U.S. Gulf:
It was a relatively quiet week on the NOLA prompt urea barge market, with most sources citing a price of $805/st FOB or thereabouts, compared to the week-ago $800-$815/st FOB. Forward trades were reported to be higher, with February-April trading in the $818-$825/st FOB range.
Eastern Cornbelt:
The urea market remained at $850-$865/st FOB regional terminals in the Eastern Cornbelt, with both the high and low reported at Cincinnati, Ohio.
Western Cornbelt:
The urea market was steady at $850-$875/st FOB in the Western Cornbelt, with the low reported at Caruthersville, Mo., and the high in Iowa. The St. Louis, Mo., urea market remained at $860-$870/st FOB at midweek.
California:
The urea market jumped to $880-$940/st FOB port terminals in California, up from $850-$880/st FOB earlier in November. Sources continued to report no current delivered urea pricing in the state.
Pacific Northwest:
The urea market was quoted at $930-$940/st FOB for prompt tons in the Pacific Northwest, up $100/s from last report, with the low confirmed at Rivergate, Ore. Tons for Q1 shipment were pegged at the $950/st level FOB Rivergate. No current delivered prices were reported in the region in late November.
Western Canada:
The urea market jumped to C$1,280-$1,285/mt FOB in Western Canada, with delivered tons quoted in a broad C$1,280-$1,330/mt range, depending on location and time of shipment, up significantly from the last reported C$1,225-$1,245/mt DEL. Most offers in Saskatchewan for February-March tons fell in the C$1,280-$1,285/mt DEL range in late November.
India:
The industry is taking its time to ensure vessels are booked and tons assembled at ports to cover the 1.6 million mt awards issued in the IPL tender. Few are looking at a quick call of another tender.
Sources said the earliest a tender might pop up would be near the end of December. However, there is a larger view that the tender will be called in early January 2022. Sources speculated the next tender will be called by NFL, which was just recently granted permission to import urea.
While the recent IPL tender did buy the largest single amount of urea in any tender so far this year, the supply of urea in the country still remains low. Local media reports have highlighted disgruntled farmers and local distributors who complain of no urea available. Compared to purchases made last year, the intake of urea is about 2.5 million mt behind.
Pakistan:
The TCP tender for 100,000 mt in two lots closed on Nov. 22 with only one company offering material. Two other companies – Ameropa and Swiss Singapore – sent regrets. The buying company scrapped the tender.
The lack of participation in the tender came for a variety of reasons, said sources. One overriding issue was the potential quick delivery time. Under the tender, shipment was to take place within 20 days of the issuance of the letter of credit. However, obtaining the LC and securing all the other financial requirements has often taken longer than expected. A trader could be caught holding onto a cargo longer than expected at great expense.
Sources said the lack of serious participation in the tender also indicated how short the market was of December urea. Traders said if the paperwork moved through at a normal pace, shipment would have to take place before the end of December, at the same time everyone else is shipping material to India, making securing tons and a vessel difficult.
Sources said Pakistan needs the product to build up its reserves, but the issue will be how much they actually need. Any new tender call will include the usual one-month waiting period between the call and the closing of the tender. If TCP waits too long, it will once again have its tender closing at or near the same time when a major Indian tender closes.
The center of gravity for the market will shift to India, leaving Pakistan on the sidelines.
Ethiopia:
A second shot at buying 800,000 mt failed. The EABC tender needed a second call after only one trader offered tons in the initial call and was later disqualified.The tender is an annual event when Ethiopia looks to book its tons for the coming year. The 800,000 mt was to be spread out from December 2021 through March 2022.
Sources said most traders stayed away from the tender because of previous issues with financing and the timing of deliveries. Adding to the problem, sources said, was the absence of urea in the spot market, plus the Indian and Pakistan tenders. In the end, the absence of China and the Russian restrictions on exports dried up the market for the Ethiopians.
January-October imports this year were reported at 531,000 mt by Trade Data Monitor, up less than 1 percent increase from the 529,000 mt imported during the same period last year. The main suppliers so far this year have been Egypt at 241,000 mt, Saudi Arabi at 125,000 mt, and the United Arab Emirates at 120,000 mt.
October imports were reported at 100,000 mt, compared with only 1 mt in October 2020. Few to no tons were imported during several months so far this year, with February, August, and September showing no urea imports, and April recording only 132,000 mt.
January 2021 was the big month for imports at 141,000 mt. March saw 47,000 mt, May 112,000 mt, June 43,000 mt, and July 88,000 mt.
