U.S. Gulf:
It was a big trading week for NOLA urea. Sources reported several transactions and a broad price range.
The week began with barges trading as low as $465/st FOB before working their way up to $580/st FOB on Thursday for July-August business. This compares to the week-ago $470-$535/st FOB. September was reported to have occurred at $520-$585/st FOB.
With Egyptian prices shooting up early in the week, sources said there was a huge gap between international and NOLA prices, making U.S. prices a real bargain. Others noted that more exports from NOLA have been going out, whittling down domestic inventories.
Eastern Cornbelt:
Urea prices were quoted in a broad range at $560-$610/st FOB in the Eastern Cornbelt, with the low confirmed early in the week. The higher numbers came later in the week amid firming NOLA barge values.
Western Cornbelt:
Urea prices edged higher to $550-$610/st FOB in the Western Cornbelt, depending on location and time of the week.
California:
Urea pricing in California was steady at $710-$760/st FOB port terminals for bulk tons, while reference prices remained as high as $900/st FOB Stockton for bagged product. The last rail-DEL urea sales were confirmed at the $625/st level for limited spot sales in mid-July.
Pacific Northwest:
The urea market was pegged at $625-$630/st FOB in the Pacific Northwest, with the low at Rivergate, Ore. Rail-DEL pricing fell in the $600-$640/st range in the region in late July, depending on location.
Western Canada:
Urea prices in Western Canada were confirmed in a broad range at C$810-$865/mt FOB and C$855-$880/mt DEL for 3Q tons at midweek, depending on location.
India:
The IPL urea tender awards came in higher than what the buying house requested. The tender documents called for 500,000 mt. In the end, IPL bought 593,000 mt from eight companies.
When the tender closed on July 20 with prices of $517-$520/mt CFR, many in the industry doubted IPL would be able to secure their requested tonnage. Traders estimated the best IPL could do is about 495,000 mt. During the weekend after the tender close, IPL secured 422,000 mt from six companies.
They then stepped up their efforts with six more companies to at least reach 500,000 mt. The initial effort netted 520,000 mt. Further talks took the final amount to 593,000 mt.
| Supplier | Quantity (mt) | Discharge Port |
| Gavilon | 100,000 | Krishnapatnam-Mundra |
| Swiss Singapore | 150,000 | Tuticorin-Mundra-Pipavav |
| Sun | 30,000 | Paradip |
| Samsung | 95,000 | Gangavaram-Tuna |
| Dreymoor | 50,000 | Pipavav |
| OQ Traders | 90,000 | Kandla |
| FertCom | 48,000 | Jaigarh |
| Medallion | 60,000 | Rozy |
Shipments to East Coast ports are estimated at 185,000 mt, while the remaining 408,000 mt are bound for West Coast deliveries. Sources estimated three cargoes totaling 120,000 mt will come from China, with another 45,000-50,000 mt coming from Indonesia. Just about all the West Coast deliveries are expected to be sourced from the Arab Gulf.
India still needs 1-1.5 million mt for the current application season. Sources speculated that the next buyer will wait until all the tons awarded in the IPL tender have vessels nominated. Once the cargoes and ships are locked in, said traders, it would make sense to call the next tender.
Prices in the next tender are expected to be much higher. The consensus going into the IPL tender was that prices would be around $600/mt CFR. This level would have been significantly lower than the previous tender, but not so low that producers would shy away from supporting the deals. In the end, said one trader, Gavilon was able to get its hands on cheap urea and went for the sale instead of a large profit margin.
Sources said the price and availability of tons for the next tender will depend on how many tons China makes available and if the Turkey-brokered deal to provide safe passage for Ukraine grain and Russian fertilizers works out. One trader said even if China holds back on its urea, if Russia can get several vessels out in a public manner, prices could remain at current levels – or even go down.
Middle East:
The urea price from the Arab Gulf bounced back from the upper-$490s/mt FOB, based on the IPL tender, to $545/mt FOB. Sources said a deal was closed that moved tonnage out at that level, with higher prices expected.
