U.S. Gulf:
Yet another week of very volatile prices was reported in the NOLA granular urea market, with trades again spanning a broad range at $485-$590/st FOB, compared with the week-ago $545-$610/st FOB. Sources reported that the week started as high as $590/st FOB, but early-week trades soon dropped to as low as $500-$525/st FOB before hitting $485/st FOB and then bouncing back to $560-$570/st FOB.
Why the rebound? Some were still scratching their heads, but others said rumors that India might soon tender for urea had once again lit a fire under prices.
Very thinly-traded NOLA prills were hard to peg, with the last done called $585/st FOB.
Eastern Cornbelt:
The regional urea market fell to $630-$650/st FOB, depending on location, with the low confirmed in Illinois and at Toledo, Ohio, as the week progressed. The Cincinnati, Ohio, market was pegged at $640/st FOB for prompt and $650/st FOB for 2Q offers.
Terminal pricing in Michigan, by contrast, remained as high as $815/st FOB in some locations.
Western Cornbelt:
Urea prices ranged broadly at $620-$655/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and the high at Port Neal, Iowa. Sources said the Catoosa/Inola, Okla., urea market rebounded to $645-$655/st FOB as the week progressed, up from a low of $620/st FOB.
Northern Plains:
Urea pricing in the St. Paul, Minn., market ranged widely at $610-$670/st FOB at midweek for river-open offers, sources reported, down dramatically from prices reported at the start of the year. In North Dakota, delivered urea pricing also ranged broadly, with the low confirmed at $675-$705/st DEL for prompt tons and the high at $765-$795/st DEL for prepay.
Northeast:
Urea prices were pegged at $690-$720/st FOB in the Northeast, with the high reported at Fairless Hills, Pa., as the week began. In the Southeast, new pricing was confirmed at $640/st FOB Savannah, Ga.
Eastern Canada:
Urea pricing in Eastern Canada remained at C$1,200-$1,235/mt FOB in late January, unchanged from last report in spite of the rapidly softening markets reported at NOLA and in the Midwest in recent weeks.
Some regional suppliers were reportedly “looking at a lower wholesale number” while continuing to watch the market “for signs of a sustained price decline.”
India:
As the week closed, urea markets around the world began shifting as word circulated that India was ready to step back in with a tender.
Reportedly, the financing has been finalized for IPL to call a tender no later than Feb. 15. One of the driving forces, said one trader, was making sure all the tons awarded in the December IPL tender were in the process of being loaded. The shipping deadline for that tender is Jan. 31. Green Markets earlier reported that vessels had been nominated for all the tonnage awarded.
The tender could come as early as next week. It is no secret that India is more than 1 million mt short of supplying its urea needs for the current season. Any urea awarded in the upcoming tender is expected to have a shipping deadline of March 31. This would keep the entire order in the current fiscal year, which also ends March 31.
Normally, tenders are not called in February. However, the shortage of urea in the country has forced the government’s hand. Usually at this time the market is quiet as buyers assess their upcoming seasonal needs and as producers take maintenance turnarounds. Even with the shutdowns, normally reserves would be building up. This year, unlike others, the global reserves are not as large as in the past.
With China out of the urea export market, a major contributor to urea supplies is gone. Other producing areas are building reserves because of limited interest so far this year. However, sources said it will be difficult to secure all the tons India needs. Domestic demands in Indonesia and Russia will limit what can be offered from there. Long-term contracts with Arab Gulf producers will also limit how many spot tons will be allowed to be offered to India.
On the plus side, India did secure a multi-year 1 million mt/y deal with OMIFCO. Sources said none of the material from the 2022 allotment will be ready during this quarter, but it will ease the pressure to use the pending tender to also build reserves for the next season.
Middle East:
Arab Gulf producers are fulfilling the last of the award in the December 2021 IPL/India tender and covering long-term contract sales. No new spot business from the area was reported, leaving prices steady until the next Indian tender is called.
Late last week and earlier this week reports circulated of a series of small orders totaling about 20,000 mt out of Egypt at $700-$710/mt FOB. Traders said these deals were older ones that occurred quietly. At the same time, producers tried to stem any discussion of a major downward trend in the market.
Sources said bids for February material came in at $600/mt FOB, but with producers pushing back at $650-$690/mt FOB. The impasse seemed to hold until the end of the week, when sources reported deals concluded for February shipment at $620-$630/mt FOB. Producers disputed this level, but tended to agree that prices had dropped below $650/mt FOB. By Friday, MOPCO reported it sold 40,000 mt of granular urea at $640-$660/mt FOB.
