US Gulf:
NOLA urea narrowed to $288-$298/st FOB for July business during the week, falling within the prior week’s broader $288-$302/st FOB range. Very limited trading was confirmed ahead of the Southwestern Fertilizer Conference in Nashville, Tenn., on July 14-18.
US Imports:
Urea imports firmed 14.1% in July-May, to 5.22 million st from 4.58 million st in the same period of 2022-2023. May imports were off 38.0%, however, dropping to 478,348 st from the year-ago 771,385 st.
July-May imports from Russia were 1.53 million st. Qatar sent 1.10 million st, Algeria shipped 569,381 st, and Saudi Arabia sent 485,933 st.
US Exports:
May urea exports were noted at 51,103 st, a 39.6% increase on the year-ago 36,610 st. July-May volumes were off 43.2%, however, at 762,091 st compared to the 1.34 million st reported one year earlier.
Exports to Canada totaled 548,125 st in July-May, followed by 93,519 st to Mexico and 77,185 st to Chile.
Eastern Cornbelt:
Urea was unchanged at $365-$375/st FOB in the Eastern Cornbelt, with the low confirmed at Cincinnati, Ohio, and the high out of inland warehouses. Most Illinois River terminals remained at the $370/st FOB level for July-August tons. The low end of the Great Lakes urea market was steady at the $365/st FOB level in Michigan.
Western Cornbelt:
Urea in the Western Cornbelt remained at $345-$365/st FOB, with the low reported at St. Louis, Mo. The Port Neal, Iowa, market was pegged at $350-$355/st FOB for limited offers on forward sales.
Northern Plains:
Urea remained at $360-$380/st FOB regional terminals in the Northern Plains. Inventories were described as very tight, with the higher end of the range confirmed for limited offers for forward sales at St. Paul, Minn. Delivered urea was pegged at $400-$440/st in North Dakota, with the low out of unit train facilities.
Northeast:
Urea pricing in the Northeast slipped to $370-$375/st FOB Fairless Hills, Pa., and $375-$380/st FOB Baltimore, Md., down $10/st from mid-June.
Eastern Canada:
Urea remained in a broad range at C$592-$700/mt FOB in Eastern Canada in mid-July.
India:
The Indian Potash Ltd. (IPL) tender closed on July 8. Nineteen companies offered a total of 2.7 million mt, though many of those offers are likely duplicates, sources said.
OQ Trading set the lowest price for East Coast delivery, offering 100,000 mt at $365/mt CFR, about $26/mt above the East Coast price from the March Rashtriya Chemicals and Fertilizers Ltd. (RCF) tender. The lowest West Coast offer came from Liven at $350.50/mt CFR for 50,000 mt, a $2.50/mt increase on the West Coast award in the prior Indian tender.
IPL Urea Tender Results
| Offering Company | Quantity WCI | $/mt CFR | ||
| Liven | 50,000 | 350.50 | ||
| OQ Trading | 300,000 | 351.00 | ||
| Continental | 100,000 | 352.00 | ||
| Medallion | 50,000 | 353.10 | ||
| ETG/Agricommodity | 45,000 | 355.50 | ||
| Samsung | 90,000 | 358.70 | ||
| Alkagesta | 45,000 | 360.00 | ||
| Aditya Birla | 50,000 | 368.40 | ||
| Indagro | 42,500 | 369.40 | ||
| Fertiglobe | 45,000 | 370.00 | ||
| Hexagon | 50,000 | 371.26 | ||
| Ameropa | 194,300 | 372.00 | ||
| FertiStream | 47,500 | 372.00 | ||
| Dreymoor | 90,000 | 372.00 | ||
| RE Energy | 50,000 | 372.91 | ||
| Midgulf | 100,000 | 377.00 | ||
| MacroSource | 45,000 | 379.50 | ||
| Koch | 47,500 | 379.80 | ||
| Total | 1,441,800 | |||
| Offering Company | Quantity ECI | $/mt CFR | ||
| OQ Trading | 100,000 | 365.00 | ||
| ETG/Agricommodity | 45,000 | 366.00 | ||
| Continental | 100,000 | 366.00 | ||
| Samsung | 90,000 | 367.70 | ||
| Medallion | 50,000 | 368.10 | ||
| Alkagesta | 45,000 | 370.00 | ||
| Hexagon | 50,000 | 371.26 | ||
| Indagro | 42,500 | 373.40 | ||
| Sun International | 100,000 | 374.15 | ||
| Fertiglobe | 45,000 | 377.00 | ||
| Aditya Birla | 50,000 | 377.40 | ||
| Koch | 47,500 | 377.90 | ||
| Ameropa | 194,300 | 378.00 | ||
| Dreymoor | 90,000 | 378.00 | ||
| FertiStream | 47,500 | 379.00 | ||
| Midgulf | 100,000 | 382.00 | ||
| MacroSource | 45,000 | 385.50 | ||
| Total | 1,241,800 |
Sources drew immediate attention to the wide price gap between the two coasts. While the disparity typically runs close to $5/mt to account for the extra freight costs from the Arab Gulf to the East Coast, the current tender’s nearly $15/mt gap can provide Arab Gulf suppliers with better netbacks for East Coast sales compared to the West Coast.