Part of the upward pressure came as European buyers moved aggressively after material to cover shorts and to take a few long positions while prices were down. The move ran up Egyptian prices dramatically and had a rollover impact, forcing higher prices out of the Arab Gulf.
Egyptian producers began reporting deals at $675/mt FOB earlier in the week. Almost immediately, new and higher prices were coming out. By July 28, the price had hit $760/mt FOB. Most of the tonnage was 10,000 mt or less, and all was sold to traders for European buyers for August and September shipments.
China:
Sources said the export urea price is pegged at $470-$480/mt FOB, against an ex-factory domestic price of $380/mt FOB and an estimated price from the Indian tender of $492-$495/mt FOB.
Traders said two cargoes of 45,000 mt and one of 30,000 mt are already set aside for delivery to India under the IPL tender. Additional tons might be shaken loose to top off these shipments.
The nearly $100/mt gap between the export price and the ex-factory price could change, said traders. Producers could move to increase the price when the next Indian tender comes along to enjoy even better income. Sources said if the price increase does not impact the domestic price, the Chinese government will most likely not move to severely limit exports.
Some traders are said to be approaching producers trying to secure long positions in anticipation of locking in a lower price before the next Indian tender is called. One trader warned, however, that the government could move to make the deals moot by either banning the exports or by placing so many hurdles to complete the deal that any profit would be eaten up in extra charges.
China remains an anchor for Indian business. Even with limited tonnage available, sources said the Chinese price helps set the tone for the rest of the market. Likewise, as long as China allows some tons to flow out – especially for the tenders – the market will not face a dramatic shortage that would provide painful price spikes.
Indonesia:
The explosion at the Kaltim V plant shut down urea and ammonia production. The plant production rate is quoted at 1.2 million mt/y for urea and 900,000 mt/y of ammonia. The market will be short 100,000 mt for each month the plant is closed.
The explosion, said traders, took the possibility of an export tender off the table. Some smaller deals for prilled urea might pop up, said one trader, but there will most likely not be any major offerings of new granular product for a while.
Black Sea:
The agreement brokered by Turkey to get Ukrainian wheat to the global market included provisions for the export of Russian fertilizers. While some Russian urea has been shipped out of the region and out of the Russian Baltic ports, the deals have been quiet and limited. Sources put the price of urea coming out of the Black Sea at $437-$450/mt FOB.
The Turkish deal could open a window on Russian urea sales if it takes effect. Bloomberg reported that Turkey is confident grain exports could start as early as Aug. 1, depending on how quickly the ports are cleared from war debris and mines and when the logistics for handling the trades are set up.
Even though Russian fertilizers are not included in the American and European sanctions against Russia, sources said many banks and insurance companies are still hesitant to get involved. One global trader said a banker or a trader could be caught in the middle of a bad situation if the rules change part way through a transaction.
Sources also said many in the financial sector are nervous about making an unintentional error in the paperwork that could open the banker to a government investigation for sanction violations. Despite a letter from the U.S. government that no bank or insurance company would be held in violation of the sanction’s regime, sources said there are too many variables for a stable deal.
Brazil:
Urea prices dropped to $540-$580/mt CFR, but seem to be ready for a rebound. Companies have withdrawn their urea pricing sheets as prices begin to go up around the world. New offers being discussed could move the price to $600/mt CFR and up by next week.
The movement in pricing confirmed talk this week that $540/mt CFR was the floor for prices. Besides the shift in prices in Egypt and the Arab Gulf, sources were looking at the higher natural gas prices in Europe and speculating that higher urea prices might follow.
Efforts by Turkey to get Ukrainian grain and Russian fertilizers out of the Black Sea have not impacted the Brazilian market yet. International traders said the first beneficiaries of Russian urea exports would be Brazil and India. Russian President Vladimir Putin earlier said Russia would ensure fertilizer shipments to its friends, and specifically called out Brazil and India.
Rondonópolis reported prices at $720-$740/mt FOB ex-warehouse. Sources said there was limited trading as buyers seem to be waiting for the end of soybean planting before discussing urea needs for the corn fields.