U.S. Gulf:
NOLA granular urea barges saw a significant boost this week, firming to $363-$390/st FOB from the week-ago $340-$390/st FOB. The higher end of the range reflected barges that were ready to move, while the lower end represented May. A moving barge on its way upriver was reported at $405/st FOB.
Another run-up in corn prices, along with possibly higher prices in the Indian tender, were seen as reasons for the uptick.
Eastern Cornbelt:
Urea prices were steady at $410-$430/st FOB in the Eastern Cornbelt, with the low confirmed at Ottawa, Ill., and the higher end at Cincinnati, Ohio, and other Ohio River terminals.
Western Cornbelt:
Urea remained at $420-$440/st FOB in the Western Cornbelt in late April, with the low reported at St. Louis, Mo., and the high at Port Neal, Iowa.
California:
Urea pricing in California remained at $515-$520/st FOB port terminals for April tons. No current rail-DEL prices were reported in late April, with movement limited to small quantities.
Pacific Northwest:
The urea market was steady at $475/st FOB Rivergate, Ore., and $480/st FOB Aurora, Ore., with delivered tons ranging from $490-$510/st in the Pacific Northwest, depending on location.
Western Canada:
The urea market was pegged at C$655-$680/mt FOB and C$670-$690/mt DEL in Western Canada, depending on location.
India:
Soon after MMTC called its tender, rumors on the other side of the globe circulated that COVID-19 problems might force the tender to be scrapped, or at least delayed.
The global urea market moved through the week as if nothing will stop the opening of the tender documents on May 4, as planned by MMTC. The big issue facing a timely closure of the tender, however, remains the status of the COVID-19 shutdowns.
The Indian Department of Fertilizer and MMTC offices are all closed until May 3 as variants of the virus ravage the country. Sources said there are a number of unconfirmed reports that many in these two agencies and the main banks have been sidelined by the virus. No one is sure how these illnesses will affect the ability of MMTC to open and evaluate the tender offers, nor how the department and banks will be able to process the necessary award making process.
Some international traders expressed confidence that because of its long history dealing with international urea tenders, MMTC officials will be able to process the offers and awards without too much difficulty.
For traders offering into the tender, sources said they will need to secure their tons from China before the weekend. China will close on May 1-3 to celebrate International Workers Day. Office and factory workers are not expected to be back in their work units until May 5, after the tender closes.
The total tonnage expected in the tender will depend on the price. Sources gave ranges from $360/mt CFR to the current high price of $380/mt CFR. Even if the price is at or close to the $380/mt CFR level, sources said MMTC will need to take at least 1.2 million mt just to make up for the deficit from the last tender and to make sure farmers have what they need going into the season.
The tender provides for an extended shipping window. Usually, the period is about one month from the closing of the tender. This time the shipping deadline is June 28, about six weeks from the closing. The extra time could allow for more tons to be purchased. Some traders said they could see as many as 2 million mt being purchased if the right price is achieved. A more likely outcome, said sources, are purchases of 1.2-1.6 million mt.
Another major factor that could affect the final purchases is the availability of vessels. While the balance of ships in the area has returned to more normal levels, the COVID situation in India could cause some vessel owners to refuse to send their ships there. Sources said owners might be concerned that after the ship empties its urea at the Indian port and takes on another cargo, it could be quarantined for an extended time in the next port of call.
The uncertainty related to COVID and fluctuations in oil prices have impacted shipping costs. As the week opened, sources said the cost of moving 45,000-50,000 mt from China to East Coast India was $21/mt. By the end of the week that price had jumped $5/mt, with sources saying even higher prices might be expected next week.
China:
Prices strengthened following the announcement of the MMTC/India urea tender, and with news that some domestic demand remains.
Prilled urea remains priced at $335-$340/mt FOB, but with most of the business focused closer to the $340/mt mark. Granular urea moved up, with sources reporting that a small cargo of 6,000-8,000 mt was sold to a South Korean buyer at $348/mt FOB. At the same time, there were reports of a deal at $350/mt FOB for an Australian buyer.
Sources said the domestic demand is waning, but not enough to counter the upward pressure from the international market. Traders said they found themselves competing with domestic traders still looking for tons to ship inland well into June. The domestic demand is expected to ease off by July, leaving only offshore sales as the target for producers.
