US Gulf:
NOLA urea barges started the week in the $600-$615/set FOB range, but dipped as low as $595/st on Oct. 13. Overall, the week’s average dropped from the week-ago range of $590-$635/st FOB.
US Imports:
Urea imports dropped 43.4% in August, to 143,657 st from 253,677 st in the prior year. July-August volumes were noted at 320,235 st, off 55.7% from the year-ago 722,203 st.
Imports originating from Qatar totaled 162,996 st for the July-August fertilizer year-to-date, topping both 75,399 st from Canada and 48,502 st from Saudi Arabia. Russia added 28,785 st.
US Exports:
Urea exports for August totaled 101,664 st, up 341.2% from the year-ago 23,042 st. July-August shipments were up 1,148.3%, to 403,319 st from 32,310 st in the prior year.
Eastern Cornbelt:
Urea terminal prices firmed slightly to $680-$690/st FOB in the Eastern Cornbelt, up $5/st from the previous week, with the low confirmed at Cincinnati, Ohio. Sources said pricing had been pulled at some Illinois River terminals due to low water levels and delayed barge shipments.
Western Cornbelt:
Urea pricing was reported in a broad range at $660-$700/st FOB in the Western Cornbelt, depending on location, with the low confirmed at St. Louis, Mo., and the high at Caruthersville, Mo. In the Northern Plains, the St. Paul, Minn., urea market was pegged at $680-$700/st FOB, up from the prior week’s $670-$685/st FOB range.
Southern Plains:
The urea market was quoted at $665-$680/st FOB in the Southern Plains, with the low confirmed at Borger, Texas. Pricing at Houston, Texas, was pegged at the $670/st FOB level at midweek, while the Catoosa/Inola, Okla., market was reported in the $670-$680/st FOB range.
South Central:
The latest urea offers in the South Central region ranged broadly at $670-$710/st FOB at mid-month, depending on location, with the low reported at Convent, La., and the high at Memphis, Tenn. Most Arkansas terminals fell in the $695-$700/st FOB range, while Kentucky sources quoted Ohio River terminals at the $685-$690/st FOB level.
Southeast:
Urea pricing in the Southeast slipped to $685/st FOB Wilmington, N.C., and other port terminals, down from the last reported range of $690-$710/st FOB in the region.
India:
India Potash Ltd. called a urea tender to close on Oct. 17, with shipping by Dec. 5.
Sources said IPL could be looking for as much as 2 million mt in this tender. Expectations as the week ended were for the winning price to be lower than the $668-$675/mt CFR secured in the last tender. One trader was careful to point out that while the market dynamics support lower prices, he does not think the market will crash. Rumors of price discussions in the Arab Gulf at $630/mt FOB put the landed price into India around $650/mt CFR. At that level, said sources, IPL might be able to get the large quantities it needs. If IPL does take 1.5-2 million mt in this tender, sources said another tender may not be needed until the first quarter of 2023. If IPL takes 1 million mt or less, however, another tender will most likely be needed to finish out the application year.
Sources said demand for urea remains strong. At the same time, domestic production is reportedly down because of limited amounts of natural gas.
Traders also said a lot depends on the source of the urea tied to the lowest offer. If that offer comes from a trader offering Chinese product, the other offering companies may have a difficult time matching the price. While Chinese producers have long ago abandoned the idea of being low-cost suppliers, some producers have been willing to entertain bids from traders that could lead to lower prices in the market.
Tenders from Pakistan and Bangladesh could affect how low producers are willing to go in pricing. The Trading Company of Pakistan called a tender for 300,000 mt of urea to close the same day as the IPL tender. In Bangladesh, the government authorized BCIC to call a tender for 60,000 mt of granular urea.
While both tenders pale in comparison to the IPL tender, they could offer just enough of an alternative market to push against efforts for lower prices.
Pakistan:
A urea tender for 300,000 mt was called by TCP to close on Oct. 17. The tender calls for all product to be delivered to Pakistan by Dec. 5.
This tender will be the first in Pakistan that will allow TCP to negotiate with offering companies in a manner similar to that of the Indian buyers. In the past, TCP had to accept the lowest offer and the tonnage offered at that rate. If the winning offer did not satisfy the needed tonnage, TCP would have to call new tenders until the full amount was awarded.
Under changes authorized by the government in late September, however, TCP can now use the lowest offer as a target for other offering companies to match. The buyer is allowed to go to the other offering firms with the low price as a counterbid. Just as the Indian buying houses move to secure as many tons as possible from as many suppliers as possible, TCP is expected to work its way through the offering companies until it achieves its goal of 300,000 mt.
