US Gulf:
NOLA urea prices continued to firm, fueled by last week’s production curtailments in Egypt and news this week of an official halt to exports from China. Prices for loaded barges moved to $310-$312/st FOB early in the week after closing out the prior Friday in the low-$300s/st FOB, then strengthened again to $320-$330/st FOB as the week progressed.
Full June offers were pegged in the $308-$320/st FOB range during the week, with July reported at $300-$315/st FOB, depending on timing. Last week’s range was $290-$302/st FOB for prompt and June business.
Eastern Cornbelt:
Urea was pegged at $365-$375/st FOB in the Eastern Cornbelt, with the low confirmed out of Illinois and Ohio River terminals. The Cincinnati, Ohio, market remained at $365-$375/st FOB during the week.
Western Cornbelt:
Urea in the Western Cornbelt remained at $345-$375/st FOB, with the low reported at St. Louis, Mo., and the high in Iowa.
California:
Urea was quoted at in a broad range at $490-$540/st FOB in California, with the low reported for granular bulk tons at Stockton and the high for prilled urea at San Diego. Bagged granular urea prices were reported at the $560/st level FOB Stockton during the week. No current DEL prices were confirmed.
Pacific Northwest:
The urea market slipped to $410-$430/st FOB in the Pacific Northwest, depending on location and time of the week, with delivered tons falling to a low of $375/st in mid-June.
Western Canada:
The urea market dropped to C$625-$630/mt DEL in Western Canada for June-August fill offers, well below the last C$775-$780/mt DEL spring pricing.
India:
International traders continue to predict a urea tender will be called before the end of June, with delivery likely stipulated for July and August. The absence of Chinese urea from the global market could force India to pay more than the $339-$348/mt CFR awarded in the last tender.
Due to fluctuations in the urea market, sources have predicted that India will take no more than 1 million mt in its next tender. Reserves already on hand – estimated at 11 million mt – will make it easier for the buying companies to delay larger purchases in the hope of snagging lower prices in the future.
However, Chinese urea is not expected to be a major force in the global market for the rest of the year, sources said, leaving India to depend on supply from Russia and the Middle East. While the Russians might be willing to provide a lower price than Arab Gulf producers, sources said they will not be able to supply the full tonnage that India will need.
Black Sea:
The price for prilled urea shot up more than $30/mt in the region, to $300-$305/mt FOB. The increase exceeded those reported in other urea-producing areas except for China, which came down.
Mediterranean:
News of natural gas curtailments in Egypt pushed Egyptian granular urea prices to as high as $355/mt FOB during the week and kept most European buyers in the Mediterranean on the sidelines. Importers believe they can afford to wait given that it is the offseason for urea on the continent.
Italy is still not buying imported tons due to weather delays. Offers were heard around $350/mt CFR in nearby Romania and FCA prices on the French Atlantic coast reflect around $365/mt CFR. As a result, granular urea in the Mediterranean edged up to $350-$365/mt CFR this week.
There were no reports or indications on prilled urea from Italian buyers, but the range moved higher to $325-$355/mt CFR, mirroring movement in the granular market and higher prill netbacks reported in the Baltic and Black Sea regions.
Southeast Asia:
No FOB granular urea deals were concluded this week as the Southeast Asian market seems slow to respond to upward pressure mounting in the Arab Gulf.
Indonesia appears to be taking a breather after hefty sales following its latest tender, while Petronas in Malaysia has no June spot availability. The Southeast Asia granular urea market was unchanged at $312-$320/mt FOB.
Indonesia:
The shipment of roughly half of the 280,000 mt of granular urea sold under the recent Pupuk Kaltim tender may be delayed to the first half of July, sources said. While Pupuk Holdings was reportedly expecting Australian demand to begin waning and Kaltim production to remain on track, neither has happened.
Rains in Western Australia have prompted buyers to call for more product, sources reported, and about half of the tender volume will go to that area. At the same time, Kaltim has experienced ongoing production issues. The company will be able to ship product already held in reserve, but only after increased demand reported from the domestic market has been covered. The producer is also entering the rainy season. Vessel loading must be delayed until the rains stop, further eroding its promise of June shipments.
Indonesian urea exports stepped 48% higher in January-April, according to Trade Data Monitor, to 411,000 mt from the year-ago 277,000 mt. Australian buyers took 203,000 mt, followed by the Philippines with 69,000 mt. April exports were 70,000 mt, a significant decline from the 170,000 mt exported in April 2023.
