245/st FOB, with the lower end late in the week, compared to the week-ago $230-$260/st FOB.
Thinly-traded prills retained a firmer footing at $260-$265/st FOB, compared to the prior week’s $260-$270/st FOB.
Eastern Cornbelt:
Sources quoted the granular urea market at $275-$285/st FOB in the Eastern Cornbelt, with most river terminals reported in the $275-$280/st FOB range in late September.
Western Cornbelt:
After the prior week’s rapid run-up in price, the granular urea market had reportedly plateaued. Sources quoted the St. Louis, Mo., market at $275-$280/st FOB, with pricing out of Port Neal and Caruthersville, Mo., pegged at the $280/st FOB mark.
Urea pricing at Catoosa, Okla., and Minneapolis, Minn., had actually retreated from the prior week’s highs. Sources quoted the Catoosa market at $270-$275/st FOB for the week, down from a high of $290/st FOB reported on Sept. 21. The Twin Cities urea market was quoted in a broad range at $260-$275/st FOB for the week, down from $285/st FOB or higher the week before.
California:
The granular urea market had reportedly firmed to $310-$325/st FOB in the California market, up $15/st from last report, with rail-DEL tons quoted firmly at the $330/st mark for new business.
Pacific Northwest:
Granular urea pricing was quoted at $295-$315/st FOB in the Pacific Northwest, up a full $20/st from last report, with the upper end reported out of inland terminals. The Rivergate, Ore., price had reportedly firmed from $295/st up to $305/st FOB in late September, while delivered tons in eastern Montana were quoted at the $310-$320/st level.
Western Canada:
Urea prices had moved up considerably in Western Canada, fueled by the rapidly firming NOLA market. Most of the new offers for October tons reportedly fell in the C$430-$440/mt DEL range in the region, up a full C$45/st from last report, but many were skeptical that business had actually been done at that level.
“There is still hesitation at C$425-$430/mt DEL in Saskatchewan,” said one contact. “There is lots of nervousness, and distributors will not take any position right now. They can afford to wait.”
India:
The IPL tender closed on Sept. 25 with another push on prices. The lowest offers were at $284.66/mt CFR for the West Coast and $285/mt CFR for the East Coast, just a bit more than a $40/mt bump from the IPL tender earlier in the month.
IPL was ready to issue awards for 522,000 mt, but there are reports from India that IPL was only authorized by the fertilizer ministry to purchase 300,000 mt. Sources said IPL’s leadership was appealing the decision so that they can buy the full amount. As the week ended, however, sources were reporting that at least one possible award was being pulled back.
More companies participated in this tender, and they offered more tonnage than the previous tender. Sixteen companies offered about 1.1 million tons. The defining difference was the price, said one trader, with the boost in price appearing to have shaken more tons loose.
The bulk of the offers were in the $290s/mt CFR, with a few at $300-$330/mt CFR. Sources noted that there were limited offers from Iran, and more from China than expected. Once the price neared the $300/mt CFR zone, however, sources said more producers were willing to part with their product.
| Offering Company | Offers (‘000 mt) | Price US$/mt CFR | Discharge Port | |
| Firm | Optional | |||
| Aries | 126 | 284.66 | Gangavaram | |
| 289.66 | Krishnapatnam | |||
| Transagri | 10 | 285.00 | Kandla | |
| 60 | 295.00 | Krishnapatnam | ||
| 291.00 | Mundra | |||
| Koch | 41.9 | 286.00 | West Coast | |
| 60 | 291.80 | East Coast | ||
| Ameropa | 42 | 286.77 | Mundra | |
| 42 | 297.77 | Kandla | ||
| Comzest | 40 | 287.40 | West Coast | |
| 290.00 | Gangavaram-Karaikal-Tuticorin | |||
| 60 | 293.70 | Kandla | ||
| Amber | 60 | 288.00 | Mumbai-Kandla-Pipavav | |
| 295.00 | Gangavaram | |||
| 296.00 | Kakinada-Vizag-Karaikal | |||
| CHS Europa | 45 | 290.13 | Kandla-Mundra | |
| Dreymoor | 172 | 291.25 | Pipavav | |
| 291.45 | Hazira Anchorage-Mundra | |||
| 291.60 | New Mangalore | |||
| 291.95 | Tuna | |||
| 296.69 | Gangavaram | |||
| 297.79 | Vizag-Krishnapatnam | |||
| 298.39 | Karaikal | |||
| 301.69 | Tuticorin | |||
| Fert Trade | 60 | 292.00 | Mundra | |
| 294.00 | Krishnapatnam | |||
| Transglobe | 60 | 292.00 | Mundra | |
| 295.50 | Krishnapatnam | |||
| Swiss Singapore | 60 | 295.50 | Gangavaram-Karaikal | |
| 296.40 | Mundra-Pipavav | |||
| Fertisul | 50 | 299.00 | Gangavaram | |
| 299.95 | Krishnapatnam-Karaikal-Kakinada | |||
| Sinochem | 50 | 30 | 299.96 | Krishnapatnam |
| Continental Traders | 60 | 301.00 | Gangavaram | |
| 301.95 | Krishnapatnam-Karaikal-Kakinada | |||
| Midgulf | 60 | 330.00 | Krishnapatnam-Karaikal-Kakinada | |
| 328.00 | Tuna | |||
Muntajat of Qatar offered 30,000 mt at $300/mt FOB. Sources said this was put in so the Arab Gulf producers could signal where they think prices should be.
