US Gulf:

New NOLA urea business was reported in the $325-$330/st FOB range for December-January during the first half of the week, up significantly from last week’s $295-$310/st FOB range.

Prices appeared to soften as the week progressed, however, with trades at $315/st FOB reported on Dec. 7 for both December and January tons. Rumors of business below the $315/st FOB level could not be confirmed.

Eastern Cornbelt:

Urea prices in the Eastern Cornbelt inched up on reports of slightly higher NOLA barge values. The regional market was quoted at $380-$400/st FOB for the latest offers, with the low reported at Cincinnati, Ohio, up from last week’s $365-$375/st FOB range at that location.

Western Cornbelt:

Urea prices were up slightly, firming to $370-$400/st FOB in the Western Cornbelt, with the St. Louis, Mo., market pegged at the $370-$380/st FOB level. The latest offers FOB Catoosa/Inola, Okla., were quoted in the $375-$385/st FOB range in early December.

Northern Plains:

The latest delivered urea offers in the Northern Plains were reported at $425-$455/st, below the prior $430-$470/st DEL range. The St. Paul, Minn., urea market was pegged at $410-$420/st FOB in early December.

Northeast:

Urea prices were down in the Northeast, with reports of new offers falling to $400-$410/st FOB in the region. The low was reported at Fairless Hills, Pa., for December-January tons, down from $440/st FOB in mid-November.

Eastern Canada:

The urea market was steady at C$710-$725/mt FOB in Eastern Canada, unchanged from last report.

India: 

Market players are becoming increasingly convinced that no new tender will be called until at least mid-January. Some believe the tender call may be delayed until late January or early February.

The delay in calling the tender, said one source, is not expected to hurt supplies for the March application season. Stockpiles were reportedly higher at the end of November than initially expected, and November sales fell below predicted levels. The extra tonnage will allow for a longer wait for the next tender.

Due to its newly instituted export restrictions, China is not expected to play a role in the next tender. Sources were initially concerned that a late-December or early-January call could mean a dramatic increase in the prices offered. However, the longer India waits to call the tender, said one trader, the more likely that offer levels will fall below the current $400-$404/mt CFR.

India remains the single largest buyer of urea in the global market. While other large buyers such as Brazil will also be in the market for urea in the first quarter of the new year, and Chinese product will not be available, sources still expect there to be more than enough urea on hand to allow for a drop in prices.

The Chinese government has also been promoting policies that are designed to reduce its dependency on imported urea, and it is likely the government will lean on domestic urea plants to step up production, sources said. At the same time, the Indian government has continued to promote the use of liquid Nano urea, which was introduced to reduce the amount of regular urea used.

Even with the steps India has taken to limit its urea imports, the strong global price still requires the government to provide more subsidies for urea buyers. The government this week announced an additional $1.6 billion to cover fertilizer subsidies for the current fiscal year, taking the total fertilizer subsidy budget to $216 billion, a significant drop from the FY2022/23 budget of $300 billion.

Black Sea:     

Discussions for prilled urea are attempting to push the price into the $270s/mt FOB, sources said. No deals have yet concluded at that level, however, leaving the price at $280-$290/mt FOB.

Indonesia:     

A selling tender this week showed a slight increase in granular urea prices. Pupuk offered 30,000-40,000 mt for January shipment, with the final price reported at $342.50/mt FOB for 30,000 mt.

Other smaller deals, based on the last tender price of $340/mt FOB, were also reported.

Bids for prilled urea were noted at $344/mt FOB, a premium to the granular product. The bump in pricing may have come because China will no longer be supplying urea to regional buyers under its new export regime, sources speculated.

Middle East: 

Urea prices were being discussed at $320-$340/mt FOB during the week, sources said, despite the lack of any new spot deals to test the market. The lower price ideas – down from the mid-$380s/mt FOB derived from the last Indian tender – came from calculating the estimated netback from potential awards in the recent Ethiopian Agricultural Businesses Corp. (EABC) tender. Traders also calculated the Arab Gulf-equivalent price from sales of Egyptian urea into Europe.

For now, producers are wrapping up shipments to India from the last tender. They will then begin fulfilling long-term deals with buyers for first-quarter deliveries.

Arab Gulf product is expected to play a major role in the next Indian tender. With China out of the exporting business through at least March 2024, only the Arab Gulf has the capacity to fulfil most of India’s needs, sources said.

