U.S. Gulf:
While NOLA granular barge trades for late January and February were put in the $320-$343/st FOB range early in the week, business later in the week was reported at $368/st FOB for both February and March. Prills have been running at about a $20/st FOB premium over granular.
Eastern Cornbelt:
Urea prices were quoted at $365-$385/st FOB Cincinnati, Ohio, up another $10-$20/st from last report, with the higher numbers reported as the week progressed. Pricing out of Illinois terminals ranged from $360-$395/st FOB for prompt or spring tons, depending on location and time of the week, with the upper level confirmed on Jan. 28 for prompt tons on a spot basis.
Western Cornbelt:
Urea pricing at St. Louis, Mo., reportedly firmed from $370/st up to $385/st FOB during the week, while pricing out of spot Iowa terminals ended the week at $385-$395/st FOB for prompt tons. The market FOB Caruthersville, Mo., was quoted solidly at the $370/st FOB level on Jan. 26, with April offers at Wever, Iowa, pegged at $395/st FOB on Jan. 28.
Urea pricing at St. Paul, Minn., had reportedly edged up to as high as $405/st FOB as the week advanced, but some suppliers were no longer quoting prices there late in the week.
Southern Plains:
Sources quoted the Southern Plains urea market firmly at the $380/st level FOB Catoosa/Inola, Okla., and Houston, Texas, at midweek, up $15-$25/st from the previous week and some $95/st higher than spot quotes at the beginning of the year.
Pricing at Borger, Texas, was reported at $365/st FOB early in the week, but sources said an increase was imminent. Truck-DEL urea in central Texas was pegged at the $395-$405/st level at midweek.
South Central:
Urea prices in the South Central region firmed to $370/st FOB Convent, La., $375/st FOB Memphis, Tenn., $370-$380/st FOB Arkansas and Ohio River terminals, and up to $390/st FOB Shreveport, La., during the week. Based on higher NOLA values, sources speculated that terminal values would move to the $400/st FOB level or higher in the near term.
Southeast:
The urea market in the Southeast was quoted at a firm $375/st Wilmington, N.C., Charleston, S.C., and Norfolk, Va., with no tons reportedly available at Savannah, Ga. That level was up $15-$35/st from the previous week, and reflected an increase of $80-$90/st since the start of the year.
China:
Some small urea deals of 8,000-10,000 mt to area buyers have moved the granular market into the $330s/mt FOB. By the end of the week, some traders were reporting sales at $340/mt FOB, but without details of who handled the deals or where the tons are going.Prilled urea out of China has also seen a boost into the upper-$320s/mt FOB.
The price increase is a classic example of more demand chasing limited supply. Chinese producers are seeing a cutback in output for a variety of reasons. The plants are facing reductions in energy to operate, as is most of the Chinese industrial system. Natural gas and electricity are being diverted to cover residential needs.
Regional COVID-19 shutdowns and quarantines are also affecting the plants. In some cases, workers are told to stay home as hot spots pop up. In other cases, truck drivers are forced to stay at home, reducing the number of trucks available to move product from factory to terminal. In still other cases, drivers are not being allowed to pass through townships and villages without being forced to quarantine before passing through. And additionally, the terminals and ports are facing worker shortages due to the disease.
Some plants are already planning to extend the traditional one-week holiday related to the Lunar New Year, which begins on Feb. 12. The idea is to shut down production completely for enough time to allow any COVID-19 hot spots in the area to stop the spread of the disease.
One other issue hitting some of the producers appears to be a renewed effort by the central government to enforce its environmental laws. Sources said some plants have already received notices of what they need to do to be in full compliance. Sources did not point to specific plants that have been affected, however.
Middle East:
Fertiglobe moved the high end of the Arab Gulf urea price to $340/mt FOB with a 40,000 mt granular sale for March loading. The market followed along, with sources now calling the price from the Arab Gulf at $335-$340/mt FOB.
Plant shutdowns in the area for routine maintenance are keeping the supply of urea tight just as demand is picking up. The situation is getting so tight that rumors were circulating by the end of the week that deals are now under discussion at $345-$355/mt FOB.
Some producers have already mentioned that prices should be closer to $365/mt FOB. One trader said acceptance of these higher prices will depend on loading times and how much buyers will push back. So far, sources noted, buyers have been grabbing everything that comes available at ever-higher prices.
Egyptian prices keep moving up as well.At the beginning of the week, Helwan sold 15,000 mt of granular urea at $360/mt FOB for an April loading. At the same time, Abu Qir sold 8,000 mt of granular at $362/mt FOB and 6,000 mt of prilled urea at $352/mt FOB, both for March loadings.
As the week ended, MOPCO came in with a deal of 20,000 mt at $365/mt FOB for April, quickly followed by another sale of 5,000 mt at $370/mt FOB, also for an April loading. Sources speculated that all the Egyptian tons are heading to European buyers, who seem to have stepped in a few weeks early for their annual buying program.
The steady climb in Egyptian prices, coupled with the rises in the Arab Gulf and China, are securing much higher prices for producers. The current rate of increase, said one trader, appears to be sustainable and might continue for some time.
Indonesia:
The two urea tenders that closed last week, each with a reserve price of $315/mt FOB, were awarded at higher levels.The Kaltim granular tender for 30,000-40,000 mt closed at $328.70/mt FOB with awards to Ameropa and Samsung.The Gresik tender for 18,000 mt of prilled urea closed at $321.75/mt FOB with the material going to Ameropa and Hertychem.