The MOPCO deal was immediately surpassed by another sale of 10,000 mt from the same company at $690/mt FOB, to be followed by another 10,000 mt at $700/mt FOB. AlexFert joined in and sold 6,000 mt at $700/mt FOB. The MOPCO sales were for second half February, while the AlexFert tons are to be shipped in early March.
The paper market for Egyptian material was initially reported at $510/mt FOB for February and March this week. However, as news of a pending Indian tender circulated, sources reported that the paper market jumped $120/mt and is now running behind the actual market.
International traders expect Algeria to play a role in the upcoming Indian tender. Sources said AOA had material available for February and March loadings. Prices under discussion were reported at $600-$620/mt FOB. By the end of the week, sources said deals were done at that level, and possibly up to $640/mt FOB. Algeria is reportedly now sold out through February.
Black Sea:
Despite tensions between Russia and Ukraine and the possible disruption that this dispute might cause, Black Sea urea prices are tending down. Sources said previous business that might have been completed in the upper-$840s/mt FOB is now under discussion at $840/mt FOB and below.
China:
No urea of any serious quantity is expected to come out of China until at least April. Some small lots may be allowed for Japan or South Korea for their emissions control needs. However, both countries have begun to search for alternate sources and may not need to seek an exemption from Beijing to get what they need.
Producers used this week to move as much product out of their warehouses as possible to regional distributors. The upcoming week-long celebration of the Lunar New Year is already causing shortages in offices and mills as workers take off early for the traditional visits to families and hometowns.
The push to move out product caused the domestic price to soften. The export ban had already dropped the local price more than $200/mt when compared to the global price. This week showed an export-equivalent price of $700-$750/mt FOB.
Traders are expected to pick up talks with urea producers for April shipments at the end of February. Immediately following the Lunar New Year celebrations, China will host the Winter Olympics. The central government has ordered factories of all types to cut back on production or shut down completely to reduce air pollution.
Brazil:
Urea prices came off in Brazil as local distributors move to close out as many deals as possible before new tonnage arrives. The lower end of the imported price dropped $50/mt, and the upper end by significantly more. Sources now put the portside price of urea at $540-$600/mt CFR, with new bids at $500-$520/mt CFR.
The large influx of urea slated for Brazil might be tempered if India comes in for a tender soon. Tonnage that was designated for Brazil could be diverted to India. Such a move would relieve the downward pressure on prices by not building up excess reserves in Brazil.
Prices dropped about $150/mt in Rondonopolis as excess stocks of urea inland are not finding buyers. Sources now peg the Rondonopolis price at $780/mt FOB ex-warehouse.
Just as holders of urea at the ports are desperate to find a way to unload their holdings, inland distributors are also seeing full warehouses and no takers. Sources said they expect to see continued softness in the market through March.
Indonesia:
The government continues to require producers to focus on the domestic market, leaving nothing for exports. The lack of any new tenders leaves the posted urea price higher than where sources think the market will be once a new selling tender is authorized.
One observer noted that once the next Indian tender is closed, market watchers will be able to calculate what the price could be if Indonesian material was awarded. Until then, the public price reflects business prior to the December 2021 IPL tender.
Thailand:
Urea imports for 2021 were reported at 1.87 million mt by Trade Data Monitor, down about 2 percent from the 1.9 million mt imported in 2020.
The main supplier in 2021 was Saudi Arabia at 698,000 mt, for 37 percent of the import market. Sources noted that the Saudi suppliers offered a lower netback than other buyers. Often the landed price in Thailand was close to the FOB price cited by the Saudis to other buyers.
Other suppliers included Malaysia with 350,000 mt, for 19 percent of the import market; Oman at 317,000 mt, for 17 percent of the market; and Qatar at 285,000 mt, for 15 percent of the market.
December 2021 imports were down 61 percent, to 20,000 mt from the 51,000 mt imported during December 2020.
Serbia:
Serbia has secured 400,000 mt of nitrogen fertilizers, which will be available before the sowing season, according to a SeeNews report, citing the country’s Agriculture Minister Branislav Nedimovic on Jan. 25. He said there would be “a large-enough” supply of both urea and NPK fertilizers.
The ministry also announced that it will remove the 10 percent customs duty levied on fertilizer imports from developing countries in order to help combat soaring fertilizer prices. The ministry additionally said it will provide zero-interest loans to farmers to help them buy nitrogen fertilizers, according to the report.