U.S. Gulf:
NOLA granular urea barges continued to move downward, with the range reported at $545-$610/st FOB, compared to the prior week’s $575-$685/st FOB. While prices had moved down to a low of $545/st FOB midweek, some sources said they were seeing a rebound as the week closed, which was in line with recent weeks.
Thinly-traded NOLA prills were even harder to peg, with sources calling the last done in the $585-$630/st FOB range.
Eastern Cornbelt:
Urea pricing volatility continued to grip the Eastern Cornbelt market during the week. The Cincinnati, Ohio, urea price reportedly fell to $645/st FOB by Jan. 20, down from $670/st FOB earlier in the week and the previous week’s range of $675-$735/st FOB.
Low urea prices out of spot river terminals in the Illinois market were reported at $635-$650/st FOB at midweek.
Western Cornbelt:
Urea prices continued to fall in the Western Cornbelt, driven by still lower NOLA barge values.
The St. Louis, Mo., market reportedly ranged from $620-$635/st FOB, depending on supplier and time of the week, with the upper end of the regional market pegged at $640-$650/st FOB in Iowa. A low of $620/st FOB was also reported in the Catoosa/Inola, Okla., market during the week
In the Northern Plains, delivered urea pricing in North Dakota reportedly fell to $675-$705/st for prompt tons and $765-$795/st DEL for spring prepay. No urea tons were reportedly available at St. Paul, Minn.
California:
Sources reported a broad range of urea prices in California in mid-January. While the Stockton market reportedly fell to $810/st FOB, down some $70/st or more from December, reference price levels at West Sacramento remained at $910/st FOB for bulk and $970/st FOB for bags.
Rail-DEL urea pricing was pegged in the $885-$895/st range in the state, but, as one source put it, “if we were pressing for a concrete amount, I think we could get some concessions.”
Pacific Northwest:
Sources reported softer urea pricing in the Pacific Northwest in mid-January. The latest offers as of Jan. 20 were quoted at $790/st FOB Rivergate, Ore., down from early-week pricing at $810/st FOB Rivergate and $815/st FOB Aurora, Ore.
Even softer values were reported for delivered urea, including $710-$735/st DEL for prompt tons in Montana and $740-$790/st DEL in Washington.
“I don’t know (or expect) that much has transacted as most people out West were already full, or nearly full,” said one regional contact of the lower urea prices.
Western Canada:
Slightly softer urea prices were reported in Western Canada in the wake of plunging NOLA barge values in recent week, but sources were quick to note that the region has sustained “no hard price drop” amid limited supply and spring pricing offers.
The urea market in Western Canada was reported at C$1,220-$1,250/mt FOB for March-April, down from C$1,250-$1,265/mt before the holidays, with the low describing recent offers from “brokered warehouses.” The last spring urea offers for delivered tons were reported firmly at the C$1,240-$1,250/mt level in the region.
India:
Sources said the Department of Fertilizer finalized a deal with OMIFCO for 1 million mt to be delivered each year for at least the next three years. The arrangement will ease some of the pressure to import urea under tenders. Reportedly, the price of each cargo will be based on an agreed formula just before loading.
Sources said even with the good news for farmers that 1 million mt of imported urea is now guaranteed for 2022, the country is still short about 1.5 million mt for this season. Sources said the softening of the global urea market could move the Department of Fertilizer to designate a buyer to hold another tender soon. However, most seem to think nothing will happen until February.
Details of the 2022/23 budget are seeping out. Indian media report that the government will propose an increase in the subsidy budget to US$19 billion. None of the reports have detailed how the subsidies would be divided among the main fertilizer groups. Sources noted, however, that urea has traditionally taken the lion’s share of the subsidy payments.
Middle East:
Most producers are shipping material from long-term contracts or fulfilling orders won under the IPL/India tenders. Supplies from the area are tight, with only limited tons available for possible spot sales.
Sources said at least one producer was quietly shopping around material for shipment in February, with prices out of these discussions quoted at about $750/mt FOB. Nothing was reported at this level, but a drop from the $860s/mt FOB in the last Indian tender was not surprising to industry watchers. The amount of the drop, however, has more than a few traders stunned.
As the year began, sources were reporting a steady drumbeat of calls for lower prices out of the Arab Gulf. The lack of any spot deals made price checking more an exercise in gossip management than actual trading, however. Besides the reports of the tonnage being offered from the region, a strong indicator of softer prices came at the end of the week, when the Brazilian delivered price dropped about $180/mt to under $600/mt CFR in just a week.
The paper market for the Arab Gulf anticipated the drop. The price was put at $680/mt FOB for February and $670/mt FOB for March orders.
A deal between India and OMIFCO will guarantee shipment of at least 1 million mt of product from the Omani producer to India each year for the next three years. The price for each shipment will be determined by mutual agreement just prior to loading.
The deal with India leaves OMIFCO with another 1 million mt to sell on the open market. Sources said the Omani trading house, OQ, will be handling the sales. Traders expect to see more product being offered to the U.S., and possibly to some Asian buyers. Reportedly, OQ prefers to work with end users rather than international traders. This would mean leaving out sales to Brazil, which are primarily handled through trading houses.
There are reports that some small cargo deals have been done at $780-$800/mt FOB. Some deals are even pegged at $760/mt FOB, but sources are careful to point out that these lower-priced deals still seem to be more talk than action.
Reportedly, European buyers, the mainstay of Egyptian sales, are pushing hard for lower prices and are willing to walk away if the price is not to their liking. One source noted the Europeans still have some time before they need to begin fresh buying. This break in strong demand could play into their hands for lower prices.
