U.S. Gulf/Tampa:
Tampa ammonia for July settled at $960/mt CFR, down from June’s $1,000/mt. Sources had expected some decrease, though the rise in natural gas prices in Europe was starting to idle ammonia production, thereby potentially putting brakes on the Tampa price drop. Still, the $40/mt drop for July was minor compared to the $425/mt plummet recorded from May to June.
Eastern Cornbelt:
Sidedress and post-emergence applications were winding down quickly in the Eastern Cornbelt, resulting in the first round of ammonia fill offers late in the week. CF on June 30 reportedly came out with a program at $950/st FOB in Illinois and Indiana for tons shipped from July 1 through Sept. 30.
In Ohio, prompt tons were still being offered at the $1,250/st FOB Lima level at midweek.
Western Cornbelt:
The awaited launch of summer fill programs pushed ammonia prices lower in the Western Cornbelt. Ammonia fill was announced during the week at $825/st FOB Hoag, Neb., $850/st FOB Port Neal, Iowa, and $950/st FOB Palmyra, Mo., for tons shipped from July 1 through Sept. 30. Sources also reported limited offers at $975/st FOB Wever, Iowa, for tons shipped in June.
Southern Plains:
Ammonia fill programs for 3Q delivery were announced on June 28-29 and reportedly included $805/st FOB Borger, Texas, and Oklahoma terminals at Enid, Woodward, and Pryor; and $825/st FOB Verdigris, Okla., and Dodge City, Kan. Prompt truck offers for ammonia out of Beaumont, Texas, were quoted at $900/st FOB at midweek.
South Central:
The truck market for ammonia reportedly fell to $900-$910/st FOB Gulf Coast terminals in the South Central region. No truck prices were reportedly being offered at El Dorado, Ark., Donaldsonville, La., Cherokee, Ala., or Midway, Tenn.
Black Sea:
The lack of material coming from the region is still impacting the global market. Sources said even new output coming online in the Arab Gulf will not be enough to replace the tonnage lost due to Russia’s war on Ukraine.
One trader said while some may make statements about what the price should be out of the Black Sea, the lack of any product flowing from the usual sources makes those statements more speculation than reality.
Northwest Europe:
The high price of natural gas into Western Europe is causing some concern for producers. Industry observers noted that the current quotes for natural gas will be felt by producers in another four to six weeks. The gas presently being used in Europe is priced at lower levels.
The expectations of higher production costs have already caused some plants to close, with many more quietly considering closures. Sources said there are reports out of BASF that they are indeed making plans to shut down their main operations in Germany unless gas prices come down.
The lack of any transparency in the Northwest Europe ammonia market has industry watchers looking for any plausible price indicators. Many have seized on the estimates of production costs tied to existing and expected natural gas prices.
At present, sources said the production break-even cost is probably $1,050/mt. For July and August, that price is expected to move up to $1,100/mt.
The final sales price out of Rotterdam is estimated at $1,100-$1,200/mt C&F now, with a likelihood that it could move to $1,400/mt C&F. Unfortunately, said one trader, without any indicators from the Baltic ports, nailing down the actual price is growing ever more difficult.
Earlier prices at $1,500/mt C&F were pegged to estimates from European production only. New pricing estimates now include the possibility that more product from Trinidad and North Africa could cycle through the Northwest European terminals.
The Trinidad ammonia could be heading to Europe to seek a higher return after the drop in pricing in Tampa. The North African product is partly laid to Algeria sending its tonnage away from Spain as part of a political dispute.
North Africa:
Sources said tonnage out of North Africa keeps flowing, but the cargoes from Algeria once slotted for Spain now seem to be going to Turkey and Northwest Europe.
After Spain sided with Morocco in a dispute with Algeria over disputed territory in the Western Sahara, Algeria said it was suspending its treaty with Spain and cut off access to Algerian ammonia and natural gas.
Phosphate giant OCP continues to take its contracted tons from various buyers and seems to be uninterested in searching out spot tonnage. Sources reported that OCP has shifted its production emphasis to MAP and TSP to reduce its demand for ammonia. This move, said one trader, will allow OCP to still turn out DAP for its main customers while exploiting demand for other phosphates from other buyers.
Middle East:
Producers keep saying that the price for their ammonia is $950-$1,000/mt FOB. Others, however, said that for a deal to work into Southeast Asia, the price has to be well below $900/mt FOB.
The impasse on pricing for spot tons is said to be creating a slight surplus of ammonia. For now, however, sources said supply and demand is almost balanced, with a nod to the supply side. The operations from Saudi Arabia seem to be handling all contracts well and covering swaps that took place as the world waited for Ma’aden III to come online.
Those arguing for strong prices point to reports that Saudi exports for the first quarter of this year were about half of the exports from the same period in 2021. The drop came as Russian material was taken from the market because of the war with Ukraine. Even if Ma’aden makes it to full rate output, it will not be enough to counter the loss of the Russian ammonia.
On the other side, sources arguing for softer prices note the drop in demand from Southeast Asia, and the combined effect of the Ma’aden output with that of a new line opening in Oman in August. The reduced demand from a major market for the Arab Gulf producers and new production, said one trader, points to softer prices.
Southeast Asia:
Major buyers in Taiwan and South Korea are reportedly backing away from asking for any additional tons from suppliers. In fact, said one trader, some of the buyers are asking suppliers to hold off on shipping new tons.
The cutback in demand is seen as a result of higher inflation and interest rates impacting the global economy. With reduced demand for the products that need ammonia as an input, the manufacturers are in no rush to build up their stockpiles of ammonia.
Another hit to the market comes from China, which is only slowly coming out of its COVID-related shutdowns. The government has ordered factories shut as part of its Zero-COVIDpolicy. At the same time, it has limited how many vessels are allowed to dock to reduce the possibility of additional infections.
Sources expect to see prices continue to come off.
India:
Demand for ammonia by the DAP producers remains limited because of the high price of phos acid. Even with reports that JPMC will supply 100,000 mt of phos acid to Coromandel Fertilizers, sources said prices are still high enough to encourage more DAP imports.
January-April 2022 imports of ammonia were reported at 650,000 mt by Trade Data Monitor. This represented a 13% drop from the 748,000 mt imported during the same period in 2021. The main suppliers in the first four months of the year were Saudi Arabia with 287,000 mt and Qatar with 140,000 mt.
April 2022 imports were reported at 134,000 mt, up from the 101,000 mt imported during April 2021. Saudi Arabia accounted for 51% of the tonnage received in India with 68,000 mt. Bahrain and Qatar accounted for about another 20% of the import market each.
Indonesia:
January-April 2022 exports of ammonia from Indonesia were reported at 652,000 mt by Trade Data Monitor. This is only marginally down from the 694,000 mt exported during the same period in 2021. South Korea was the single largest buyer in the first four months of the year, taking 205,000 mt.
April 2022 imports were reported at 174,000 mt, down just slightly from the 175,000 mt exported in April 2021. South Korea took 47% of the exported tonnage at 82,000 mt. India and Taiwan each took an additional 20,000 mt.
Turkey:
January through May 2022 imports of ammonia were reported at 289,000 mt by Trade Data Monitor. This is a slightly more than a 25% drop from the 389,000 mt imported during the same period of 2021. Russia remained the top supplier with 117,000 mt, followed by Bahrain with 64,000 mt.
May 2022 imports were reported at 61,000 mt, down 20% from the 76,000 mt imported during May 2021. Bahrain was the dominate supplier with 23,000 mt. The next two major suppliers were Saudi Arabia with 15,000 mt and Algeria with 12,000 mt.