As Chinese urea is not available in large quantities, sources had predicted that Arab Gulf and Russian material would dominate the tender offers. The West Coast price represents a netback to Russian Baltic ports of $290/mt FOB and to Arab Gulf producers in the low-$330s/mt FOB, a lackluster level for both groups. The estimated East Coast netback to the Arab Gulf was put in the low-$340s/mt FOB, however, a price that has already been achieved from the AG and a level that producers want to maintain.
Counterbids were initially made to the next 10 lowest offers for West Coast delivery. One trader said the move made sense, as the landed price was much lower than the East Coast price. As the July 10 deadline approached, however, there were no responses to the counterbids, prompting IPL to extend the deadline to July 11.
Reports indicate that two shipments totaling 80,000 mt were ultimately offered. Sources said Continental and Aditya Birla will be supplying the product.
Rumors that IPL was ready to counterbid East Coast deliveries despite the higher price were reported late on July 11. Sources said IPL issued the counterbids to all the companies offering tons for West Coast ports.
The Liven and OQ Trading offers secured 150,000 mt for IPL. The rumored additional 80,000 mt from Continental and Aditya Birla puts IPL’s potential take at 230,000 mt, well below even the most pessimistic predictions for the tender. Going into the tender, sources were expecting purchases up to 700,000 mt, with the Arab Gulf supplying at least 400,000 mt of that amount.
However, the low West Coast price established a netback to the Arab Gulf well below what producers were willing to take. Soon after the prices were revealed, several traders began discussing a maximum purchase of just 400,000 mt, and possibly as little as 300,000 mt. The East Coast netback, however, is closer to the producers’ desires, leaving the possibility that additional tons might still be secured.
The next lowest offers for the West Coast were from OQ Trading with 300,000 mt at $351/mt CFR and Continental’s 100,000 mt at $352/mt CFR. Facing a spread of just $0.50/mt and $1.50/mt, respectively, from the lowest price, sources said these two companies might have been able to accept the IPL counterbid without a major financial impact.
As previously noted, however, only Continental has accepted the counterbid, and with fewer tons than in the initial offer. Because of the better netbacks offered in the $365/mt CFR East Coast price, more companies are likely to accept the counterbid.
The tender’s shipping deadline is Aug. 27. Regardless of how many tons IPL ultimately buys, sources said India’s next tender is unlikely to be called before late August.
Pakistan:
Trading Corp. of Pakistan (TCP) called a tender for 150,000 mt to close on July 29. The call came after talks with Turkmenistan for a government-to-government supply deal reportedly fell through.
The TCP tender calls for the tonnage to arrive by Sept. 25. The documents divide the deliveries into three distinct periods in August, with each period involving either one 50,000 mt cargo or two 30,000 mt shipments. The size of the vessel will be determined by the discharge port.
The government earlier approved the import of 200,000 mt of urea. In recent years, TCP arranged government-to-government deals after that authorization was granted. The last was in late 2023, when TCP bought 220,000 mt from Azerbaijan, Russia, and the UAE.
The use of government-to-government deals has been helpful to Pakistan, which maintains limited hard currency reserves. These limited funds – and the possibility of delayed payment – have in the past led some traders to avoid participating in tenders.
Black Sea:
Black Sea prilled urea moved up to $310-$315/mt FOB.
Mediterranean:
European buyers have been closely watching developments with the IPL urea tender and in Egypt, where gas supply has been restored and producers are reportedly ramping up operations. Buyers in the Mediterranean are in no rush, however, as highlighted by the lack of new indications and inquiries in Spain and Italy.
In France, liquidity for fresh offshore tons was reported around $400/mt CFR, while FCA prices reflected closer to a $410/mt CFR equivalent. This week, granular urea in the Mediterranean was quoted higher at $385-$400/mt CFR.
Southeast Asia:
The Southeast Asia granular urea market was reported at $350-$366/mt FOB this week. Pupuk Indonesia awarded its 30,000 mt granular urea tender, which closed on July 5at $366/mt FOB Bontang, to the buyer Universal Harvester. No further granular sales were reported, with Petronas still down at Bintulu and Brunei reportedly committed through August.
