US Gulf:
NOLA urea barge prices remained volatile, ramping up as the week progressed. Trades firmed from a low of $355-$360/st for August-September business early in the week, climbing to $390-$410/st FOB at midweek and topping out on July 27 at $425/st FOB for August and $415-$420/st FOB for September.
The range jumped from the previous $335-$365/st FOB, with sources describing a market that is “on fire” in the wake of a new India tender and rapidly firming prices in China, Brazil, and the Middle East.
Eastern Cornbelt:
Urea prices jumped to a broad $425-$460/st FOB in the Eastern Cornbelt on firming NOLA barge values, up from last week’s $395-$420/st FOB. Sources pegged the Cincinnati, Ohio, urea market in the $440-$460/st FOB range for the week.
Western Cornbelt:
Urea moved to $430-$460/st FOB in the Western Cornbelt, up significantly from last week’s $370-$400/st FOB range in the wake of stronger NOLA barge pricing, with the St. Louis, Mo., market reported at $430-$455/st FOB.
The Northern Plains urea market jumped to $475-$485/st FOB St. Paul, Minn., with the Catoosa/Inola, Okla., market pegged at $475-$480/st FOB for very tight supply.
California:
Granular urea was steady at $550/st FOB Stockton, Calif., with prilled urea available at the $620/st level FOB San Diego. Railed tons were reportedly being priced above the $500/st DEL level in the state.
Pacific Northwest:
Urea prices were quoted at $485-$490/st FOB in the Pacific Northwest, up $35/st from last report. Delivered pricing took a bigger jump, firming to a broad $470-$530/st range in the region, with the low reported in Montana.
Western Canada:
The latest urea offers were quoted at C$635/mt FOB and C$665-$680/mt DEL in Western Canada for September-October shipment, up from the prior C$530-$535/mt FOB and C$535-$568/mt DEL ranges for July-August tons.
“Urea offers are scarce right now,” said one contact. “Local manufacturers have a strong book on through September and into October.”
India:
Indian Potash Ltd. (IPL) called a tender during the week. Set to close on Aug. 9, the tender carried a shipping deadline of Sept. 26. Sources speculated that IPL will be looking to secure at least 1.5 million mt of urea.
Normally, a tender will close one week after the call. The roughly two-week gap in this tender was most likely granted to help traders secure the tonnage for offers, sources said. Others speculated the longer period could have been announced in the hope of cooling off the market, however, which became red hot just as the tender announcement was made.
If the latter is true, said one trader, then IPL failed. If the former is accurate, sources said the move might work.
Because clearing tons for export can be time-consuming, the longer period before offers are due, along with the almost two-month shipping period, appears designed to make it as easy as possible for traders to offer tons from China to play off of Arab Gulf producers. Even with the extra time, sources said traders are unlikely to offer multiple cargoes from China out of concern that export clearances might not be completed for large orders. Instead, most are expected to offer one or two cargoes of Chinese product.
As soon as the tender call was made, some traders began speculating that prices could come in at $380/mt CFR, or about $100/mt above the last tender. A $400/mt FOB sale by SABIC made on the heels of the tender, along with subsequent statements from Chinese producers targeting similar prices, pushed pricing expectations even higher, however.
International traders looked at the $400-$415/mt CFR being traded into Brazil, noting that sales into the Latin American country are often a good indicator of where the Indian price might go.
The initial $380/mt CFR pricing idea might still be achieved with some aggressive negotiating, some speculated. Even if the netback is significantly lower than the prices achieved this week, they would still be substantially higher than what was received under the last tender, sources said.
IPL is facing another problem, as sources reported that Bangladesh is also close to finalizing a urea tender of its own. While one trader said that Bangladesh will likely settle its tender as a government-to-government deal with China, this could absorb a lot of urea from China that otherwise would have been offered into India, leaving fewer tons for traders.
Black Sea:
Sources reported Russian material being shopped around at $280/mt FOB. It was unclear if the cargo was being considered for the Indian tender, or whether the holder was looking for an immediate sale. By the end of the week, however, sources pegged the market at $330-$378/mt FOB for prilled urea, reflecting the rise in prices seen from other major urea producing regions.
Players reported at least 120,000 mt coming out of Uzbekistan via Georgia’s Port of Poti that might end up in the Indian tender offerings, estimating the price at $330/mt FOB. The cost of moving the urea from the far-eastern Black Sea port to India’s West Coast could leave the product right at the tender’s estimated $380/mt CFR price level, sources said.
Indonesia:
Traders reported receiving letters from Pupuk Holdings advising they prepare paperwork for bid bonds and possible submissions for a selling tender. No dates were discussed, but sources noted more indications that some form of a urea selling tender will arrive soon.
Pupuk will most likely hold off calling its tender until the IPL tender closes, sources said. One trader said Pupuk would want to know where traders and producers currently see the market, rather than come in with a price that might end up being too low. Speculation is growing that prices out of Indonesia could land around $450/mt FOB if Arab Gulf and Chinese prices hold at $400/mt FOB.
In the meantime, Indonesian producers are not selling any urea. Pupuk Holdings reportedly remains under investigation by the national government due to its pricing policies, leaving the company skittish about making new sales.