Traders looking at the Indian tender said they expect to see 10 to 12 vessels coming out of China. The extended shipping window might even make another several cargoes possible.
Fluctuating freight rates from China to East Coast India have made long-term planning difficult. One trader said his logistics office has had to change its estimate of freight costs almost hourly. The price moved up $5/mt this week, to $26/mt for a trip that was less than $20/mt just a few months ago.
Indonesia:
Selling tenders were called in an effort to find out where prices are. Usually in the Indonesian tenders the seller will set a reserve price. The most recent tender did not include this feature.
A Kaltim tender for 45,000 mt of granular urea closed on April 29. The highest bid came from Gavilon at $350.50/mt FOB for only 25,000 mt, sources said. At the time, traders figured Kaltim might reject this bid because it was not for the full amount. In the end, however, Gavilon won the award.
One trader said the driving factor in accepting the higher bid for fewer tons may have been that the other bids for the full 45,000 mt topped out at $331/mt FOB. By accepting the Gavilon bid, said the source, Kaltim allowed for a new price mark higher than the previous sale.
Another tender for 45,000 mt showed only bids at $333/mt and $334/mt FOB. In light of the Gavilon deal, sources said the seller scrapped this auction.Sources had described these offers as “beauty contests” because there was no guidance from the producer as to pricing.
For traders, the events were seen as efforts to determine where the market is sitting now and where it is going. The prices, with the exception of the Gavilon bid, all reflected a softer level for Indonesian product.
South Korea:
Namhae closes a tender on April 30 for 10,000 mt of granular urea. The source will most likely be China. A recent sale into South Korea of smaller tonnage showed a netback of $348/mt FOB.
Middle East:
Prices are holding steady only because of a lack of material for spot sales. The paper market is showing softer prices in the coming months, with May pegged at $342.50/mt FOB and June at $335/mt FOB.
There is talk that a trader closed a deal at $315/mt FOB, but many in the industry have discounted that rumor. If true, it would represent a significant drop in price from the most recent $340s/mt FOB level.
Some extra urea is expected in the market soon. The SAFCO IV plant has returned to production after an unscheduled technical shutdown. Sources said production will allow for some added supplies in the Arab Gulf market.
International traders are beginning to look at the new Dangote plant in Nigeria. Depending on where the company offers tons to offshore buyers, the Arab Gulf and North Africa producers could be facing new competition.
For now, the main focus of the Dangote plant seems to be split between the domestic market and Brazil. Shipments to Brazil may be problematic until the draught levels of the Nigeria port facilities can be fully explored. If tons do flow from Nigeria to Brazil, the business could disrupt sales from Qatar and Saudi Arabia, totaling about 2 million mt.
Sources reported that OMIFCO is working with its commercial arm, OQ Supply and Trading, to move 1 million mt of urea per year. The deal is a three-year offtake agreement that will make the urea available to the international market for sale around the world.
The joint venture company in Oman stopped sending urea to India at favorable rates when the two sides could not come to an agreement on terms. Following the collapse of talks, OMIFCO signed deals with international traders to move the rest of their 2020 tons. Sources reported the last of the material under those deals was offered in the RCF urea tender last month.
Thailand:
First-quarter imports of urea were down 14 percent this year, according to Trade Data Monitor, to 345,000 mt from 400,000 mt during the same period in 2020.March imports of 100,000 mt were also down from the March 2020 total of 116,000 mt.
Brazil:
Urea prices edged up in Brazil as news of the Indian tender traveled around the globe. Sources now report the Paranagua price at $355-$380/mt CFR.
The price increase comes even as buyers are arguing demand is so low that the prices should be falling. As the week closed, however, sources reported a sale of 5,000 mt of granular urea to a Brazilian buyer at $385/mt CFR for June shipment, moving the range up further.
Sources put the Rondonopolis price at $485-$510/mt FOB ex-warehouse. At the same time, however, the price at Sorriso came down to $444-$505/mt FOB ex-warehouse. The barter rates at Rondonopolis and Sorriso for 1 mt of urea is now pegged at 65 bags of corn, down from 71 bags last week.
| Brazil Urea Prices | ||
| Terminal/City | US$/mt FOB ex-warehouse | |
| Week ending 4/23 | Week Ending 04/30 | |
| Rondonopolis | 474-520 | 485-510 |
| Sorriso | 480-533 | 444-505 |