U.S. Gulf:
NOLA granular urea prices were reported at $470-$535/st FOB, down from the week-ago $515-$558/st FOB. Some said they saw an immediate drop in the NOLA market after the Indian tender results were released showing a $200/mt drop in that market.
Eastern Cornbelt:
Urea prices broadened to the $550-$590/st FOB range in the Eastern Cornbelt, down from the previous week’s low of $565/st FOB, with the low end of the range confirmed out of river terminals in Illinois and Indiana on a spot basis. The Cincinnati, Ohio, urea market was pegged at $575-$590/st FOB, up $10/st from the prior week.
Western Cornbelt:
Urea prices were reported at $550-$580/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo.
Southern Plains:
Urea pricing slipped to $545-$560/st FOB in the Southern Plains, with both the high and low reported at Catoosa/Inola, Okla., depending on supplier. The Houston, Texas, urea market remained at the $550/st FOB mark in mid-July.
South Central:
Urea prices narrowed to $560-$585/st FOB in the South Central region, with the low confirmed at Convent, La., and the high out of river terminals in Arkansas. The Memphis, Tenn., urea market was quoted at $575-$580/st FOB at midweek.
Southeast:
Urea prices were quoted at $600-$605/st FOB port terminals in the Southeast, up just slightly from last report. No tons were available at Chesapeake, Va., or Savannah, Ga., in mid-July, sources said.
India:
The IPL tender closed on July 20 with 19 companies offering about 1.8 million mt. Sources cautioned that much of that total could be double counting. The lowest price for both coasts came from Gavilon. It offered 55,000 mt for East Coast delivery at $517/mt CFR, and 45,000 mt at $520/mt CFR for West Coast unloading.
The Indian buying house announced it was interested in buying only 500,000 mt. Sources said they expect IPL to move quickly to secure the tonnage they want and move on to another tender soon. Awards in the tender are expected to be made as early as Friday, July 22. The shipping deadline is Aug. 31.
| Offering Company | Quantity(mt) | US$/mt CFR | Delivery Coast |
| Gavilon | 55,000 | 517.00 | ECI – L1 |
| 45,000 | 520.00 | WCI – L1 | |
| AgriCommodities | 25,000 | 570.81 | WCI |
| Agri Field | 45,000 | 615.00 | ECI |
| Alcagesca | 30,000 | 700.00 | WCI |
| Ameropa | 99,500 | 593.50 | ECI |
| 99,500 | 598.50 | WCI | |
| Aries Fert | 45,000 | 599.97 | ECI |
| 45,000 | 584.97 | WCI | |
| Dreymoor | 72,000 | 577.77 | ECI |
| 50,000 | 555.00 | WCI | |
| Fertiglobe | 45,000 | 605.00 | WCI |
| Fertcom | 48,000 | 559.74 | WCI |
| 48,000 | 605.00 | ECI | |
| Keytrade | 45,000 | 585.00 | WCI |
| Koch | 50,000 | 600.00 | ECI |
| 50,000 | 600.00 | WCI | |
| Midgulf | 55,000 | 593.00 | ECI |
| 55,000 | 572.00 | WCI | |
| Medallion | 50,000 | 599.00 | WCI |
| OQ Trading | 50,000 | 572.25 | ECI |
| 90,000 | 555.50 | WCI | |
| SABIC | 100,000 | 590.00 | WCI |
| Samsung | 100,000 | 530.00 | ECI |
| 45,000 | 547.00 | WCI | |
| Swiss Singapore | 100,000 | 538.88 | WCI |
| 100,000 | 551.00 | ECI | |
| Sun International | 29,800 | 539.90 | ECI & WCI |
| FOB Offers | |||
| Offering Company | Quantity (mt) | US$/mt FOB | |
| Fertiglobe | 45,000 | 580.00 | |
| PIC | 45,000 | 560.00 |
Going into the tender, industry sources were unanimous in their views that India needed 1.5 million mt of urea just to stay even with demand. When IPL announced it would only be taking 500,000 mt, sources noted a dramatic drop in pricing expectations. Just days before the tender closed, sources were speculating a low price of $590-$600/mt CFR might be possible.
