US Gulf:

NOLA urea continued to firm, fueled by strengthening prices in several offshore markets. January business was reportedly concluded at $325-$332/st FOB during the week, with February trades quoted in the $328-$335/st FOB range. Those levels were up from last week’s $304-$320/st FOB for January-February business.

Looking ahead, sources quoted March barges at $332-$340/st FOB, with April reported at the $334/st FOB level.

Eastern Cornbelt:

The urea market rebounded to $370-$390/st FOB in the Eastern Cornbelt in the wake of higher NOLA barge values, up another $5-$10/st from last week, with the low end of the range reported at Cincinnati, Ohio.

Western Cornbelt:

Urea firmed to $370-$410/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo., for January pull, and the high in Iowa on a spot basis. “Product availability is still a problem,” commented one St. Louis contact.

California:

While prilled urea prices in California remained at the $580/st level FOB San Diego, granular urea pricing reportedly dropped to $490/st FOB Stockton, down $20/st from last report. No current rail-DEL prices were reported in the state.

Pacific Northwest:

Urea continued at $425-$430/st FOB in the Pacific Northwest, with the low reported at Rivergate, Ore. Delivered pricing remained at $458-$474/st in the region, depending on location.

Western Canada:

Urea prices were up slightly in Western Canada, to C$650-$655/mt FOB and C$660-$685/mt DEL, above the prior C$635-$650/mt FOB and C$660-$670/mt DEL ranges.

India: 

Even as National Fertilizers Ltd. (NFL) continues to process the paperwork for the 674,000 mt of urea purchased in its latest tender, sources have begun to speculate when the next tender will be called.

So far, the market is divided into two camps. One side has argued that the relatively small amount purchased in the January tender means India will have to call an additional tender in early February. The other side, pointing to India’s estimated 7 million mt in reserves, has argued that no new tender is needed until after the current tender’s Feb. 29 shipping deadline.

Russian prilled urea loading from the Black Sea is expected to be shipped on time. However, if the situation in the Red Sea deteriorates further, sources said delivery could come later than NFL had initially expected.

For now, sources said Russian producers and the traders handling Russian tons expect to ship the estimated 400,000 mt of prilled urea to India through the Suez Canal and Red Sea. However, it has become more difficult to find vessel owners willing to send their ships into the area. Even if a vessel can be found, the insurance rates for vessels entering the Red Sea are rising daily, sources noted.

The increased costs related to transiting the Suez Canal and Red Sea will not fall to the Indian buyer. Depending on the deal cut between Russian producers and the traders servicing their tonnage, the extra expense will either be reflected in a lower netback to the producers or a hefty charge against the trader, sources said. There are already reports that some Russian producers have resisted lowering their netback to accommodate the increased freight costs.

Black Sea:     

Sources confirmed that 400,000 mt of prilled Russian urea will be sent to India to cover awards from the NFL tender. Of that amount, 150,000 mt will be sent to West Coast ports, while the remainder will be sent to higher-priced East Coast facilities.

Many are questioning how the urea will be shipped to India. The threats to the shipping lanes in the Red Sea have many carriers rerouting their vessels around the Cape of Good Hope. So far, said sources, the Russian producers and traders handling the sales to India appear to be planning to use the shorter Suez Canal/Red Sea route.

There were reports this week that non-Russian granular urea was offered at $340-$345/mt FOB. At least 10,000 mt was sold to a European buyer at $340/mt FOB, sources said, up from previous deals reported in the upper-$320s/mt FOB. The increase in granular prices pushed prills higher as well, and pricing is now reported at $250-$280/mt FOB.

Any effort to increase prilled prices could bump up against higher freight costs to India, however. Even with the Red Sea route, insurance rates are rising rapidly. If the danger increases, the cargoes will be forced to take the longer and more expensive route around the Cape of Good Hope.

Either way, said sources, producers will face pressure from their trader allies to reduce the netback rather than stick the traders with the increased costs.

Indonesia:     

Indonesian export permits for 2024 have not yet been completed by the relevant government agencies. Some traders tied the slow, bureaucratic process to the Feb. 14 national election, though others described the pace as normal for the Indonesian government.

The delay in authorizing the export permits is not expected to affect the 12,000 mt of prilled urea and 45,000 mt of granular urea purchased by Ameropa last week for $324/mt FOB. Sources said the paperwork should be concluded by the end of this month or early February, which fits with the reported shipping window for the purchased tons.

Trade Data Monitor reported January-November urea exports at 1.1 million mt, a 35% year-over-year decrease from 1.7 million mt. Indonesia exported 157,000 mt in November, up 70% from 92,000 mt in November 2022. India took 82% of the month’s exports with 129,000 mt, followed by Vietnam with 15,000 mt.

Southeast Asia:         

Brunei Fertilizer Ind. (BFI) called an auction offering 30,000 mt of urea, sources reported. While BFI usually relies on contract sales instead of spot deals, the company occasionally offers a cargo or two to test the market. The current auction was seen by the industry as a price discovery move.