By the middle of the week, IPL released a list of awards totaling 522,000 mt. Chinese producers will be sending 248,000 mt, Iran only 65,000 mt, Ukraine 52,000 mt, Arab Gulf producers 122,000 mt, and Pakistan 35,000 mt.
|
East Coast |
||
| Offering Company | Source | Tons Awarded (mt) |
| Aries | China | 126,000 |
| Fert Trade | China | 62,000 |
| MidGulf | China | 60,000 |
| Comzest | Iran | 40,000 |
|
West Coast |
||
| Offering Company | Source | Tons Awarded (mt) |
| Ameropa | Arab Gulf | 84,000 |
| Koch | Oman | 41,600 |
| Dreymoor | Ukraine | 52,000 |
| Amber | Pakistan | 35,000 |
| TransAgri | Iran | 10,000 – 25,000 |
As the week closed, reports surfaced that one award was being withdrawn by IPL. Late Friday, as Green Markets was going to press, IPL increased the total tonnage awarded to about 600,000 mt. Sources confirmed Amber was one of the companies that received an additional award. Sources said the Amber award was for Chinese product.
Sources also raised eyebrows at the Amber offer of Pakistani urea. Traders expressed concern that political differences between India and Pakistan would be played out in the final approval stage of the delivery of the product. One trader said he could imagine all sorts of bureaucratic issues that could be raised at the receiving port to slow the entry of Pakistani urea into the country. Others said the need for urea in India could push down the traditional rivalry between the two countries.
The lack of Iranian tons in this tender was attributed to plants being shut down for maintenance and Iran’s growing presence in the global urea market. One trader noted that just a few years ago only two companies knew the ins and outs of exporting Iranian urea. Now, he said, there are at least nine trading houses that handle Iranian tons. He further noted that only three of those companies have been offering tons into India.
Even as Iran expands its presence in the world, sources said it should be able to provide the bulk – if not all – of the remaining demand for urea in India for this year.
If IPL can buy all the tons it wants, the country will still need about 1 million tons to close out the current season. Sources said the country could easily run two more tenders to secure the tons before Jan. 1.
The tenders could be called by two new players in the urea import business. The government has issued limited-time permission for NFL and RCF to import urea during the last quarter of the year.
Sources said the Department of Fertilizers is unhappy with the way IPL and MMTC have handled urea purchases this year. In addition, the DOF and STC continue to have disputes that have kept the trading house from running a tender. The permission given to NFL and RCF to import urea for farmers is officially being promoted as an effort to streamline the process and bring more competition to the importing business.
One international trader said the government could make the process more competitive if it removed the heavy subsidies from urea and went to a modified market-based pricing system. He and others noted, however, that the subsidies on urea are a highly dangerous topic to discuss in politics, and few in government or the legislative branch are willing to do so.
China:
The almost 250,000 mt offered into India from China represents most of the tonnage sitting in dock-side warehouses, according to sources.
Chinese producers had been unwilling to back offers into India in previous tenders because prices were too low. Now, with estimated netbacks to China of $265-$270/mt FOB, companies were more than happy to step up.
