U.S. Gulf:
NOLA granular barge prices collapsed. The week began at $550/st FOB, with $500/st FOB reported late on June 2. The week-ago price was $570-$585/st FOB. New prill trades were put in the $515-$540/st FOB range.
Eastern Cornbelt:
Urea prices continued to decline in the Eastern Cornbelt, fueled by further weakness in NOLA barge pricing. Sources pegged the regional market at $620-$645/st FOB, down significantly from last week’s $665-$695/st FOB range, with the low confirmed in Illinois and the high at Cincinnati, Ohio.
In the Great Lakes region, urea prices dropped to $715/st FOB Toledo, Ohio, down another $15/st from the prior week. Posted prices out of Michigan warehouses remained as high as $850/st FOB on a spot basis in early June.
Western Cornbelt:
Urea prices dropped to $600-$640/st FOB in the Western Cornbelt, down from the previous week’s $665-$695/st FOB range, with the high confirmed in the Iowa market. St. Louis, Mo., urea prices were pegged in the $600-$615/st FOB range at midweek.
Northern Plains:
The urea market was quoted at $600-$615/st FOB St. Paul, Minn., and $630/st FOB Carrington, N.D., down significantly from the last reported $685-$715/st FOB range. Delivered offers were pegged at the $700-$720/st level in North Dakota.
Northeast:
Urea pricing reportedly dropped to $725-$730/st FOB in the Northeast, down from $750-$765/st FOB, with the low confirmed at Fairless Hills, Pa. In the Southeast, the urea market FOB Savannah, Ga., dropped to $775/st FOB from the previous $810/st level.
Eastern Canada:
Urea prices in Eastern Canada were reported in a broad range at C$1,375-$1,465/mt FOB during the week, down from the prior low of C$1,395/mt FOB.
Western Europe:
Sources said the gap between prilled and granular urea price levels in the region has diminished as demand from the industrial sector for prilled product weakens.
India:
A new urea tender is expected no earlier than mid-June, but more likely in early July. Sources said India needs to purchase at least 1.5 million mt to stay on track for the current season.
Sources said the most likely price for the next tender, based on rumors and talk during the IFA conference in Vienna, would be around $640/mt CFR. This would be about $75/mt lower than the previous tender.
The downward pressure on pricing is coming from reports that China will allow up to 500,000 mt of urea to be available for the next tender. At the same time, Russia continues to offer urea at discount prices to entice buyers. The return of the two big exporters – Russia and China – could prove a blessing to the cash-strapped Indian buyers.
Even as talk of the next tender continues, sources said the Indian government is also in deep discussions with Russia to arrange for urea via barter or rupee/ruble deals. Reports that the U.S. is allowing exemptions in its sanctions against Russia for the transport of fertilizers could make the shipments easier to arrange.
Even as the international market was improving for Indian buyers, efforts to make India urea self-sufficient were dealt a blow when the Pollution Control Board ordered Ramagundam Fertilizers Company Ltd. to close its 1.25 million mt/y urea plant.According to local news reports, the plant was accused of chemical gas leaks and of dumping its wastewater in a way that damaged the local groundwater.
The plant was closed in 1999 because it was an expensive coal-fired facility. After the Modi government decided to modernize the country’s fertilizer production to reduce dependency on imported urea, the plant was retrofitted as a gas-powered facility. The upgrade work began in 2016.
Members of the ruling party said the complaints against the plant were started by opposition party leaders in the area around the facility. The complaints, they said, were designed to embarrass the Indian government. Environmental activists, however, have also raised concerns about the wastewater discharges.
Pakistan:
The Pakistan government gave permission to a TCP plan to buy 200,000 mt of urea on a government-to-government basis from China with 90 days credit.
The agreement came after the government and TCP discussed the possibility of buying a portion of the 200,000 mt in an open tender. Sources said the current market price of urea would make a tender expensive to Pakistan, which is reportedly low on foreign reserves.
Similar deals have been done in the past with Arab Gulf states. No names of the supplying companies in China were made available.
The government set a new price for urea at Rs1,850 per 50-kg bag (US$187/mt). For producers and regional distributors, this price is a reduction from Rs2,000-$2,030 per 50-kg bag ($200-$205/mt). However, based on the previous official price, this is an increase.
Local media reported that the cost of production was such that no one could offer urea at the lower official price.
In order to get the producers on board, local media reported that the government agreed to ensure that the funds to cover arrears for past subsidies were included in the next budget. At the same time, the government is to supply natural gas to the urea producers at a lower subsidized rate.
