U.S. Gulf:
NOLA granular urea barge trades early in the week were reported in the $532-$560/st FOB range. After the Russia/Ukraine news, however, trades shot up to $680-$705/st FOB, leaving a very broad range for the week of $532-$705/st FOB, versus the week-ago $525-$545/st FOB.
Eastern Cornbelt:
The urea market remained extremely volatile, with reports that most terminals had pulled offers on Feb. 24 in the wake of soaring NOLA barge prices.
Prices out of most Illinois and Ohio River terminals were quoted in the $610-$620/st FOB range at midweek, up from a low of $600/st FOB the previous week. The market reportedly rebounded to $630-$635/st FOB Cincinnati, Ohio, on Feb. 23 before offers were withdrawn on Feb. 24.
Western Cornbelt:
The urea market continued to climb in the Western Cornbelt, although the disarray caused by Russia military action in Ukraine resulted in multiple locations pulling offers late in the week. “Everything is up, but it may be tomorrow or Monday before the markets get reestablished,” commented one regional source on Feb. 24.
Urea prices firmed to $600-$630/st FOB in the region prior to Feb. 24, depending on location, with the St. Louis market quoted solidly in the $600-$610/st FOB range at midweek, up from the prior week’s $590-$600/st FOB.
Southern Plains:
Sources reported some topdress applications of urea on wheat in central and southern Kansas ahead of a series of midweek storm.
After starting the week in the upper-$500s/st FOB, the Catoosa/Inola, Okla., urea market reportedly firmed to $610-$615/st FOB as the week progressed. “It totally depends on what day you call,” commented one source.
Urea pricing at Houston, Texas, was quoted at a solid $640/st FOB during the week. Sources said no tons are currently being offered out of Enid in late February.
South Central:
Urea pricing volatility continued in the South Central region, fueled by a firming NOLA market after several weeks of dropping prices.
Terminal prices for urea ranged from $600-$635/st FOB in the region, with the low reported on the Arkansas River and the high at Convent, La. Other terminal prices included $610-$615/st FOB Memphis, Tenn., and $615/st FOB Shreveport, La., while Kentucky sources reported Ohio River terminal offers in the $620-$630/st FOB range.
Southeast:
Urea prices out of port terminals in the Southeast were once again firming after a lull earlier in the month. Pricing at Savannah, Ga., was pegged at a solid $700/st FOB at midweek, while the market FOB Wilmington, N.C., was quoted at $680-$690/st FOB for the last offers.
Black Sea:
No deals were done out of the Black Sea because of the closure of all Ukrainian ports on the Black Sea. The closures were forced by the overwhelming presence of the Russian navy in the Black Sea and direct attacks on several of the ports by the Russian army.
The lack of any possibility of business by the end of the week meant there is currently no way to determine pricing for product from the area. The price just before the closures was based on calculations from the IPL/India tender at $545-$550/mt FOB. However, movement in Egypt and the Arab Gulf – before the invasion – indicated prices were on the ascendancy.
Sources were not sure how many tons were coming from Black Sea ports to India as part of the IPL tender. They speculated at best maybe two or three cargos would be involved. There was no word in the market if any of those cargoes were being loaded at the time of the closures.
Buyers looking to find other sources of urea will find the market tight. Arab Gulf producers reported they are sold out though mid- to late-March. Central Asian countries are landlocked and depend on Russian ports in the Black Sea to move their product beyond neighboring countries.
Southeast Asia does not have the capacity or availability of vessels to replace what could be lost from the Black Sea if the closures continue more than a week. North Africa is focused on Europe, and European buyers are snapping up tons, pushing the price ever higher, making any other market unfeasible.
Russia exported 7 million mt of urea in 2021, according to Trade Data Monitor. This is a 4 percent drop from the 7.3 million mt exported in 2020.
All told, Russia sold urea to 86 countries in 2021. The diversity of its customer base ensured no one buyer dominated the others. The single largest buyer was Brazil with 1.4 million mt, which represented 19.7 percent of Russian urea exports. Next in line was Finland with 856,000 mt, or 12 percent of the export market. These tons were usually earmarked for re-export to the global market.