At the same time, however, warehouses are filling due to the lack of export business. The domestic market is done for now, leaving offshore buyers as the only escape valve for the country’s building reserves. International buyers are expected to have a short window of opportunity. Domestic demand will pick up again in late September, sources said.
Thailand:
Urea imports remained strong, with Saudi Arabia leading the way. Saudi suppliers have traditionally offered Thai buyers substantial discounts, sources said.
Trade Data Monitor reported January-June imports at 1.2 million mt, up 31% from the year-ago 948,000 mt. Saudi Arabia supplied 489,000 mt, Malaysia sent 304,000 mt, and Qatar added 225,000 mt.
June imports were 307,000 mt, up slightly from 300,000 mt on record for June 2022. Second-quarter imports were pegged at 846,000 mt, up from 700,000 mt received in April-June 2022.
Middle East:
Urea prices exploded across the region. SABIC reported a 40,000 mt granular urea sale at $400/mt FOB. At the same time, the price out of Egypt climbed from $436/mt FOB at the beginning of the week to $467/mt FOB on July 27.
All of the Arab Gulf producers are now following Saudi Arabia’s lead by pricing their material at $400/mt FOB, sources said. One trader noted that even at $400/mt FOB, the price is a bargain for European buyers. Once the freight differential between the Arab Gulf and Egypt is calculated and the European duty of 6% is tacked on, Arab Gulf material is still cheaper than the most recent Egyptian price.
The issue is whether tons are available. Sources said producers all claim they are sold out well into August and are unwilling to discuss lowering their prices. The market’s tightness has raised questions as to how many tons Arab Gulf suppliers will be able to offer to traders for the IPL tender.
Iran has reportedly withdrawn its earlier $320/mt FOB offers. With the Arab Gulf at $400/mt FOB, sources expect the new Iranian price to fall closer to $380/mt FOB.
Sources reported at least one ship of Iranian urea heading to China, and speculated the tons will be re-exported rather than sold into the Chinese market. India is the most likely destination, but smaller lots could be created for Southeast Asian buyers as well.
Egyptian producers continue to search for a price ceiling. The week opened with a deal at $436/mt FOB, $25/mt above the prior week’s high. Prices moved up throughout the week as small lots of 4,000-6,000 mt found buyers in Europe. The price reached $467/mt FOB late on July 27, with producers now looking at $500/mt FOB as a possibility.
Many small cargoes sold in the past few weeks are being assembled into a large vessel for sale to a Latin American buyer, according to reports. Argentina was named as one possible destination.
Egyptian prices are not expected to soften. The government’s request to reduce urea production, an effort to save on natural gas, is beginning to have an impact, said sources in Egypt.
Producers were asked to cut their weekly output by at least 30% to divert natural gas from industrial use to the production of electricity for consumers. The government cited a need to help keep the power grid operating, as extreme temperatures have driven people indoors.
China:
Immediately after SABIC closed a deal at $400/mt FOB, Chinese producers tossed out their old price ideas, informing traders that their price was also $400/mt FOB. So far, deals have not been made at this level. Buyers were reportedly looking at business done just one week ago in the $340s/mt FOB for granular urea and the upper-$330s/mt FOB for prilled product, and trying to understand what just happened.
The end of China’s domestic season and steady levels of urea production are building up reserves that could be offered in the IPL tender, sources said. The longer period to prepare offers and ship the product seemed designed to take into account China’s laborious process of clearing urea for export.
Chinese traders were reportedly working the phones to secure cargoes from producers and then offer those tons to international traders for the Indian tender. Sources speculated that some producers might be willing to accept less than the current desired price of $400/mt FOB. Even if pricing drops to cover an Indian price of $380/mt CFR, that level will be higher than the current market, and significantly higher than China’s netback from the previous tender.
Sources expect to see traders offering only one or two cargoes each of Chinese material into the Indian tender, rather than face the possibility of a larger order not making the shipping deadline due to the export review process.
At the same time Chinese urea is being considered for export to India, foreign urea is reportedly sitting in warehouses being prepped for re-export, sources said. In addition, cargoes from Russia and Iran were also rumored to be on the way to Chinese ports for re-export deals.
January-June urea exports totaled 1 million mt, according to Trade Data Monitor, a 39% year-over-year increase from 724,000 mt. South Korea and India topped the list of buyers, taking 176,000 mt and 166,000 mt, respectively.
China exported 224,000 mt in June, a 24% increase from the 186,000 mt shipped in June 2022. Second-quarter exports came in at 483,000 mt, up 15% from 421,000 mt in April-June 2022.
Brazil:
Urea prices rallied to $400-$420/mt CFR following the July 25 Indian tender announcement, lifting from last week’s $370-$385/mt. Noting both increased demand from importers and a lack of offers from suppliers, players expected a lift to $430-$440/mt CFR soon.
Following early-week lows at $510-$535/mt FOB ex-warehouse, prices at Rondonopolis surged to a record-high $550-$595/mt FOB ex-warehouse in the wake of India’s urea tender announcement. With rising production costs running up against demand for the safrinha, farmers could respond by planting 25-50% fewer acres, sources said.