Indonesia:
Reports of 15,000 mt of Indonesian urea being sold to South Korea as a re-export were noted in the industry. The deal reportedly was handled by a Chinese trader, implying the re-export was from a Chinese port. Sources said it would have made more sense for the product to be stored almost any place other than China for shipment to South Korea, however.
One trader noted that the last sales out of Indonesia were at $502/mt FOB from tenders held a couple of months ago. No new sales were reported. Indonesian product had to have been purchased for no more than $502/mt FOB. With a landed price reported in the $990s/mt CFR, sources said the cost of shipping to a Chinese port, storing the tons, and then shipping to South Korea could still garner a healthy profit of about $300/mt. One trader noted, however, that in a normal market this deal would never have happened.
Reportedly, the producers are anxious to start exporting because of the high prices in the global market. However, the government is firstly concerned with the domestic market and is reluctant to issue the necessary export permits.
Estimates of where the Indonesia market should be, based on the IPL/India tender price, were in the low-$950s/mt FOB. Some sources said an even higher price might be possible if the tons become available because of reports out of Malaysia that a deal for 1,000 mt in a container for South Korea showed a netback for Petronas at $1,000/mt FOB.
China:
Sources reported that about 50,000 mt remains in bonded warehouses but cannot be released for export because of the Chinese ban on exports that took effect on Oct. 15.
Sources said Chinese traders are reportedly lobbying the government to release the material, arguing that because the product is already in a bonded warehouse, it is essentially already outside the country and should not be counted as part of the domestic reserves. Port authorities, however, appear to be adhering to the letter of the edict and are refusing to discharge the tons because all the paperwork was not done by the Oct. 15 deadline.
The recent sales into South Korea show a China-equivalent price of $960-$970/mt FOB. This price matches up with the estimated China price from sales in the IPL/India tender.
South Korea:
The South Korean government and business agents have been sweeping the globe looking for urea to replenish the supply of liquid urea necessary for their emissions abatement program.Reportedly, the South Korean government approached Moscow to ask for an exemption to the Russian restrictions on urea exports.
A cargo of 18,500 mt that cleared a Chinese port last week reportedly arrived in a South Korea port this week. The urea was already in a bonded warehouse when the Chinese export limitations were put in place. The buyer argued that the urea was already cleared for export but required a few more papers to be processed, and so should not be included in the export ban.
Additional efforts to secure tons from Vietnam and Australia were also put into play.
South Korea has largely depended on China for its urea. China sent 607,000 mt to South Korea in the first 10 months of the year out of total imports of 751,000 mt. The next highest supplier was Qatar at 52,000 mt.
Russia:
The Russian government is being lobbied by urea buyers from around the world.
Bloomberg reported that Moscow has assured Brazil that it will fulfill its urea contracts. So far this year, according to Brazilian import numbers assembled by Trade Data Monitor, Brazil took 1.2 million mt of urea from Russia out of a total of 6.2 million mt imported. This makes Russia the second largest supplier to the Latin American country, with Qatar supplying 1.5 million mt.
The South Korean government also approached Russia to see if it could clear more urea for export. According to Trade Data Monitor, the last time Russia exported urea to South Korea was in 2018 for a total of only 1,365 mt.
Middle East:
Arab Gulf producers are reportedly sold out through December with either sales to India from the IPL tender or under contracts for other buyers. The scarcity of product is expected to last into January, with tightness anticipated though the whole first quarter of 2022.
The lack of any new spot deals leaves the price set from the Indian tender at $950-$959/mt FOB.Sources reported no new business out of Egypt following the sales last week at $930/mt FOB and $945/mt FOB. Reportedly December is sold out.
Iranian exports for January-October were reported by Trade Data Monitor at 3.2 million mt, down 2.7 percent from the 3.4 million mt exported during the same period in 2020.The main buyer so far this year was Turkey at 1.2 million mt. The rest of the buyers took less than 300,000 mt each.
October 2021 exports were reported at 292,000 mt, down 31.7 percent from October 2020 exports of 427,000 mt. Turkey took 215,000 mt of the month’s product.
Brazil:
Urea prices shifted up in Brazil, reflecting the bullish global market. Sources put the port-side price at $880-$950/mt CFR.
Inland, buyers seemed relieved that Russia agreed to supply the urea promised under existing contracts. At the same time, farmers and local blenders seem to be taking the advice of local farmers associations in Mato Grosso to postpone their purchases until next year in hopes of lower prices.
A softer price in the area could also be the result of the government announcement that it was working on a long-term plan to increase domestic production and reduce imports. For now, sources put the Rondonopolis price at $960-$1,000/mt FOB ex-warehouse.