The netback for the East Coast offers to China – the most likely source for these ports – was pegged at $490-$492/mt FOB. The netback to the Arab Gulf for the West Coast orders was calculated at $495-$500/mt FOB.
If Russian material does indeed make an appearance, sources said it would most likely come from the Baltic ports for discharge at a West Coast port. The estimated netback for these cargoes was put at $470/mt FOB. If anything comes out of the Black Sea, the netback would be $470-$475/mt FOB.
The offers from the two producers at $560/mt and $580/mt FOB seemed to some to be an attempt to hold the line on prices. Going into the tender, there were reports of deals at $580-$585/mt FOB with a softening trend at hand. The producers seemed to be ready to draw the line at $560/mt FOB. With an average West Coast price of $580/mt CFR for a netback to the Arab Gulf in the mid-$550s/mt FOB, however, it was clear the price was going to come down more than producers seemed to want.
The Gavilon offer, said one trader, could make it difficult for some of the offering companies to match their prices. Sources estimated that Samsung and Swiss Singapore might be able to match the Gavilon price of $517/mt CFR for the East Coast, giving IPL a total of 255,000 mt. The same two companies might also stretch to meet the West Coast price of $520/mt CFR for an additional 190,000 mt. That would give IPL 445,000 mt.
One trader said Dreymoor, with the fourth-lowest offer for the West Coast, might be able to drop its price from $555/mt CFR to meet the Gavilon price. That would bring IPL to 495,000 mt, close to its half-million mark.
The bulk of the tonnage is expected to come from the Arab Gulf, up to three cargoes from China, and possibly a load or two from Russia. Once the awards are issued, sources expect the winners to quickly nominate vessels for their allotted tons. Urea from China especially will need to be carefully planned so that the ships arrive in time to load the limited urea available for export under the strict rules set by the Chinese government.
Sources said once the vessels are nominated and the tonnage is committed for each ship, another tender may be called. In the past, Indian companies have called quick, back-to-back tenders when their need was evident. Traders said the country will still need another 1 million mt for this application season, so rapid-fire tenders would make sense.
The downside for repeated tenders, said one trader, is that each succeeding one will be more expensive than the previous one. Additionally, the further in the third and fourth quarter the tenders go, India will begin competing with other major buyers such as the U.S. and Brazil.
Pakistan:
TCP secured 200,000 mt from China, as instructed by the Pakistan government in late June. The deal was a government-to-government arrangement that came out to Pakistan paying $500/mt CFR with 90 days credit.
Reduced output by the Pakistan urea manufacturers due to limited natural gas resources led the government to authorize importing urea. The government panel tasked with deciding what steps to take initially wanted a combination of a public tender and government negotiations with China. In the end, they opted for government relations to bring in the urea they needed. Sources said had TCP called a tender at the time the option was under discussion, they would have paid much more than what they are paying now.
Sri Lanka:
India continues to send Sri Lanka urea under a loan guarantee program. Earlier in July 44,000 mt of urea was sent to the impoverished country. Another 22,000 mt is set for delivery later this month.
Bangladesh:
A gas shortage in Bangladesh has caused a curtailment of urea production. Chittagong Urea Fertilizer Ltd. was forced to close its 561,000 mt/y facility because of a lack of natural gas. At least one other plant was also forced to close for the same reason earlier this month.
China:
Exports from China remain limited due to government restrictions. The buildup of reserves as a result of the government action has played out in lower domestic prices. Sources said the ex-factory price was quoted at $375-$380/mt against a global market closer to $500/mt FOB.
Sources said no more than three tons of urea will be available to service the Indian tender. The estimated netback from the lowest East Coast offer in the tender put the price at $492-$495/mt FOB. Prior to the closing of the Indian tender, sources had been speculating the export price might be closer to $520-$530/mt FOB.
Urea exports from China for the first half of 2022 were reported at 724,000 mt by Trade Data Monitor, down 70% from the 2.4 million mt exported during the same period in 2021. The main buyers were India with 174,000 mt, South Korea with 169,000 mt, and Pakistan with 100,000 mt. The Pakistan tons were from a purchase agreement done before the more recent deal of 200,000 mt.