Middle East:
Following news that China has stopped all urea exports while Egyptian urea production remains shut down, the price of urea from the Middle East shot higher. Arab Gulf granular urea was reportedly sold at $350/mt FOB, up about $20/mt from last week, while Iranian product traded at a reported $300-$303/mt FOB, a $10/mt increase from the last sale.
Arab Gulf producers are sold out through the first half of July, traders said, and the only tons moving were booked earlier in May or under routine contract obligations. Anyone looking for product will have to wait until late July for shipment – if any tons are available – and will have to pay more than the current rate.
Talks were centered on $360/mt FOB during the week, sources said. The paper market lagged behind producer expectations, however, with July quotes noted at $345-$355/mt FOB.
Iran exported 1.8 million mt of urea in January-April, Trade Data Monitor reported, a 70% increase from the 1.1 million mt shipped through the first four months of 2023. Turkey bought 974,000 mt, Brazil received 316,000 mt, and Oman took 184,000 mt. The material sent to Oman will likely be reexported to another buyer, one trader noted. April exports stood at 506,000 mt, up 15% from 442,000 mt in April 2023.
Egyptian production remains largely offline. Last week’s promise of resumed natural gas supplies does not seem to have been fulfilled, sources said. The lack of new production, and the expectation that plants will be unable to immediately return to high capacity once production is restarted, has pushed up the price of granular urea. Deals were reportedly done at $355/mt FOB with offers for July shipment reported in the $360s/mt FOB.
China:
Late last week, sources reported that the CIQ export process would cease over the weekend. By Monday, local port authorities had received written instructions that all urea export procedures were to be halted. The announcement, in combination with the massive shutdowns in Egypt, triggered a major price increase in the global urea market.
The discussions to cut back on China’s already-restricted urea exports began in late May, sources said, when domestic prices began rising and some producers had begun actively seeking international buyers. The late-May price increase was not related to reports that exports would soon be allowed, sources said, but instead came as strong rains appeared toward the end of the current application season in rice-producing areas.
The resurgent domestic demand pushed up prices just as producers were gearing up to ship product overseas, and producers were forced to make alternative arrangements to move their product. Instead of being shipped to an export facility, the urea was required to make the more arduous journey to regional distribution centers. The shift caused some delays in shipping, as well as higher costs.
The National Development and Reform Commission last week informed urea producers that unless prices stabilized, all exports would be stopped. Once the order was given, prices reportedly dropped by $10-$15/mt, leaving prilled urea at an estimated $330-$335/mt FOB equivalent and granular estimates at $340-$345/mt FOB. Both prices were based on the current ex-factory price plus additional costs to prepare the product for export.
If the softer price trend continues, said one trader, some limited tons might be made available for export in late July. Even before the CIQ export process was stopped, only limited cargoes of 5,000-10,000 mt were being cleared to ship. Any July shipments are expected to fall along those same lines.
One less optimistic trader noted, however, that given how urea exports have been severely restricted since October, there is nothing stopping the Chinese government from extending the export limitations through the rest of the year.
If the government does relent and allow significant tonnage to be shipped sometime soon, sources expressed concerns of a potential rush to sell material on the open market. Even if the government allows only limited large cargoes to go out, the change could psychologically impact the market and precipitate a price crash.
Sources also noted rumors that the Chinese government is using the export restrictions to force older urea production facilities to shut down. The plants, said one trader, are inefficient and will have difficulties staying online as prices drop. At the same time, closing these plants would help the central government when it resumes its occasional campaigns to reduce air pollution.
During past drives to improve air quality, the government leaned heavily on older facilities to reduce output and, in some cases, shut down for a limited time. There have been fears in the past that forcing a shutdown could exacerbate unemployment in many poorer regions, though sources said the central government now seems to have pushed the employment issue to the side.
Brazil:
Granular urea prices lifted 7.2% in Brazil amid the recent events in Egypt and China and ensuing price increases from Iran and the Arab Gulf, jumping to $365-$375/mt CFR from last week’s $340-$350/mt CFR. There were unconfirmed reports of a $380/mt CFR trade, though buyer interest was noted falling off at higher prices.
The firmer CFR values pushed inland prices up $5/mt week-over-week, to $470-$490/mt FOB Rondonópolis.
Trade Data Monitor reported January-May urea imports to Brazil at 2.4 million mt, statistically unchanged from the same period of 2023. Nigeria led suppliers with 529,000 mt, Qatar shipped 460,000 mt, and Oman added 430,000 mt. May imports softened 22%, to 460,000 mt from the 592,000 mt received in May 2023.