Middle East:
Egyptian producer MOPCO started the week with a urea sale of 10,000 mt at $600/mt FOB. The move represented what industry sources expected to be a gradual increase in prices. By midweek, another deal was closed at $615/mt FOB for another 10,000 mt.
In the last days of the week, however, the price rises came faster and went higher. In just one day prices jumped to $670/mt FOB, then $700/mt for 6,000 mt from KIMA, and finally to $730/mt FOB for 6,000 mt from MOPCO.
Sources said all the tons were bound for European buyers.The big increases came after Russia invaded Ukraine and as buyers began looking for sources other than Russia for their urea.
At the same time, Arab Gulf producers were pushing $600/mt FOB as their new floor. The price was a minor and expected boost from the $560-$580/mt FOB from the IPL/India tender. However, the producers were also telling people that they could not ship anything until late March after the last of the IPL tender tons were shipped.
Following the Russian invasion of Ukraine, the closing of the Black Sea ports, and the dramatic run-up in prices in Egypt, sources said the producers will be asking for much more once there are tons available for spot sales.
The paper market for the Arab Gulf was behind on pricing ideas even before the Russian action took place. The posted prices were at $592.50/mt FOB for March and $580/mt FOB for April.
Sources said buyers were approaching Iran to see if deals could be worked out to replace lost Black Sea tons, or to find product at a cheaper price without running afoul of the American sanctions on Iran. One trader noted that the disruption in the Russian and Ukrainian supply chain is now casting Iran as a possible savior of the urea market.
Initial expectations were that Russian urea might be included in sanctions imposed by the U.S. and Western Europe. If that happened, sources said they hoped that some accommodation might be made to allow some Iranian urea into the market or to allow urea from landlocked Central Asian countries to be transported through Iran and shipped out of Iranian ports without penalty.
One trader said the logistics of arranging transportation through Iran to one of its ports would be just as formidable as the steps necessary to comply with the U.S. sanctions against Iran.In the end, however, the first wave of sanctions against Russia did not include urea or other fertilizers.
India:
India still needs urea, but is not as desperate as it was before the most recent tender.
Sources said they expect to see another tender called within the next several weeks. The most likely time, said one trader, would be right after the last letter of credit was opened. By that point, he said, financing for the urea would be done and vessels would be nominated for all the material awarded.
Even before the uncertainty pressed on the market by Russia, sources said the price in the upcoming tender would be higher than the previous tender. Now, said one trader, all bets are off.
China:
Small urea quantities of 3,000-6,000 mt are being exported from China. Sources said the paperwork to secure these few shipments often requires weeks of processing and explaining to local customs officials that the urea can and should be shipped.
Prices for these small quantities are being quietly negotiated between the producers and end users. For reference, the industry is using the last Indian tender price to calculate the estimated export price. For now, that price remains at $575-$580/mt FOB.
Indonesia:
Another sale was secured from the scrapped urea tender of last week. Kaltim sold 90,000 mt of granular product at $553/mt FOB. This represents a sizable increase from the highest bid in the tender of $529/mt FOB.
Sources noted that it is not unusual for Kaltim or another Indonesian producer to scrap a tender if the bids are not high enough for them. They will then go into private talks with the leading bidding companies to negotiate a new price and close the deal.
Brazil:
Sources said all trading stopped at the end of the week because of the uncertainty raised by the Russian invasion of Ukraine. Some traders were already pulling back after announcements of higher natural gas prices in Europe, which were seen as an indicator of higher urea prices coming.
Before talks stopped, however, the landed price tightened to $550-$585/mt CFR.
At the same time, holders of urea in Rondonopolis began to unload their product. The price was reported at $700-$800/mt FOB ex-warehouse before all trades stopped to allow players to assess the impact of the Russian invasion. Sources said besides the rapid sales, a weaker dollar provided a slight downward push to the inland prices.
Brazilian urea handlers were concerned about the impact of the incursion into Ukraine and possible sanctions against buying Russian urea. As previously reported, Brazil imported 1.4 million mt from Russia out of a total of 7.8 million mt in 2021. Trade Data Monitor reported that this total represented about 18 percent of Brazilian urea imports.
Sources said even the proposed efforts by the Brazilian government to step up Iranian imports could not have made up for the loss of Russia as a major source of urea.