U.S. Gulf:
While NOLA urea barges had been drifting lower in recent weeks, sources said a midweek spike in Arab Gulf and Egyptian prices caused the NOLA market to spike. Several sources said NOLA had been trading too far behind international prices for too long.
NOLA urea ratcheted up from early-week trades of $685/st FOB to as high as $720/st FOB for October/November, versus the week-ago $680-$700/st FOB.
Eastern Cornbelt:
Sources quoted the urea market at $725-$735/st FOB in the Eastern Cornbelt in late October, with the low confirmed at Cincinnati, Ohio.
Western Cornbelt:
Urea pricing was quoted at $740-$760/st FOB in the Western Cornbelt, up another $10/st from last report, with the low reported at St. Louis, Mo. The market FOB Caruthersville, Mo., was pegged at the $745/st FOB level at midweek.
In the Northern Plains, the St. Paul, Minn., urea market had reportedly firmed to $770-$780/st FOB and potentially higher as the week advanced.
Southern Plains:
The urea market was reported at $730-$750/st FOB Catoosa/Inola, Okla., depending on supplier and time of shipment, with the Houston, Texas, market pegged firmly at the $730/st FOB level for prompt tons at midweek. Urea pricing FOB Enid, Okla., was quoted at the $735-$740/st level for prompt shipment.
South Central:
Urea pricing in the South Central region was quoted at $710-$760/st FOB in late October, up $10-$15/st from last report, with the low confirmed at Convent, La, and the high at Shreveport, La. Other prices at midweek included $730/st FOB Ohio River terminals in Kentucky, $740-$745/st FOB Memphis, Tenn., and $750/st FOB Arkansas River terminals.
Southeast:
The urea market in the Southeast was quoted at $730/st FOB Savannah, Ga., $750/st FOB Fairless Hills, Pa., and $700-$750/st FOB Wilmington, N.C., with the high reported for November tons.
India:
The industry was shocked on Oct. 26 when RCF called a tender that allowed only producers to participate and for shipment to only West Coast ports. The tender will close on Nov. 2, with a shipping deadline of Dec. 11. Rumors are flying that a follow-up tender that will allow trader participation might be called shortly after this one closes.
Throughout the week, traders and some producers were considering the rationale for the move. One trader noted that in previous tenders the traders are the ones with the best delivered price. He said in most tenders, the few producers that participate often put in an FOB price that is almost the same as the delivered price submitted by traders. For example, the July 21 RCF tender had a PIC offer of $498/mt FOB, against low offers from traders at $510-$517/mt CFR. The March 21 tender had offers from producers at $368/mt and $380/mt FOB and low offers from traders at $380/mt CFR.
Rumors circulating in the market suggest that RCF excluded traders because they figured traders would not be able to secure tons on a short notice. They pointed to the urea export ban from China and limited tonnage available from Arab Gulf suppliers.
In the end, this tender is expected to soak up whatever extra tons producers have. However, no one expects to see any major discounts in pricing, especially after reports that SABIC closed a deal near the end of the week at $850/mt FOB and AlexFert in Egypt sold a November cargo at $900/mt FOB.
Estimates of how many tons RCF will be able to secure are put in the 400,000-600,000 mt range. One trader said 800,000 mt might be offered, if RCF is lucky.Based on the Saudi sale, the landed price into India would be about $880/mt CFR. Sources said given the rapid rise in prices around the world, the Saudi price might look cheap by Nov. 1.
Sources estimated that only four or five Arab Gulf producers will participate. Participation from Indonesian producers is not expected because the rules of selling urea out of Indonesia require a public tender as the first step in achieving a deal.
The tender closes just as the Diwali holiday kicks in. Large portions of Indian society and the government will be closed from four to 20 days for celebrations. Any subsequent tender would have to be issued either immediately after the current tender closes, or a week later.
Sources estimated that India is still 2-2.5 million mt short of its urea needs for the current season. One trader suggested that RCF may need to keep calling a tender each month until the end of the fiscal year in March.
Middle East:
Arab Gulf prices jumped from $785/mt FOB at the beginning of the week to $850/mt FOB. The first deal was 10,000 mt sold by Fertiglobe on Oct. 25. By Oct. 27, reports were confirmed that SABIC sold 45,000 mt at $850/mt FOB. Both deals were for November loadings.
Sources said the Indian Department of Fertilizers is still in talks with OMIFCO to obtain favorable rates on urea for the first quarter of 2022. Sources said OMIFCO sent notices to Yara and Swiss Singapore that it was canceling their offload contracts. A similar deal with Ameropa was not immediately affected, one trader said, because Ameropa handles its OMIFCO tons through the Omani trading house OQ.
Industry watchers are not sure how many tons will be affected by the cancelation of the contracts to the two trading houses. Sources said some of the material may still be loaded to cover immediate contract requirements.
Sources said extra material for the Indian tender is limited. One trader said at best he could only see 400,000 mt being available. Others said the number could be higher – as much as 800,000 mt – but most figured 600,000 mt or less.
The paper market for the Arab Gulf is already behind the actual market. Sources said the value was pegged at $805/mt FOB just as the Saudi deal at $850/mt FOB became known.
