U.S. Gulf:
It is almost July, and time was starting to catch up with the NOLA urea barge market. The latest trades were put in the $413.50-$430/st FOB range, down from the week-ago $430-$465/st FOB. However, sources said the inland market still had some steam.
Eastern Cornbelt:
Urea prices were reported at $475-$485/st FOB terminals in the Eastern Cornbelt, reflecting a tighter range from the prior week. Both the high and low ends of the range were reported in Cincinnati, Ohio, during the week, with the Ottawa, Ill., market pegged firmly at the $485/st FOB level at midweek.
Western Cornbelt:
The urea market was quoted at $470-$480/st FOB in the Western Cornbelt in late June, with the low reported at Camanche and Port Neal, Iowa, and the upper end at St. Louis, Mo. Urea pricing at St. Paul, Minn., had reportedly firmed to $490-$505/st FOB for new offers.
Southern Plains:
Urea prices continued to climb in the Southern Plains, fueled by tight supply and strong demand. The Houston, Texas, market was quoted at a firm $490/st FOB at midweek, while pricing at Catoosa/Inola, Okla., reportedly strengthened to $500-$505/st FOB as the week progressed.
South Central:
Urea pricing in the South Central region was up amid reports of tight supply. The market was pegged at $475-$495/st FOB, up another $5-$10/st from the prior week, with the low at Memphis, Tenn., and the high confirmed at Shreveport, La. Sources reported the last offers out of Convent, La., firmly at the $475/st FOB level, with most Arkansas terminals pegged at the $485/st FOB level.
Southeast:
Urea prices were up in the Southeast. Sources pegged the market at $480-$485/st FOB Wilmington, N.C., up roughly $10-$15/st from the previous week, while pricing at Fairless Hills, Pa., firmed to $490/st FOB for June/July tons, up from $485/st FOB one week earlier.
India:
The RCF tender closed on June 24 with 13 companies offering 1.8 million, and prices jumped, as expected.
Dreymoor came in with the lowest offers for both coasts at $509.95/mt CFR for Kakinada on the East Coast and $501.96/mt for delivery to Pipavav on the West Coast. These numbers represent a jump of $84/mt for West Coast pricing and $101/mt for the East Coast.
At the beginning of the week, traders were predicting prices might come around $472-$474/mt CFR, which would represent a significant jump from the $409-$419/mt CFR done in the last tender. By the end of the week, however, more were talking about $505/mt CFR for the West Coast and $510/mt CFR for the East Coast.
| Offering Company | US$/mt CFR | Quantity (mt) | Discharge Port |
| Dreymoor | 509.95 | 50,000 | Kakinada L1 ECI |
| 501.96 | 52,000 | Pipavav L1 WCI | |
| Amber | 543.50 | 50,000 | Krishnapatnam-Karaikal-Paradip-Kakinada |
| 546.50 | 50,000 | Mundra-Adani Tuna-Pipavav | |
| Ameropa | 520.00 | 61,500 | Kakinada |
| 520.00 | 51,500 | Gangavaram | |
| 520.00 | 45,000 | Vizag | |
| 511.00 | 52,500 | Mundra | |
| 511.00 | 50,000 | Pipavav | |
| 511.00 | 50,000 | Kandla | |
| 511.00 | 51,500 | Mundra | |
| 511.00 | 61,500 | Pipavav | |
| OQ Trading | 509.00 | 50,000 | Mundra |
| Continental | 521.00 | 45,000 | Mundra-Kandla-Adani Tuna |
| Midgulf | 519.00 | 50,000 | Gangavaram |
| 523.00 | 50,000 | Mundra | |
| Keytrade | 522.00 | 50,000 | Kakinada |
| Koch | 536.00 | 50,000 | Krishnapatnam |
| 536.00 | 50,000 | Kakinada | |
| Medallion | 544.99 | 60,000 | Gangavaram-Krishnapatnam-Karaikal-Kakinada-Paradip |
| 50,000 | Kandla-Pipavav-Adani Tuna-Mundra | ||
| Samsung | 521.25 | 90,000 | Kakinada |
| 521.30 | 90,000 | Krishnapatnam | |
| 521.35 | 45,000 | Karaikal | |
| 524.00 | 45,000 | New Mangalore | |
| 524.05 | 45,000 | Kandla | |
| 524.10 | 90,000 | Mundra | |
| Swiss Singapore | 533.00 | 47,000 | Gangavaram-Paradip-Kakinada-Vizag |
| 533.05 | 47,000 | Tuticorin-Kamarajar-Krishnapatnam-Karaikal | |
| 518.25 | 47,000 | Mundra-Adani Tuna-Kandla | |
| 518.30 | 48,000 | Pipavav-Adani Dahej-New Mangalore-Adani Hazira-Jaigarh | |
| Transglobe | 521.00 | 50,000 | Paradip |
| Gavilon | 512.88 | 90,000 | Karaikal |
Sources noted that no urea producer directly offered tons to RCF. Even without their direct presence, the producers are well represented in the offers to the West Coast. Ameropa and OQ are both most likely offering tons from Oman. No one could offer any single reason for the absence of the producers in this tender. Often some will join in with very high prices just to let the Indian buyers know they are interested.