BFI also reportedly covered an award into Nepal under a tender by Krishi Samagri Co. Ltd. (KSCL) that closed in December 2023. The price was reported at $450/mt CIP with a netback of around $340/mt FOB.

Petronas, in Malaysia, announced it would close its Gurun plant for a routine maintenance turnaround on Feb. 1. The company expects the 700,000 mt/y facility to be down for 45-60 days.

With China out of the export market, Petronas cutting back on output, and Indonesia still working to process export permits, sources said the supply of urea into Southeast Asia is limited. Arab Gulf producers are reportedly looking to cover some of the demand. By moving cargoes East, the Arab producers can avoid the dangerous Red Sea.

Even with the possibility of Arab Gulf urea entering the area in larger numbers, sources expect prices to continue inching upward.

Middle East: 

Two late-week deals moved prices to $350-$360/mt FOB. SABIC reportedly sold a February cargo of 30,000 mt of granular urea at $350/mt FOB, followed quickly by a deal from SIUCI out of Oman in the high-$350s/mt FOB.

The price increase was not surprising, said sources. The lack of Chinese product for buyers in Southeast Asia, along with the dramatic run-up in Egyptian prices last week, led traders to expect higher pricing out of the Arab Gulf.

Only about 270,000 mt will be sent from the Arab Gulf to India under the recent tender. Sources said producers were unwilling to accept prices near $300/mt FOB for large quantities of product, and producers saw better price possibilities in East Asia due to the lack of Chinese tonnage and limited availability from Indonesia and Malaysia, one trader said.

There are rumors that Arab Gulf producers might also play a major role in the upcoming Ethiopian Agricultural Businesses Corp. (EABC) tender. While Egypt has been increasing its presence in recent EABC tenders, sources noted that its cargo will have to transit areas where vessels have been attacked. While the Arab Gulf tonnage will also face some dangerous areas, it is not expected to be as vulnerable as the Egyptian ships.

Egyptian producers took a break this week after running prices up to $375/mt FOB last week, a $40/mt week-over-week increase. Sources said discussions are now starting at $380/mt FOB, with some producers arguing for even higher prices.

AOA, in Algeria, is reportedly sold out through February, and at least five vessels are lined up to take 20,000 mt each. The cargoes were said to be destined for European buyers covering positions.

China:

No urea exports of any form are being allowed to leave China. Even the urea used in pollution control devices, such as the material needed by South Korea, is not being allowed out, sources noted.

The restrictions on exports will ensure a steady buildup of domestic urea reserves, and production has reportedly picked up to 159,000 mt/d, an 8,000 mt/d increase over prior levels.

With the country’s stockpiles of urea growing, the export-equivalent price at the factory gate has declined to the upper-$320s/mt FOB. However, that estimated price is meaningless, one trader noted, because the government is not allowing any tons to leave the country.

Nepal:

An award was reportedly made in a KSCL tender that closed late last month. The award was issued to Sun International with tonnage from Brunei at $450/mt CIP Nepal.

The cost of servicing a Nepal tender usually excludes material sourced from Southeast Asia, sources noted. With the absence of Chinese urea in the global market, however, KSCL had little choice but to accept the offers that were available.

Ethiopia:       

EABC called a tender for 365,000 mt to close on Jan. 29. The company wants offers to be submitted on an FOB basis in 50,000 mt lots, with shipment in February-June. EABC closed a tender in November 2023 for the same amount. In the end, it secured only 150,000 mt, with December and January shipments originating from Egypt and Nigeria.

For the current tender, sources expect to see more participation from Arab Gulf producers. The limited tonnage that producers are supplying to India has left them with more product available for other buyers. EABC is expected to pay a premium for the Arab Gulf material, as well as for the Egyptian tons that are also expected to be offered.

Egyptian producers have been stepping up their participation in Ethiopian tenders in recent years. In 2023, Egypt supplied 506,000 mt of Ethiopia’s total 765,000 mt imported for the year.

South Korea:

Urea imports to South Korea fell 18% in 2023, Trade Data Monitor reported, to 723,000 mt from 879,000 mt in 2022. China led suppliers with 420,000 mt, for 58% of the imports, followed by Qatar with 114,000 mt. December imports stood at 55,000 mt, down 18% from 67,000 mt in December 2022.

Brazil:

Urea prices rose to $355-$360/mt CFR in Brazil, with players abandoning last week’s $340/mt CFR high to make room for a new range of offerings. Offers were noted up to $370/mt CFR and above on reports of production issues in Iran and rising prices in the Arab Gulf and Middle East, while most bids were noted closer to $350/mt CFR.

The rising CFR market pushed Rondonópolis prices higher, to $510-$520/mt FOB ex-warehouse. No offers were reported below that level, and some vendors were noted withdrawing their price lists. No new negotiations were reported for the week as buyers remain focused on the soybean harvest, while suppliers are focused on deliveries for the second corn crop.