Egyptian prices moved up throughout the week. MOPCO sold 20,000 mt at $850/mt FOB at the beginning of the week. Within 48 hours, reports were confirmed that AlexFert sold a November cargo at $900/mt FOB. In the midst of those sales, Abu Qir closed a tender for 20,000 mt. No news from the tender was available at press time.
Sources said the high prices were being supported by European buyers looking to ensure full reserves for the next application season. One of the reasons more buyers are stepping up and paying the higher Egyptian prices is because of the lack of material from the Black Sea. High natural gas prices have shut down the Ukrainian urea producers, leaving a gap in the Mediterranean supply market.
As with the Arab Gulf, the paper market for Egypt at $807.50/mt FOB for November shipments was outstripped by actual sales.
Black Sea:
Sources reported discussion out of Yuzhnyy at $750/mt FOB. One trader pointed out, however, that the price is just a discussion of where things would be if there were any tons available.
Traders said there are some urea cargoes still being loaded and shipped from reserves built up before the Ukrainian plants closed due to high operating costs. The tons being shipped are reportedly under contracts or formula-based deals.
Sources put the freight rate to West Coast India at $60-$70/mt. At that rate, the Indian market would be $810-$820/mt CFR. However, working the other way, taking the Saudi price of $850/mt FOB to India comes up with a landed price of $880/mt CFR. Working back to Yuzhnyy would mean a netback of $810-$820/mt FOB.
Sources said given the volatile nature of the urea market, either price could be accepted as a legitimate market price for Yuzhnyy. The odds, however, are in favor of the higher rate. Traders said they will be looking at the final prices offered into India to get a sense of where the Black Sea might be called.
No extra tons are expected to come out of Yuzhnyy until the first quarter of 2022. By then, sources said they hoped natural gas prices will come down and demand for home heating will have eased enough that plants could once against begin production.
Baltic:
Sources reported prices being discussed at $780/mt FOB for prills and $800/mt FOB for granular. Sales from the area are mostly Russian material targeted at Latin America.
Industry watchers said the Russian producers were not hit as hard with high natural gas prices as the Ukrainians or Europeans, thus allowing them to keep producing. With rising prices of urea, the plants are said to be able to cover their production costs.
Europe:
Little was reported in the way of new urea sales in Europe, as farmers focus on fieldwork rather than on purchases. Export prices out of Egypt and from other regional suppliers continued to move up, however, and this was reflected in the region’s latest CFR price ranges.
Indonesia:
Producers have gone quiet. After some initial rumblings of a possible tender this week, the announcement of the RCF/India urea tender stopped any further sales discussions.Sources said the producers want to see what the Arab Gulf producers are ready to offer and what India is ready to accept before calling their own tender.
In the past, some Indonesian material was sent to India under their tenders. Those tons, however, were always handled by traders who had purchased the material in tenders or had negotiated based on tender results. The requirement that offshore sales can only be linked to a selling tender is expected to keep the Indonesian producers from offering material directly in the RCF tender that closes on Nov. 1.
Already prices are looking as if they should be in the $800s/mt FOB, despite the last sale at $502/mt FOB.
Sources pointed to a deal from Malaysia to South Korea that reportedly came in with a netback to Petronas at $810/mt FOB. Traders said the equivalent price into Indonesia would be a few bucks cheaper. Once the RCF tender closes, Indonesian producers will be looking at the tender results and the South Korean deal to determine what their new reserve price should be.
Pakistan:
TCP called a tender for 100,000 mt of urea to close Nov. 22. Shipment is for December and January. Sources had speculated the rising price of urea could force TCP to hold off on the tender until the market cooled down. The purchase will be used to build reserves for next year.
Bangladesh:
The government approved the immediate purchase of 90,000 mt of granular urea. Domestic producer KAFCO will supply 30,000 mt at $740/mt ex-warehouse. An additional 30,000 mt is slated to come from Muntajat at $720/mt CFR. The final third of the portion is slated to come from SABIC at $740/mt CFR.
These prices are currently well below market reports, especially from the Arab Gulf. The deal is being handled by BCIC, which may have earlier secured the tons at lower prices.
Brazil:
Urea prices are edging up. A late-week deal by Ameropa into Paranagua from Oman was reported at $835/mt CFR, putting the new market range at $800-$835/mt CFR.
Sources said there were few deals this week as both sides waited to see what happens in India with the RCF urea tender. Sources said if the price into India hits $900/mt CFR, the market could see a shift away from Brazil to India, leaving Brazil short of product.
Prices inland continue to make dramatic upward moves. Sources put the Rondonopolis price at $940-$1,000/mt FOB ex-warehouse, up $20-$80/mt in just one week.
Sources said some tension is brewing inland as rumors of a potential truck strike circulated. The details of the strike and what areas will be affected are still up in the air. The barter price in Mato Grosso has moved to 118 bags of corn per mt of urea, up from 111 bags.
Thailand:
January-September urea imports were down two percent, to 1.87 million mt from 1.9 million mt during the same period last year, according to Trade Data Monitor.
Third-quarter 2021 imports were reported at 677,000 mt, about 11 percent down from the 761,000 mt reported from the same period in 2020.September 2021 imports were pegged at 285,000 mt, down 14 percent from 331,000 mt in September 2020.