U.S. Gulf:
New NOLA granular urea business was reported at $470-$515/st FOB for June, compared to the week-ago $500-$550/st FOB. Sources said prices dropped early in the week, but then increased after barges were bought up for an export sale.
July barges were reported to have been sold at $520/st, with forward cargoes into September reported at $536/st FOB.
Nothing new was reported in the prill market, with sources saying the current market would approximate granular.
Eastern Cornbelt:
Urea prices tumbled to $550-$600/st FOB in the Eastern Cornbelt, with both the high and low reported out of spot river terminals in Illinois as the week progressed. The Cincinnati, Ohio, market was pegged at $570-$585/st FOB, down from $640-$645/st FOB the week before.
In the Great Lakes region, new urea offers were reported at $620/st FOB Toledo, Ohio, down significantly from the prior week’s $715/st FOB level.
Western Cornbelt:
Urea prices dropped to a wide $540-$610/st FOB range in the Western Cornbelt, down from $600-$640/st FOB the week before, with the low confirmed at St. Louis, Mo., and the high at Caruthersville, Mo. The St. Paul, Minn., urea market was quoted at a low of $550/st FOB at midweek, down from the prior week’s $600-$615/st FOB range.
Southern Plains:
Urea prices continued to drop in the Southern Plains. In Texas, sources pegged the market at $550-$555/st FOB Houston and $525/st FOB Borger. The Catoosa/Inola, Okla., market was quoted in a broad range at $530-$580/st FOB, depending on supplier, down significantly from the last reported $600-$620/st FOB range.
“Urea is falling out of bed, and phosphates have dropped a good bit as well,” said one contact. Added another: “Urea is living up to its volatile reputation.”
South Central:
Urea prices fell to $580-$630/st FOB in the South Central region, down from the prior week’s $620-$650/st range, with the low confirmed at Convent, La., and the high at Memphis, Tenn. Other terminal prices at midweek included $600/st FOB Little Rock, Ark., $610/st FOB Caruthersville, Mo., and $620/st FOB Shreveport, La.
Southeast:
Urea prices dropped to $675-$695/st FOB port terminals in the Southeast, down significantly from the last reported $750-$775/st range, with the low confirmed at both Savannah, Ga., and Baltimore, Md. The Wilmington, N.C., urea market was pegged at $680-$695/st FOB, depending on supplier and time of the week.
India:
Sources said for now India is set on handling the urea that will be coming in from its last tender. The next tender is not expected until the end of the month at the earliest. Traders said it will most likely not be called until early July.
Estimates are that India will need to repeat the 1.7 million mt purchase made in the May RCF tender. One trader said buyers will actually have to double that amount by August to ensure a successful application season.
There are reports circulating that India continues to find ways to secure Russian tons without bumping up against U.S. and E.U. sanctions. Reportedly, the main way India will pay for the urea from Russia is under a ruble/rupee exchange system.
The Modi government had issued orders that the country will refrain from any exports of urea. However, exceptions were made for Sri Lanka and Nepal.
The new Sri Lankan government pleaded for fertilizers after it rescinded the policy of the previous administration that limited imports to only organic fertilizers. The Modi government is sending 65,000 mt of urea to Sri Lanka, as well as providing a loan through the Ex-Im Bank of India for additional purchases.
The Indian government also closed a government-to-government deal with Nepal to supply 50,000 mt in July. The arrangement calls for India to send a total of 565,000 mt to Nepal over the next five years.
Sri Lanka:
The move by the Indian government to immediately send 65,000 mt of urea and to provide a loan to allow for additional purchases was praised by the Sri Lankan government.
The previous government banned imports of all but organic fertilizer. The result was a 50% drop in agricultural output. The new administration lifted the ban and sought help from its neighbor.
Besides the immediate shipment of 65,000 mt of urea, India will also provide a loan of US$55 million from its Export-Import Bank to allow Sri Lanka to buy more urea.
Nepal:
After frustration over long delays in securing urea in public tenders, the Nepal government closed a deal with its neighbor for delivery of 50,000 mt in July and 565,000 mt over five years.The government had earlier closed a deal with Bangladesh for 50,000 mt in a similar transaction.
The Nepalese government said the delays receiving urea under public tenders – often as long as five to six months – prompted it to look for a faster way to ensure a timely supply of product.
According to local media, the government has also dusted off plans to build its own urea plant in the country. How the plant will be powered has been the key issue because of rising energy costs.
China:
Figures received by Bloomberg showed port inventories at 219,000 mt for the first week of June. This represents a 40% increase in tonnage from the same time in the previous month. If past practices hold, this could represent 200,000-250,000 mt for export.
Sources said there are already at least five vessels booked to pick up product from China, all to cover sales into India from the May RCF tender. Shipment for this tender can be pushed back to July 11.
At the same time, Pakistan is also slated to get 200,000 mt from China under a government-to-government deal.
Sources reported the price out of the factories at $473-$478/mt. After adding another $25-$30/mt for transportation to portside warehouses for export, the estimated export price could be right around $500/mt FOB. However, the netback from the RCF tender showed a price of $685-$690/mt FOB.
Indonesia:
Sources expect to see a selling tender called soon. Reportedly, producers should have about four cargos available for July exports.
After a failed tender last month because bids were too low, producers entered into private talks with traders and end users. Earlier reports indicated deals were done in the upper-$620s/mt FOB. This week, however, sources said some new sales came in at $688/mt FOB for granular and $605 for prilled.
Expectations are for higher prices in the next tender, with at least a couple of the cargoes being offered into the next Indian tender.
Middle East:
The market remains quiet as producers work to fulfill orders booked under the last Indian tender and their long-term clients. Sources said there is no reason for producers to be actively seeking buyers or to discuss prices at this time.
Traders said the producers are biding their time for now, and will most likely only discuss prices once the next Indian tender is called.
Turnarounds by Abu Qir and Helwan, combined with a slow market, have Egyptian producers remaining quiet about availability and pricing. Sources said even traders are not asking around about prices.
Brazil:
Urea prices have softened in Brazil to $620-$640/mt CFR. Sources said there were reports of a deal in the $590s/mt CFR, but the lack of any details led them to believe it was either a rumor or just a one-off deal not to be repeated.
Even without the rumor of a sub-$600/mt CFR sale, sources said buyers are pushing hard to break into the $590s/mt CFR and below. The pressure for lower prices comes as global urea prices soften and as warehouses owners in Brazil appear to be anxious to rotate material out of their facilities. At the same time, buyers are only stepping up when they need product, putting the holders of the urea under pressure to lower their prices.
Rondonópolis showed a slight dip in pricing to $780-$820/mt FOB ex-warehouse. Even with the drop, however, farmers still see the barter ratio as too unfavorable for them, so they are holding back from placing any large orders.
Sources said demand will eventually have to kick in for the second semester applications. At that time, prices are expected to firm up.
Black Sea:
Reports of Russian material making its way into the market continue. Sources have reported that the estimated price for the product has dropped as an incentive for buyers to find ways to work around the American and European sanctions.
The estimated price out of the Black Sea is now around $500/mt FOB. This rate is well below even the discounted price offered by Iranian material. The deals are quiet with little transparency, leading to traders to consider the pricing to be more talk than fact.
Reports of India taking urea and DAP from Russia continue, with sources saying the deals appear to be handled under an expanded version of the ruble/rupee exchange system set up for smaller deals in the past. The reported urea purchases could help ease the pressure on Indian buying houses to make large purchases in upcoming public tenders.