One observer suggested that the volatile freight market could have led the producers to let the traders take the risk of rising transportation costs. Even if the producers do not actively provide transportation for any material purchased on an FOB basis, sources said they would be under pressure to lower their prices to meet changes in the freight market.
The nearly $100/mt jump in price for the East Coast was attributed to a combination of transportation costs, higher prices for the product, and uncertainty about supplies from China.
Sources said the rising price of fuel added to the basic transportation cost. What is really hitting the transportation market, however, is the disruption in vessel placements in the region and a continued reluctance of ship owners to send their vessels to India because of COVID-related concerns.
All told, sources estimate 750,000-800,000 mt might be awarded in the tender. There are already rumors that one or two cargoes from Chinese ports will really be Iranian urea run through the Chinese ports for re-export.
The information released by RCF showed 977,000 mt offered to East Coast ports and 837,500 mt offered to the West Coast. The ratio between the two sides of the country is not unusual. So far this year, only the May 4 MMTC tender had more offers to the West Cost than to the East Coast. In the end, the limited amount of material available from China in each case has limited the amount of urea shipped to the East Coast.
No tender this year has secured more than 802,000 mt. Sources said purchases closer to 1.2 million mt were needed each time to fill demand. The lack of securing the necessary tons, said one trader, has India running behind this season. Even with the long Aug. 11 shipping deadline, sources said the chances are good that another tender will need to be called within a couple of weeks.
China:
The export duty on urea that seemed an almost done deal last week has reportedly been put on the backburner in favor of a plan to let the state absorb the cost of the ever-rising price of urea instead of the farmer. Sources said a one-time subsidy plan of US$3 billion is being planned to counter the hot urea market.
Prior to the rumors of the subsidy plan, traders and producers quickly moved at least 150,000 mt of urea to portside warehouses. Sources said the move was an effort to get the urea registered in the bonded warehouses and ready for export before the duty was imposed on urea still officially in the country.
Sources said this tonnage, and possibly an additional 100,000 mt, could provide the basis for offers into the RCF India tender. Besides the Chinese product in the warehouses, sources said product from Iran is being cycled through some Chinese ports and may be included in several of the offers made to the Indian buyer.
For the most part, everyone was quiet about pricing from China. There were some reports of small cargoes of granular urea going to regional offshore buyers at $450/mt FOB. If true, and many in the industry do accept this rumor as true, this would move up the benchmark price to the upper end of last week’s range.
To add fuel to the hot market, sources also reported deals of July shipments of 15,000-20,000 mt in the low-$450s/mt FOB. However, the low price for the East Coast of India now shows a possible netback in the mid-$480s/mt FOB.
Chinese urea exports for the first five months of the year were up about 30 percent, to 1.9 million mt from 1.5 million mt during the same period last year, according to Trade Data Monitor. The main buyers this year were India at 682,000 mt and South Korea at 322,000 mt.
May exports were essentially stable at 601,000 mt, compared with 600,000 mt in May 2020. The main buyer in May was India at 188,000 mt, which represented a drop of about 41 percent from the 320,000 mt exported to India in May 2020.