Middle East:
Producers are waiting for the next Indian tender before they start quoting prices to potential buyers.If the price into India does come off, as some are expecting, sources said the price in the Arab Gulf could drop into the upper-$500s/mt FOB from the current $680s/mt FOB.
There is some pushback against this bearish view, however. Sources said they were surprised to hear a more bullish attitude during the IFA meeting in Vienna. Some of the price pessimism could come from reports that China might make as much as 500,000 mt available for the next Indian tender. At the same time, exemptions from sanctions for Russian fertilizers are reportedly in place. Arab Gulf producers will once again be facing two larger suppliers who are often willing to lower prices to secure large sales.
If Russia and China do come back into the Indian tenders with large quantities, the Arab Gulf producers will have to look elsewhere. The move will come right after other buyers began relationships with different suppliers after the Arab Gulf producers focused on India. Sources note, for example, that the new Dangote plant in Nigeria will be providing tonnage in the second half of the year. Arab Gulf producers once filled these orders.
Egyptian producers remained quiet this week. They are still looking at $730/mt FOB for their product. However, if the next Indian tender goes as some traders expect, the producers might be facing bids at $600/mt FOB.
Black Sea:
Urea exports from the area remain nonexistent, or are being kept quiet. Even with reports now from the U.S. that fertilizer exports are exempt from the sanctions against Russia, traders are still nervous about doing business in the area.
Reportedly, India is actively looking at ways to pick up as many Russian tons as possible. There are reports that India is looking at barter deals, as well as expanding its rupee/ruble exchange program.
June may be a good month for Russian exports. The limitations on exports expired on May 31. A new decree limiting exports will not take effect until July 1. Sources said buyers are moving quickly to take advantage of this window.
While the Russian government has not issued any export numbers since January 2022, other countries have reported their purchases from Russia. According to Trade Data Monitor, Russia exported 1.5 million mt of urea in the first quarter of the year, compared with 1.7 million mt during the same period in 2021.
Turkey’s January-April urea imports were reported at 738,000 mt by Trade Data Monitor, down about 30% from the 1.05 million mt imported during the same period in 2021. The main suppliers were Oman with 437,000 mt and Egypt with 132,000 mt.
April 2022 imports were reported at 209,000 mt, down 28% from 290,000 mt in April 2021. Oman accounted for about 80% of the April imports at 165,000 mt, followed by Iran with 24,000 mt.
China:
Sources reported that Chinese urea producers could offer 300,000-500,000 mt in the next Indian tender. Reportedly, the portside warehouses are building up reserves for the tender. This would almost be a return to normal.
Sources noted, however, that getting permission to export is becoming more difficult. Exporters still have to convince customs officials that any exported tons will not adversely affect the Chinese domestic market. The process is now said to be taking as long as 60-120 days, instead of the previous 30-60 days. The longer bureaucratic delays may be what has motivated traders and producers to push as many tons as possible to the portside warehouses.
There are at least three cargoes going to India under the previous tender from China. Sources noted, however, that only one cargo is of Chinese origin. The other two cargoes are most likely Iranian product that passed through Chinese warehouse paperwork. This process is not unknown nor uncommon, said traders.
Brazil:
Urea prices are coming off as buyers push ever lower. Domestic traders called the landed price $640-$650/mt CFR, while some international traders claim the price range should be as low as $620/mt CFR. This lower number, said one trader, represents Iranian material that is a regular stable of some Brazilian buyers.
Even as prices appear to soften, buyers are still reluctant to make major purchases. Sources said buying ideas are now coming in around $570/mt CFR.
The Rondonópolis price has dropped significantly to $790-$840/mt FOB ex-warehouse. The reported increase of Russian supplies is giving buyers encouragement to hold off for even lower prices.
Sources said the biggest concern remains logistics. There are still long delays getting vessels to the dock for unloading and then ensuring enough trucks at a reasonable price to move the product inland.
Indonesia:
The lack of any new business is keeping the urea price at $628/mt FOB. Sources said, however, the current pressure for lower prices could hit the producers once tons are again made available.
January-March urea exports were reported by Trade Data Monitor at 203,000 mt, down 43% from the 354,000 mt exported during the same period last year.
March 2022 exports were reported at 198,000 mt, marginally up from the 192,000 exported in March 2021.The main March buyers this year were from India at 137,000 mt, accounting for 69% of the exports. Philippine buyers were second, taking 29,000 mt.
Thailand:
January-April imports were reported at 517,000 mt by Trade Data Monitor. This is up 23% from the 421,000 mt imported during the same period in 2021.April 2022 imports were reported at 268,000 mt, dramatically up from the 76,000 mt imported in April 2021. Saudi Arabia accounted for about one-third of the imports with 98,000 mt.