All material is slated for late February or early March loadings. Sources speculated that some of these tons might be included in a much-anticipated Indian tender if it is called soon.
India:
Sources are now saying they are reverting to their original views that an Indian tender will be called in early February. For the past few weeks, sources have been speculating that the Indian government will lean on the Department of Fertilizer to call a tender sooner rather than later to ease concerns that urea supplies might not be sufficient to kick off the next season.
Some said a contributing factor in delaying the tender until February is the current wave of protests and violent demonstrations by farmers opposing government plans to alter how farmers are paid for their crops. Others said supplies appear to be strong enough to wait a bit longer in the hope that global urea prices will come off. That last hope appears to have faded as each of the major urea producing regions are reporting ever-higher prices.
The government said urea demand for the fiscal year that ends on March 31 is up 9 percent from last year. According to analysts, the increase in demand came because more land was tilled and the monsoon rains were exceptionally good for agricultural output.
Local distributors said they prefer the current situation. Some told local media that the farmers are taking product out of the local warehouses fast enough that the seller does not have to incur major storage costs, leaving them with a better netback on their sales.
In addition to the more rapid movement of urea from distributors to the farms, sources said the government has stepped up the process of paying off the subsidies it owes to manufacturers and importers.
According to Trade Data Monitor, India imported 10 million mt of urea for January-November 2020 against 9.7 million mt in the same period of 2019. This number does not include the 1.27 million mt awarded in the MMTC tender of December 2020.
The average value of the tonnage bought in 2020, according to figures reported by the Indian government, was $261.29/mt CFR, against $278.47/mt CFR for the same period in 2019. These values included urea purchased under the tenders and from the long-term contract with OMIFCO that expired in mid-2020.
As a point of reference, the average prices of the eight tenders that took place during the same 2020 period were $259.40/mt CFR for the West Coast and $260.05/mt CFR for the East Coast.
China was the main supplier to India in both 2019 and 2020, with 3 million mt in each year. Second came Oman with 2.8 million mt in 2019 and 2.4 million mt in 2020. As mentioned earlier, the supply agreement from the Oman-based OMIFCO plant lapsed in mid-2020, allowing the producer to move some of its product to other markets.
| India Urea Imports | ||||
| Source Country | Jan-Nov 2019 | Jan-Nov 2020 | ||
| Quantity | Average US$/mt | Quantity | Average US$/mt | |
| World | 9,688,552 | 278.47 | 10,055,971 | 261.29 |
| China | 2,993,344 | 312.07 | 2,944,701 | 275.85 |
| Oman | 2,785,748 | 224.35 | 2,429,776 | 231.50 |
| Egypt | 460,090 | 290.60 | 934,408 | 265.50 |
| Ukraine | 295,808 | 283.38 | 779,961 | 260.03 |
| United Arab Emirates | 775,761 | 288.47 | 704,061 | 272.96 |
| Indonesia | 496,820 | 285.86 | 682,861 | 274.68 |
Ukraine:
Urea exports from Ukraine for January-November 2020 were reported at 1.4 million mt, more than double the 637,000 mt exported during the same period in 2019. November 2020 imports were put at 248,000 mt, according to Trade Data Monitor, against November 2019 imports of 158,000 mt.
Russia:
Togliattiazot confirmed 2020 urea output at 839,000 mt, a 7 percent increase over the previous year’s production of 785,000 mt and the highest output reported by the company since 1991.
Trade Data Monitor reported Russian urea exports at 6.5 million mt for January-November 2020, up slightly from the 6.3 million mt exported during the same period in 2019. The main buyer of Russian urea in 2020 was Brazil at 1 million mt, followed by Finland at 952,000 mt and Estonia at 639,000 mt.
Brazil:
Urea prices moved up to $365-$380/mt in Paranagua, representing at least a $20/mt jump. Some are even calling the upper end of the market at $390/mt CFR. While sellers were pleased to see rates move up, many in the industry are preparing for prices to drop by the end of the first quarter.
The uncertainty in the market is leading some buyers to hold off on making long-term buying commitments. Sources said inland buyers in particular are hesitant to jump in with big orders for urea at this time.
Rondonopolis is now reporting prices at $470-$480/mt FOB ex-warehouse. The purchases appear to be buyers taking only tonnage they need, without looking at any distant commitments. The situation is repeated in Sorriso, where prices firmed to $483-$497/mt FOB ex-warehouse, up from $445-$492/mt FOB at last report.
The barter rate for 1 mt of urea shifted back to 60 bags of corn after last week’s level of 50 bags.
| Brazil Urea Prices | ||
| Terminal/City | US$/mt FOB ex-warehouse | |
| Week ending 01/12 | Week Ending 01/29 | |
| Rondonopolis | 360-380 | 470-480 |
| Sorriso | 445-492 | 483-497 |
Mexico:
Urea imports in Mexico were put at 1.8 million mt for the first 11 months of 2020, according to Trade Data Monitor, compared with 1.5 million mt for the same period in 2019. November 2020 imports were pegged at 127,000 mt, against 68,000 mt for November 2019.
Russia was the main supplier to Mexico in both the 2020 and 2019 periods, at 574,000 mt and 716,000 mt, respectively. The big winners in obtaining new sales into Mexico were suppliers from Indonesia at 214,000 mt, and Oman at 101,000 mt.
Nigeria:
Sources said the new Dangote urea plant is expected to start production in time to begin serving Nigeria’s late-winter and full spring demand. After taking care of local demand, the management of the 3 million mt/y facility is expected to turn to exports to Latin America. There are already reports that traders in Brazil are anticipating receiving the tons.