The tender documents call for the awarded tons to be delivered in three tranches of 100,000 mt each. The first wave of 100,000 mt is to be delivered on Nov. 1-7, the second group of 100,000 mt will arrive on Nov. 10-16, and the third wave is to be delivered on Nov. 19-25.
The need to import urea came as government analysis showed domestic production was down. Local media reports cited both limited quantities of natural gas and the high price for any gas that is available.
International traders expressed concern about participating in the tender. They noted that Pakistan is short of hard currency necessary to pay for the urea. Traders said the recent wheat purchases made by the government were paid late, causing some concern among grain traders.
Sources are careful to point out that eventually Pakistan did pay for its purchases. However, some trading houses are facing financial difficulties that could be disastrous for them if payment is delayed too long. These trading houses may sit out the TCP tender and focus solely on the IPL tender, with its more reliable payment process.
Sources said the public tender was made after TCP attempted to repeat a previous government-to-government deal from earlier this year. However, they said the talks fell apart when the discussion centered on the payment process.
Bangladesh:
The government gave BCIC permission to initiate another tender for 60,000 mt of granular urea. The tender call is expected soon.
BCIC is also planning for tonnage awarded in a previous tender to come to Bangladesh. One cargo of 30,000 mt will come from Fertiglobe, and another 30,000 mt will come from Muntajat. The final price for these cargoes was $623/mt CFR bagged.
According to local media reports, the completion of a new plant at Ghorashal Palash will be pushed back until 2024 because of issues with the arrangements of loans from Japanese and Hong Kong banks. The facility was scheduled to replace two older nearby plants. In addition, some of the components for the plant could not be imported because of COVID-related delays.
The new plant has a rated production figure of 924,000 mt/y. The combined annual output of the two plants it will replace is 315,000 mt.
The government estimates current domestic annual production at 700,000-1 million mt, against annual demand of 2.5-2.6 million mt. The new plant was to cut into the 1.3-2 million mt of imports required to make up the difference between domestic production and demand.
Indonesia:
Pusri closed a prilled urea tender for 5,000-20,000 mt on Oct. 13. Three companies bid in the tender. Ameropa was the lowest bidder at $550/mt, with Liven second at $570/mt. The highest bid, and likely winner, was Swiss Singapore at $571/mt FOB.
Another tender from Kaltim is expected within a week. Sources said the tender could be for 50,000 mt, but could settle at a higher number.
Sources calculated that the producers would have a total of about 100,000 mt available for export now through November. Sales for exports are expected to end with this batch as the producers begin to focus on the domestic needs into the first quarter of 2023.
Middle East:
Producers in the Arab Gulf and Egypt have gone quiet as the industry prepares for the IPL and TCP urea tenders.
Sources said there was talk of prices around $630/mt FOB. This would be a slight drop from the $645-$650/mt FOB based on the previous India tender.
Reportedly, the deals closed with Egyptian producers have focused on deliveries to southern Europe and Turkey. The October and November order books are said to be full, with some December deals already under discussion.
China:
The number of tons available for the Indian tender is still up in the air, said traders. If the previous Indian tenders are any indication, there will be about three cargoes available for the IPL tender. There are reports that contracts with buyers in Southeast Asia dominate the tons currently at the port warehouses.
Sources said the government-imposed restrictions on exports and COVID-related delays have added a new dimension to talks among traders and their discussions with suppliers.
One trader said normally at events such as the recently concluded IFA Crossroads conference in Singapore, people talk about supply, demand, and the weather as the main forces affecting pending deals. Now, discussions include COVID-related delays in production and berthing schedules, uncertainty about Chinese government policies on exports, what quantities will be available from Russia and Ukraine due to the war, and trends in inflation and interest rates.
Brazil:
Urea prices in Brazil edged up to $680-$690/mt CFR on news that India was calling a new urea tender. Additional upward pressure came with news that Pakistan was also looking for tons.
Sources noted that while most ports showed a price rise, some sellers were still pushing urea from sanctioned countries – Venezuela or Iran – at $650-$660/mt CFR. Most of these tons were being offered in southern ports.
The urea price in Rondonopolis tightened to $785-$825/mt FOB ex-warehouse.
Ethiopia:
Urea imports for January-September 2022 were reported at 456,000 mt by Trade Data Monitor, up 6% from the 431,000 mt imported during the same period in 2021. The main suppliers were Egypt with 355,000 mt, and United Arab Emirates with 100,000 mt.
September 2022 imports of 403 mt were typical of activity for that month. September 2021 imports were reported at 22 mt, with no imports reported for September 2020.
Third-quarter 2022 imports were reported at 111,000 mt, up 26% from the 88,000 mt imported during the same period in 2021. Egypt supplied 100,000 mt of the quarterly imports, with the UAE sending an additional 10,000 mt.