Egyptian producers continue to argue for higher prices, but they seem to have abandoned hopes of maintaining the $960/mt FOB price they got a month ago for early January shipments. Sources said producers are now arguing for $800/mt FOB against $750/mt FOB bids.
The rumored Egyptian prices fit in with the reported discussions taking place for Algerian tons. Sources said the discussions for a granular cargo are focused on $710/mt FOB, without much pushback from the producers.
Iranian urea exports for 2021 were reported at 3.8 million mt by Trade Data Monitor. This is down about 5 percent from 2020 exports of 4 million mt. The main recipients of the Iranian tons in 2021 were Turkey at 1.4 million mt, accounting for about 37.6 percent of the exports, then South Africa at 387,000 mt, and Brazil at 349,000 mt.
December exports from Iran were reported at 359,000 mt, down 5.4 percent from December 2020 exports of 379,000 mt. Turkey dominated December shipments with 154,000 mt, followed by Sudan at 65,000 mt, and Mozambique at 60,000 mt.
China:
Sources reported that some small cargoes of urea may still be allowed out of the country to South Korea and Japan to deal with their emissions control program. The exports are expected to be just a few thousand tons at a time and at prices off the normal market rates.
International traders seem resigned to not being able to snag any Chinese urea for the global market until at least May. There are now reports that exports might even be delayed into June, depending on the domestic Chinese demands.
Production is slowing down in China under orders from Beijing, with some plants even closing. The central government is determined that skies be free of pollution for the upcoming Winter Olympics. They are ordering most factories to either cut back or close for most of February.
Sources noted that most of the industrial sector would either shut down or drastically reduce output during the first week of February, when the country takes a week off to celebrate the Lunar New Year. Soon after that holiday break, China will host the Winter Olympics.
Sources said local and regional warehouses now appear to have enough urea on hand to kick off the next application season in China at lower prices than what had been expected in the international market. Even though the global price is coming down, sources said the central planners in Beijing are still concerned enough about supplies and prices to keep the export ban in place through the first quarter of the year.
Urea exports in 2021 were reported at 5.3 million mt by Trade Data Monitor. This represents a drop of 2.8 percent from the 2020 exports of 5.45 million mt. The largest single buyer of Chinese urea remained India, which took 2.8 million mt from China, representing 52.5 percent of the Chinese exports. In distant second place was South Korea with 655,000 mt, or about 12 percent of total urea exports from China.
December exports showed the most visible impact of the urea export ban. The December 2021 exports of urea were reported at 35,000 mt. This is down dramatically from the 582,000 mt exported in December 2020. It is also a large drop from November 2021 exports of 500,000 mt and October 2021 exports of 740,000 mt.
The export ban took effect on Oct. 15. Sources said permission was given to move out tons in November as long as the paperwork was completed by the Oct. 15 deadline. Since that time, the Chinese government has allowed limited tonnage to be exported. South Korea received the bulk of the December exports, with five other buyers getting lots of 1,000–2,000 mt.
Brazil:
Urea prices in Brazil plummeted $180/mt in one week. Softer prices were being reported at the beginning of the week. By the end of the week, however, completed business showed a collapse in the market.
Sources said deals at the beginning of the week topped off at $770/mt CFR, but fell to $590/mt CFR by the end of the week. Further declines in prices are expected. About 800,000 mt of urea is said to be in ships waiting to berth in Brazil and unload their cargoes. Sources said delays in docking are now 45-60 days.
Some of the earlier deals that led to the price drop reportedly came from traders looking at softer prices being discussed in the Arab Gulf and from North Africa. Afraid of being stuck with too many tons purchased at much higher levels earlier on, the traders dumped their product to protect what they could in the deals.
The softer prices at the ports began to be felt inland. The price in Rondonopolis was centered on $936/mt FOB ex-warehouse, with buyers looking only to buy what they need. Reportedly, they are unwilling to make major purchases in a down market.
Black Sea:
The growing softness in the urea market is also impacting discussions in the Black Sea. Prices had been pegged in the $840s/mt FOB from the IPL/India tender. Sources said discussions are now looking at $835/mt FOB and below. However, the lack of product and deals in other areas offer few opportunities to test the market.
South Korea:
Urea imports in 2021 were reported at 877,000 mt by Trade Data Monitor. This is up about 5 percent from the 836,000 mt imported in 2020. The main supplier to South Korea was China at 655,000 mt, representing about 75 percent of the import market. Vietnam came in a distant second at 60,000 mt, for 6.9 percent of the market.
December imports were reported at 87,000 mt, up from the 55,000 mt in December 2020. Because of the Chinese restrictions on urea exports, Vietnam dominated the imports with 36,000 mt. Chinese product accounted for 23,000 mt in December, down 50 percent from December 2020.
Ethiopia:
Urea imports in 2021 were reported at 531,000 mt by Trade Data Monitor, down about 8 percent down from 2020 imports of 579,000 mt. The main suppliers in 2021 were Egypt at 241,000 mt and Saudi Arabia at 125,000 mt.
There were no urea imports in December 2021, compared with 50,000 mt in December 2020. The lack of imports near the end of the year is not unusual. Ethiopia receives most of its urea in the first half of the year.
In the first six months of 2020 Ethiopia bought 529,000 mt; in the same period last year, it brought in 343,000 mt. The second half of 2021 showed imports of 188,000 mt. Similarly, the second half of 2020 was low at 50,000 mt.