US Gulf:
NOLA urea was reported at $292-$308/st FOB for December trades during the week, with January business falling in the $300-$308/st FOB range. Those levels were down from last week’s $295-$310/st FOB range for December-January tons. February business was reportedly concluded at a high of $312/st FOB during the week.
Eastern Cornbelt:
The urea market slipped to $350-$380/st FOB in the Eastern Cornbelt, down from last week’s $355-$390/st FOB, with the upper end at inland terminals and the low reported out of several Illinois river locations for December-January tons. Michigan urea prices were quoted at $390-$400/st FOB and $405-$415/st DEL.
Western Cornbelt:
Urea prices were down in the Western Cornbelt, falling to a broad $345-$390/st FOB range in late December, with the low confirmed at St. Louis, Mo., and the high in Iowa on a spot basis.
California:
Prilled urea in California was reported at $580/st FOB San Diego, down $20/st from last report. Granular urea remained at $510/st FOB Stockton, with reports of rail-DEL pricing down to the $420/st level in Northern California.
Pacific Northwest:
Urea continued at $425-$430/st FOB in the Pacific Northwest, with the low reported at Rivergate, Ore. Delivered pricing remained at $450-$474/st in the region, depending on location.
Western Canada:
The latest urea offers in Western Canada dropped to C$635-$650/mt FOB and C$660-$670/mt DEL, down from the prior C$660-$685/mt DEL range.
India:
India’s National Fertilizers Ltd. (NFL) called a urea tender to close on Jan. 4, 2024, with a shipping deadline of Feb. 29. Offer envelopes will be opened on Jan. 5.
The tender call surprised sources in Asia, who until last week remained firm in the belief that the tender would not happen until mid-January at the earliest. Sources pointed to large reserves of urea and reduced demand due to flooding to support the view that the tender could be delayed until 2024.
Brazil sources had been raising the possibility that the tender could be called before the end of the year, however. At the same time, observers noted that the Indian government has previously authorized tenders to be called in the last week of the year, just as most traders wind down for the holidays.
Players had argued that calling the tender in February would make more sense. The first draft of the FY2024/25 budget will be released by then, one trader noted, giving buyers a better sense of how much the government will dedicate to urea subsidies.
Sources put the tender’s expected take at 500,000-600,000 mt unless prices are more favorable to the buyer, leading to speculation that the market price will come down. Without a purchase nearing 1 million mt or more, said one trader, there could be a surplus of material on the global market weighing down prices.
January-October urea imports totaled 6 million mt, Trade Data Monitor reported, a 19% drop from the 7.4 million mt received through the same period of 2022 The amount does not include the 1.7 million mt purchased in the Oct. 20 Indian Potash Ltd. (IPL) tender. October imports were 1.7 million mt, a considerable increase from the 573,000 mt received in October 2022.
Pakistan:
Pakistan has been unable to secure the tonnage it needs to cover its urea deficit solely through the country’s government-to-government deal with Azerbaijan, sources said.
Initial government estimates showed a 200,000 mt shortfall of urea for the current application season. Trading Corporation of Pakistan (TCP) was ordered to secure the tonnage, either through a public tender or government-to-government negotiations. After talks with several urea suppliers, the government announced a deal with Azerbaijan.
The latest estimates now put the deficit at 220,000 mt. TCP is reportedly once again in talks with urea suppliers around the world to ensure a plentiful supply for the season. The search for more urea comes on the heels of a government announcement raising the price of urea by about 4%, to Rs5,550 per 50-kg bag ($19.58).
Black Sea:
Prices have fallen in line with the international urea markets. Sources now put the Black Sea price at $270-$280/mt FOB for prilled urea.
Indonesia:
No awards appear to have been issued in Indonesia’s latest granular urea selling tender, as Pupuk was reportedly unsatisfied with the highest reported price of $321.50/mt FOB. The holding company continues to talk with bidders in an effort to move the price closer to the market’s previous $342/mt FOB level, sources said.
Current market conditions do not allow for a return to the higher price, one trader said. At the same time, the trader conceded that it must have been difficult for Pupuk to report to the government that its product price had dropped $20/mt in just one week. There are rumors that buyers might be willing to accept a slight price increase, but nothing that would approach the prior level. For now, price discussions remain at $321/mt FOB, sources said.
Demand for Southeast Asian urea is stepping up from buyers in the West Coast of Latin America, as the slowdown in the Panama Canal has prompted a shift in sourcing from Russia to Asia. The $342/mt FOB product sold in early November is being sent to Mexico’s West Coast for unloading, sources said, while the tonnage in the most recent tender was also expected to go to a West Coast port.