Iranian urea exports fell slightly in January-November, according to Trade Data Monitor, to 4.5 million mt from 4.6 million mt reported one year earlier. November exports were also off, slipping to 399,000 from 475,000 mt in November 2022, a 16% decline.

Despite their best efforts, Egyptian producers finally accepted deals below $350/mt FOB. Producers had for weeks accepted ever-lower prices in the $350s/mt FOB, all while strengthening their opposition with each price drop. As late as last week, producers reportedly told potential buyers that $350/mt FOB was the absolute floor.

Sales reported this week at $345-$350/mt FOB were confirmed by producers. Some traders claim some of the deals may have dipped to $343/mt FOB, though nothing was confirmed at that level. Most of the business was for larger lots, such as 51,000 mt slated for January loading to cover an award into the EABC/Ethiopia tender.

Ethiopia:       

Awards have apparently been issued in the EABC tender. Sources reported that 51,000 mt is already scheduled to load from Egypt in January under the terms of the tender. Other awards, reportedly based on Arab Gulf product, are slated for January and February loading.

Trade Data Monitor pegged January-November imports to Ethiopia at 765,000 mt, a 68% increase on the 457,000 mt received through the first 11 months of 2022, while November imports of 157,000 mt were up significantly from the 301 mt recorded in November 2022. Egypt accounted for 105,000 mt in November, followed by Oman with 52,000 mt.

China:

While the decision to restrict urea exports through the first quarter of 2024 – and then place a quota on further sales into 2025 – caused a major stir in the global market, nowhere was the outrage heard louder than from South Korea.

The Seoul government dispatched trade diplomats to China to work out a deal to secure the urea it needs. All told, sources estimated that South Korea needs to import at least 1 million mt/y for its emissions control operations alone.

South Korea requires the urea as a part of its antipollution infrastructure. Korean news outlets said the country had enough urea on hand to cover its needs for about 2-3 months. After that, said reports, diesel vehicles would have to remain off the roads unless more urea was found. One trader said the South Korean government may also be concerned that its diesel-powered military vehicles might be incapacitated at a time when the North Korean government is becoming increasingly provocative.

The country previously faced a similar situation when China stopped urea exports to support its domestic market several years ago. At the time, the South Koreans worked out a government-to-government deal with China to get the urea it needed. A similar deal may have already been reached.

Other buyers will have to look to other sources, however.

Any tonnage already cleared by customs officials will be allowed to leave. Sources said most of the material is comprised of orders booked under the last Indian tender, and it remains unclear whether some newer and smaller lots to regional buyers will be allowed to ship. If not, the tons will be sent back from the portside warehouses to inland distribution centers.

Traders said it now looks as if no one in China will be ready or willing to talk about potential sales for mid-2024 until after the February Lunar New Year holiday, at the earliest.

Even though exports are not allowed, sources have calculated the potential price. Granular urea is reportedly being discussed in the $370s/mt FOB, while prills, based on ex-factory prices, were estimated at $355-$365/mt FOB.

Brazil:

Urea prices in Brazil firmed to $350-$355/mt CFR, up from $310-$320/mt CFR in the prior week. Sources said improved weather conditions and favorable barter ratios have boosted safrinha demand, while wait times of 30-40 days at major Brazilian ports have generated a premium for both warehouse and inland product.

After falling 12% in recent weeks, from an average of $520/mt FOB ex-warehouse on Nov. 17 to an average of $457.50/mt FOB last week, Rondonópolis prices began to recover on Dec. 1, sources said. Suppliers were noted pulling their offers in the expectation of higher prices in the week ahead.

Negotiations tracked in a wide $460-$495/mt FOB ex-warehouse for the week, with offers at $505-$510/mt FOB reportedly failing to transact. While grower demand continues, the sudden price increase has scared some from the market, sources said. Despite the increase, some suppliers do not expect the firming trend to continue and are likely to accept lower offers.

Year-over-year urea imports were steady in January-November, Trade Data Monitor reported, at 6.4 million mt. November imports increased from November 2022, however, rising to 835,000 mt from 683,000 mt.

Brazilian buyers reached far and wide for their product. The usual top-three suppliers – Nigeria, Oman, and Qatar – accounted for about 67% of all imports. However, 32,000 mt of Indonesian urea found its way to Brazil, the first Indonesian urea to reach the country since 2021. Brazilian buyers have purchased a total of 68,000 mt from Indonesia over the past seven years.