Indonesia:
Pupuk surprised the urea industry by calling a selling tender for 30,000-45,000 mt of granular urea to close on July 5, before the close of the Indian tender. Prices from the Pupuk tender were released just as the numbers from the Indian tender were also becoming available.
Pupuk sold 30,000 mt at $366/mt FOB to Universal Harvester, of the Philippines, surprising many players. Recent sales from regional producers Malaysia and Brunei had closed in the low-$350s/mt FOB. Going into the tender, sources were predicting a price range of $350-$352/mt FOB out of Indonesia.
Universal Harvester may have been under pressure to supply material to a contract holder in the Philippines, one trader speculated, and bid a high price to ensure it got the tons it needed. As the week closed, sources had not heard of any additional sales at the tender’s price level.
After a Pupuk granular tender is awarded, the producer normally engages in talks with other potential buyers. Pupuk’s last tender, for 45,000 mt, settled at $312/mt FOB. Following talks with other buyers, Pupuk ultimately sold 278,000 mt at the tender price.
The high price in the new tender appears to be keeping potential buyers away, however. Sources said it would be very difficult for a trader to find a home for the product at the current price level.
Middle East:
Arab Gulf producers were expected to be the primary suppliers of urea in the IPL/Indian tender, and sources estimated that at least 400,000 mt would find its way from the Middle East to Indian ports.
However, the lowest West Coast price of $350.50/mt CFR indicates a netback well below producers’ pricing expectations. Pricing to India’s East Coast at $365/mt CFR appears to offer a better opportunity for producers.
The large price gap between the East and West Coasts allows for a higher netback to the Arab Gulf if sales can be made under the Indian tender. Because of the lower price, however, IPL’s first counterbid was only made to traders who offered sales into India’s West Coast. The netback to the Arab Gulf from the West Coast price was put in the mid-$330s/mt FOB, well below producers’ expectations.
The estimated netback from an East Coast sale falls in the low-$340s/mt FOB, an area where producers have already secured deals. While an East Coast sale would not push the price into the $350s/mt FOB as producers have been arguing, it also does not force a price reduction.
Egyptian production is reportedly ramping up as natural gas supplies return to normal. MOPCO already has two plants operating at 80% of rated capacity, sources said, and other facilities were also said to be nearing an 80% production rate. Only a few smaller companies are taking longer to return to normal output.
Producers need the tons currently being manufactured not only to build reserves, sources said, but also to replace tons sold under swap deals during the short period when production was halted. If production rates continue to increase, one trader said the producers will be in good shape to offer tons for August and September shipment.
For now, the focus is on covering old deals and building reserves, and no new spot sales were reported from the area.
China:
Sources described prilled and granular urea at parity when discussing estimated export prices for the week. Mixed messages are coming out of China, however, with some reports citing an export-equivalent price in the upper-$320s/mt FOB and others claiming a price in the low-$330s/mt FOB.
The variance could easily be attributed to differences in plant location and regional urea demand, one trader noted. Regardless of the price level, however, sources said prices are still too high and reserves too low for government export inspectors, and players do not anticipate any urea exports of significance until September.
Reserves are expected to begin building this month and into August as more plants slowly ramp up production. Some production facilities are coming off routine maintenance turnarounds, while others are reacting to the government’s encouragement to step up production. The government is reportedly anxious to see plants operating at 80% of rated capacity. The average is reportedly closer to 60%, with some plants running as low as 20-30% of capacity.
Some sources are also reporting that the inspection process is being stretched up to 30 days, beyond the usual 14 days. At the same time, the inspectors are also insisting on reviewing the contracts for exports with a particular focus on payment methods. This, said one trader, is adding another two weeks to the review process.
Brazil:
The decrease in domestic corn prices has incentivized growers to delay nitrogen purchases for the second corn crop, typically delivered in the fourth quarter. Ample global supply has further eroded support for higher prices, players said.
Brazil granular urea prices increased $5/mt at the bottom of the range to settle at $360-$365/mt CFR, with new offers reported at $370/mt CFR. Despite widespread availability of sanctioned product during the week, buyers were focused on securing phosphates, resulting in limited demand for nitrogen. Offers were noted at $475-$495/mt FOB Rondonópolis, a $5/mt decline from last week.
January-June imports firmed 8% year-over-year, Trade Data Monitor reported, to 3 million mt from 2.8 million mt. Nigeria shipped 658,000 mt, followed by Oman with 574,000 mt and Qatar with 548,000 mt. Second-quarter imports lifted slightly, to 1.5 million mt from 1.4 million mt in April-June 2023.
June imports totaled 606,000 mt, a more than 50% year-over-year increase, with approximately 25% of the tonnage coming from Oman. Venezuela added 33,000 mt.