Trade Data Monitor reportedJanuary-October urea exports at 956,000 mt, down 41% from the 1.6 million mt shipped in January-October 2022. October exports were noted at 118,000 mt, off 29% from last October’s 165,000 mt.
Middle East:
Producers are busy covering contract sales, and no new discussions for spot deals were reported. The urea tender announced out of India is expected to shake things up as the year winds down.
With sellers already boasting healthy order books for January, the NFL tender call will make life even better for producers. With China out of the urea export business, sources expect to see most of the Indian tender covered with Arab Gulf material.
On the downside for producers, however, are reports that NFL will not be looking for a large purchase unless the price is dramatically lower. So far, sources estimate that NFL will take only 500,000-600,000 mt, potentially leading to a large surplus of urea in the global market. In turn, this could cause prices to fall.
Rising freight costs, partially due to higher insurance rates, will impact the netbacks that Arab Gulf producers can expect from the Indian tender. With India expecting a lower price than the previous tender, producers may have to accept a lower netback than preferred to compensate for the higher transportation costs, while also taking into account the lower prices estimated in the global market.
The week started with Egyptian producers processing and loading cargoes bound for Europe and Ethiopia. By the end of the week, however, new deals locked in the year-end price at $340/mt FOB.
MOPCO sold 5,000 mt at $338/mt FOB and another 6,000 mt at $340/mt FOB, sources confirmed, with both shipments slated for January. Producers are once again targeting $345/mt FOB for late-January and February orders.
The cost of shipping from the area has gone up. Sources pointed to higher insurance rates for vessels entering or leaving the Red Sea due to stepped-up attacks on ships in the area. So far, traders said, there have been no attacks on urea vessels.
There are reports that Iranian producers are offering deep discounts to encourage sales. Some Brazilian buyers were reportedly offered a January cargo at $300/mt FOB, though no deal was confirmed.
China:
Domestic reserves are building and ex-plant prices are dropping, sources said. The situation appears to have made it easier for some plants to take maintenance turnarounds, or at least reduce output while taking care of maintenance work.
Some small shipments of urea, mostly in containers, are still being allowed from Chinese ports. Traders have expressed concern that the attacks in the Red Sea could lead to a shortage of containers for use in the Asian market.
Exports of urea firmed 70% in January-November, Trade Data Monitor reported, to 3.9 million mt from the year-ago 2.3 million mt. India purchased about 40% of the exports, taking 1.6 million mt. November exports were 516,000 mt, against 373,000 mt shipped in November 2022.
South Korea:
The South Korean government reported that it is still in talks with China to ensure a steady supply of industrial urea for its emissions control infrastructure. At the same time, however, sources said South Korean buyers have been approaching as many urea producers in the region as they can. Lotte Fine Chemical (LFC) reportedly closed a deal earlier this week for 5,000 mt from Vietnam, and additional sales out of Vietnam are expected.
The South Korean government is also easing its tariffs on imported urea. The government said the move was designed to make it easier to meet the country’s imported urea needs.
January-November urea imports fell 18% year-over-year, Trade Data Monitor reported, to 668,000 mt from 812,000 mt. November imports were counted at 74,000 mt, 67,000 mt of which came from China before that country clamped down on exports. South Korea received 35,000 mt in November 2022.
Brazil:
Urea imports softened 6.6% in Brazil, to $310-$330/mt CFR from last week’s $340-$345/mt CFR. Prices started the week at the top of the range and receded as the week progressed, while news of the Indian tender prompted most sellers to step out of the market.
Weakening CFR prices pushed Rondonópolis prices to $460-$490/mt FOB ex-warehouse, down from $470-$495/mt FOB last week.
Weather constraints continue to negatively impact soybean production, and the soybean season’s late start has compromised demand for the upcoming corn season. Heat waves and reduced rainfall were expected to reduce 2023/24 soybean production by 20%, Moneytimes reported, referencing research by the Association of Soybean and Corn Producers of Mato Grosso (Aprosoja), while the Mato Grosso Institute of Agricultural Economics (IMEA) estimated a 24.59% reduction in planted corn acres due to delays in soybean planting.
Summer begins on Dec. 22 in the southern hemisphere, and weather irregularities from El Niño are expected to persist through early 2024. Reduced rainfall is expected in December and January, Agroclima reported,referencing Climatempo. While precipitation is forecast to increase in January and February, it will arrive late in the season and may impact the beginning of the harvest.