Middle East:
Arab Gulf suppliers all claim they are sold out well into July and have limited tons for anything going into June. And that includes the RCF tender.
Industry observers noted the absence of producers in the offers revealed by RCF when the tender closed on June 24. Even without the producers directly offering tons, most of the product marked for the West Coast of India is expected to be covered out of the Arab Gulf. Sources speculated that maybe 100,000 mt might come from the Baltic or Black Seas and another 100,000 mt from other sources.
The low West Cost offer in the RCF tender at $501.96/mt CFR indicates a netback to the Arab Gulf of $470-$475/mt FOB. That level would surpass what the paper market is currently calling for the area. The July derivative price is quoted at $460/mt FOB and the August price at $463/mt FOB.
Even these paper market prices are higher than the last publicly done business, which had the Arab Gulf topping off at $450/mt FOB.
Egyptian producers remain hesitant to offer tons for export. While the government has decreed each producer has a responsibility to ensure plenty of urea for the domestic market through August, sources said it has not issued quotas for the producers. As a result, producers have pulled back from offering tons at a time when the global market needs urea.
Besides the Indian urea tender, sources said Ethiopia is looking for about 218,000 mt. Egypt is in a good location to supply material to Ethiopia, but only if producers can be assured they will not be penalized for exporting their product.
The lack of new deals leaves the July and early August price at $408-$415/mt FOB, based on deals concluded in May and early June.
Nigeria:
Bloomberg reported that Dangote is ready to begin shipping urea to the U.S. and Brazil as early as this month. The urea will come from the new 3 million mt/y plant that just began operations.
The first wave of product from the plant was shipped by trucks to local distributors. The company said about half of its production will be dedicated to the domestic market and some regional African sales. The remaining 1.5 million mt will be offered on the global market.
On the heels of the company’s announcement early in the week, sources reported that a major trading house was shopping around for vessels to take urea from Nigeria to NOLA and Paranagua. By the end of the week, however, the search for a U.S.-bound ship seemed to have run out of steam.
Brazilian buyers have been anxious for the Dangote facility to get up and running. Sources said the steaming time from Nigeria to Brazilian ports shaves about a week off the delivery time for product from North Africa and the Arab Gulf. In past statements, Dangote has also indicated it was eying the Brazilian market as its main buyer.
Efforts to get an idea of pricing from Dangote have proven difficult. Traders reported that numerous calls to Dangote officials have not been returned. E-mails and other efforts by publications to learn more details about the upcoming shipments have also not been answered.
Ethiopia:
A tender to close on June 28 for 218,000 mt of granular urea was called by the EABC. Sources said the regional bank is looking for tons to fill out cargoes that were not covered in a late 2020 tender.
The tender is asking for shipment in August and September, but sources said the buyer will be hard pressed to find any material available at that time.
Egyptian and Arab Gulf producers are the most likely suppliers for this tender. So far, the Egyptians are hesitant to commit to exporting any material because of a government order to focus on the domestic market. At the same time, the Arab Gulf producers have claimed they are sold out into August. To make matters worse for the Ethiopians, the RCF tender from India will probably take whatever tons might be available into early August.
Brazil:
Upward pressure continues on urea pricing in Paranagua. Sources said the price is now at $485-$505/mt CFR, with limited tons available. The dearth of product, said one source, could lead to even higher prices in the coming weeks.
The inland situation is not much better, but the reluctance of buyers to step up has softened the price. Sources said Rondonopolis has now settled around $600/mt FOB ex-warehouse. Sellers have tossed their weekly price lists and are now operating on a day-to-day basis on pricing and availability.
Croatia:
Nitrogen and NPK producer Petrokemija on June 23 said it will extend the shutdown of its ammonia and urea plants for technical maintenance. The producer in a bourse filing said the plants will be restarted “once all technical conditions are in place.”
The shutdowns originally were planned to run from May 28 to June 11 “to enable the optimization of production according to market demand and allow the necessary repair and maintenance of equipment in order to minimize the risk of unplanned shutdowns during the autumn season.” (GM May 28, p. 7).
Petrokemija in its latest filing reiterated that output supplies had been coordinated with buyers, with no supply disruptions.