Second-quarter sales were also way down at 421,000 mt, a 74% drop from the 1.6 million exported in April-June 2021. June 2022 exports were reported at 186,000 mt, down from the 482,000 mt sent in June 2021. India accounted for almost half of the purchases at 87,000 mt. South Korea took 31,000 mt and Mozambique took 25,000 mt, rounding off the top three buyers. These three countries accounted for 77% of China’s June 2022 export sales.
Black Sea:
There are expectations that at least one cargo of Russian material will be included in the IPL/India tender awards. If so, sources said it would most likely come out of a Baltic port rather than any of the Black Sea facilities.
Using the East Coast India tender price of $517/mt CFR, sources calculated that the Black Sea price would be $470-$475/mt FOB, if any product could come out of the war torn area. Some urea could come out of Georgia, allowing the vessel to remain in the southern reaches of the Black Sea, away from the war zone.
Middle East:
Producers offered prices of $560/mt FOB and $580/mt FOB in the IPL tender after deals were reported the previous week at $585/mt FOB and as the paper market called the Arab Gulf price for July at $570-$580/mt FOB.
However, the netback from the lowest West Coast offered price in the Indian tender was calculated back to $495-$500/mt FOB. If this price holds, it would be the first time since September 2021 that the Middle East granular price was below $500/mt.
Egyptian producers are remaining quiet while the impact of the Indian tender gets worked out. Sources said it is unlikely that any Egyptian material was offered into the Indian tender. The last public business out of Egypt was at $730/mt FOB for early July shipment. Even the paper market is still holding to this level, quoting July shipments at $720-$740/mt FOB and $685-$695/mt FOB for August deals.
A source calculated what the netback would be if tons were offered for delivery to India’s West Coast. He estimated the price in the $480s/mt FOB, a level everyone agrees has not been done out of Egypt for some time.
Iranian urea exports for the first half of the year were reported at 2.2 million mt by Trade Data Monitor. This is up 29% from the 1.7 million mt exported during the same period in 2021. The top five buyers in the first semester were Turkey with 741,000 mt, South Africa with 267,000 mt, Nigeria with 194,000 mt, the United Arab Emirates with 191,000 mt, and Oman with 130,000 mt.
Sources have questioned why major urea producers such as Nigeria, the UAE, and Oman are such big buyers of Iranian urea. The most commonly heard consideration is that the urea was placed in warehouses in those countries by traders who then re-exported the product.
Second-quarter 2022 exports were reported at 1.3 million mt, up 48% from the 886,000 mt exported in April-June 2021. June 2022 exports were reported at 437,000 mt, up marginally from the 417,000 mt exported during June 2021.
South Korea:
Urea imports for the first half of the year were reported at 561,000 mt by Trade Data Monitor. This is a 15% increase from the 489,000 mt imported during the first semester of 2021.
April-June 2022 imports were reported at 234,000 mt, up marginally from the 226,000 mt imported during the second quarter of 2021. June 2022 imports were reported at 36,000 mt – with 33,000 mt coming from China – compared to the 58,000 mt imported during June 2021.
Indonesia:
Sources expect to see a selling tender any day. Reportedly, the paperwork to allow exports in the second half of the year is still winding its way through the Indonesian government bureaucracy. Once the tender is called, sources expect to see a softening of prices as a result of the low numbers in the Indian tender.
January-May 2022 exports were reported at 617,000 mt by Trade Data Monitor, down 22% from the 759,000 mt exported during the first five months of 2021.
May 2022 exports were reported at 146,000 mt, down from the 187,000 mt exported during May 2021. The top two buyers were China and Peru, which received slightly more than half of exported urea during May 2022. Neither country appeared on the buying list in May 2021 nor in May 2020. Australia came in for the first time in 2022 with a purchase of 30,000 mt in May, representing about 20% of the exported Indonesian urea for that month.
Brazil:
Talk of softer prices continued through the week. Sources reported deals done at $590-$630/mt CFR, but with a lot more interest being expressed at $580/mt CFR. What was clear to sources, however, was that no matter the price, no one was talking about large quantities. The limited demand for major purchases continues to put downward pressure on pricing.
Rondonópolis saw a slight tightening in its price to $730-$770/mt FOB ex-warehouse.