In the run-up to the tender, sources reported that producers were holding out for closer to $280/mt FOB. One trader said these pricing ideas are most likely what prompted tender offers in the mid-$290s/mt CFR. As soon as the tender closed, however, many of these same producers followed up with traders offering tons at $270/mt FOB so that they could get a piece of the action in India.
Traders were having a hard time organizing loadings for large vessels. Sources said it is now necessary to visit two ports to put together a panamax shipment. This two-port option adds to the cost of the package, but also adds to the frustration level of buyers and traders looking to close deals.
Chinese material bound for India was reportedly settled at $268/mt and $269/mt FOB. Other traders said that in some cases, the second-port price could raise the level to $271/mt FOB.
Loading of product will have to wait until Oct. 9. Offices and factories will be closing this weekend as China begins a week-long celebration starting on its National Day, Oct. 1. The government has been promoting the long holiday breaks to encourage more travel and recreational spending within the country to boost the national economy.
Middle East:
The netback to Arab producers from the Indian tender is pegged in the low-$270s/mt FOB. Sources put the freight to India’s West Coast at $10-$11/mt.
While Qatar offered tons into the Indian tender at $300/mt FOB, sources said other Arab producers have been talking of prices closer to $280/mt FOB. The product that will be sent to India is pegged at $270-$275/mt FOB, with some traders arguing that sub-$270/mt FOB is also possible.
Iranian plants that had been shut down for routine maintenance will be coming back on line in October. Sources said once the producers hit their stride, Iran will have about 400,000 mt available for export each month.
Traders said that means Iran could easily handle the rest of India’s demand – about 1 million tons – for the remainder of the year. In addition, said one trader, there will be enough tons for Iran to continue to service its new customers from Latin America to Southeast Asia.
Egypt is now coming down from its high of over $300/mt FOB. Sources said the latest granular price is pegged at $290-$295/mt FOB, and prills at $268-$273/mt FOB. Abu Qir reportedly sold 15,000 mt of granular for $294/mt FOB for October loading. Another full shipment of prills supposedly went for $273/mt FOB.
Traders were shaking their heads at the prices achieved last week. Even in the upper-$290s/mt FOB, sources said it will be difficult to find a home for the product. One trader noted that the tons above $300/mt FOB were all for November loadings.
Black Sea:
The Dreymoor award from IPL/India marked a return of CIS product being sold to India. Sources said it has been a long time since anything out of Yuzhnyy was considered by Indian buyers, because the prices were too high.
The $284/mt CFR West Coast price into India translates to an approximate $260/mt FOB netback to Yuzhnyy after freight and costs. One trader said a more realistic price would be $255-$260/mt FOB.
Pakistan:
Sources said the Amber offer of Pakistan material in the IPL/India tender could be the last of the 100,000 mt or so of Pakistan urea the trading house secured some time back at $215/mt FOB.
Many in the industry were stunned by the Amber move. The political and social conflicts between Pakistan and India have often turned simple transactions into major productions. One trader said he expects to see the Indian port authorities and inspection teams going over every document at product unloading to ensure that the absolute letter of the law is followed.
Pakistan allowed about 300,000 mt of urea to be exported this year because local reserves were too high. Sources said the combination of increased domestic production and imports taken under long-term contracts built up the stockpiles. The government allowed exports only if the action did not drive up the domestic price and if the sales did not cause domestic shortages.
Indonesia:
Rumors are circulating that a selling tender for small tonnage of 20,000 mt will be called soon. The floor price under discussion is about $260/mt FOB. However, sources said there have been problems getting $220/mt FOB in the past.
The recent run-up in prices may make the Indonesian pricing idea of $260/mt FOB more palatable to buyers, said one trader. The issue will still be finding a home for the product. The main buyers of Indonesian urea – Australia and Vietnam – are not in the market. Vietnam is imposing a large duty on imported urea, and the season is wrong for Australia.
Nepal:
A couple of tenders will be closing in the next few weeks. A tender by STCL closes Oct. 16 for 32,000 mt, and a second by AICL for 25,000 mt closes Oct. 25. Each tender also includes a call for DAP.
The tenders call for bagged material delivered to an Indian port near Nepal and then shipped to Nepalese warehouses. Sources said the usual package cost on the product is about $100/mt.