US Gulf:
NOLA urea covered
a broad range during the week, but prices for both prompt and forward barges
continued to fall. Prompt and loaded barge trades were reported in the
$355-$370/st FOB range during the week, down from the prior week’s $383-$392/st
FOB range, while full-April business was pegged at $320-$335/st FOB, down from
last week’s $340/st FOB low.
Eastern Cornbelt:
Urea slipped to $440-$460/st FOB terminals in the
Eastern Cornbelt, down $10/st from last week at the low end of the range, with
the bottom confirmed out of several Illinois River terminals and the high at
Cincinnati, Ohio. In the Great Lakes region, the latest urea offers in Michigan
were pegged at $490-$495/st FOB for April-May tons.
Western Cornbelt:
Urea pricing dropped to a broad
$420-$460/st FOB in the Western Cornbelt, down from the prior week’s
$450-$465/st range, with the low confirmed at St. Louis, Mo.
Southern Plains:
Urea
prices were down slightly in the Southern Plains. The latest offers FOB
Catoosa/Inola, Okla., were pegged in the $470-$485/st FOB range, down from
$495-$510/st FOB at last report, while the Houston, Texas, market was quoted at
the $500/st FOB level in early April.
South Central:
Urea prices edged down to $430-$470/st FOB terminals in the South Central region, with the low confirmed at Convent, La., and the high out of river terminals in Arkansas. Kentucky sources pegged the latest offers at $450-$460/st FOB most Ohio River terminals, with prices at Memphis, Tenn., quoted in the same range.
Southeast:
Urea
firmed to $440-$460/st FOB port terminals in the Southeast, with the low
confirmed at Wilmington, N.C., and the high at Charleston, S.C. Rail-DEL offers
were also pegged at the $450/st level in Virginia and $460/st in Pennsylvania
during the week.
India:
It
now appears that Rashtriya Chemicals and Fertilizers Ltd. (RCF) will
purchase just 724,150 mt through its March urea tender. Of that amount, 474,150
mt will go to ports in West Coast India and the remaining 250,000 mt will ship
to East Coast facilities.
Initial
reports indicated that RCF would attempt to buy 1 million mt in the tender.
However, as the April 2 deadline approached for companies to accept the L1
prices of $339/mt CFR for the West Coast and $347.70/mt CFR for the East Coast,
it appeared that no more than 810,000 mt would be offered. That number moved
lower after traders reevaluated their positions and as RCF disqualified at
least one company from contention.
| West Coast – $339/mt CFR |
|
Offering Company
|
Quantity (mt)
|
| Liven – L1 |
50,000
|
| OQ Trading |
200,000
|
| Total – West Coast |
250,000
|
| East Coast – $347.70/mt CFR |
| Offering Company |
Quantity (mt)
|
| Samsung – L1 |
90,000
|
| Aditya Birla |
200,000
|
|
Ameropa
|
47,150
|
| Agri Commodities |
47,000
|
|
Fertiglobe
|
45,000
|
|
Keytrade
|
45,000
|
| Total – Total East Coast |
474,150
|
| |
|
Total
|
724,150
|
Material
for the awards will be sourced from the Arab Gulf and Russia, players said,
with no Chinese material expected in the mix. The price gap between the East
and West Coast offers makes sending Arab Gulf product to the East Coast a
better deal, traders noted.
There
is typically a $5/mt premium on shipping Arab Gulf urea to India’s East Coast.
The nearly $10/mt difference between the tender’s East Coast and West Coast
prices will enable Arab Gulf suppliers to earn a better netback. The same is
true for product coming from Russia, both from Baltic and Black Sea ports.
Going
into the tender, sources said there was no need for RCF to make a large
purchase. February reserves were placed at slightly more than 7 million mt. As
this week closed, the government revealed that March reserves had moved up to 8
million mt, largely thanks to increased domestic production.
Sources
previously said that India could have gone longer without calling a tender
because of the amount of urea it had on hand. However, they also pointed out
that India is in the middle of its national elections. It was important to the
ruling party that rural voters see the government doing all it can to ensure a
plentiful urea supply for the upcoming application season.
RCF’s
small purchase may also push prices lower in the next tender. Sources noted
that by taking less than 1 million mt, RCF left product in the hands of Arab
Gulf and Russian suppliers. While there is some demand from Australia and
possibly Brazil, these buyers are not expected to soak up all of the market’s
excess product. At the same time, Chinese urea is expected to return to the
global marketplace in the second half of May, adding more supply to an already
saturated market.
The
next tender could be called as early as May 20 – the shipping deadline for the
current RCF tender – though sources said the call is unlikely to come before
early June.
Black
Sea:
Export
urea prices from the Black Sea were reported softening to $275-$290/mt FOB,
even lower than what some traders expected based on the West Coast India price
from the RCF tender. Looking at the freight rate, some had suggested the price
would fall in the upper-$290s/mt FOB.
At
the same time, Turkish buyers secured a few small granular urea cargoes from
Black Sea ports at $315/mt CFR. The product showed a $290/mt FOB netback into
the Black Sea. Granular urea is normally sold at a $5-$7/mt premium to prilled.
If the estimated netbacks from the Indian tender and deals into Turkey hold,
however, the differential will be reversed.
While
Turkey’s buyers continue to look for low-cost opportunities such as the recent
Black Sea granular purchases, the bulk of the country’s urea is received from
Oman and Egypt. Egypt has steadily expanded its share of the Turkish import
market over the past four years.
January-February
urea imports firmed 24% year-over-year, Trade Data Monitor, to 691,000
mt from 556,000 mt. Oman sent 325,000 mt, followed by Egypt with 267,000 mt.
February purchases were put at 410,000 mt, up 59% from the 258,000 mt received
in February 2023.
Mediterranean:
Offers for fresh urea tons in Italy have
fallen to $360-$365/mt CFR, but demand for new tons is muted due to planting
delays. With confirmed sales ex-Egypt down to $328/mt FOB this week, it is
expected that Mediterranean urea will continue to experience downward pressure.
Southeast
Asia:
Buyers
are said to be getting anxious for product. Tons normally sourced from China
have not been available for the past several months and are not expected to be
seen until late May. At the same time, product from regional producers such as
BFI and Petronas is fully committed to contracts. The only spot material
available is from Indonesia.
This
week saw no granular urea business in the region, with prices at Indonesia
holding at the $354-$359/mt FOB level and Malaysia lacking spot availability
through April. Theoretical netback calculations from the L1 in India’s RCF
tender would indicate about $320-$330/mt FOB at best.
Given
a lack of any additional market direction in the region, this week’s Southeast
Asia granular urea price was noted at $320-$360/mt FOB.
Indonesia:
Pupuk
Holdings appears to be awaiting new export permits before offering more tons
for sale. Sources said the permits should be issued soon, allowing for larger
cargoes of granular urea to be released once again.
Urea
exports from Indonesia stood at 118,000 mt in January-February, Trade Data
Monitor reported, a sharp rise from 100 mt shipped through same period of
2023. Australia grabbed 57% of the exports with 67,000 mt, Thailand took 20,000
mt, and the Philippines bought 11,000 mt. Indonesia shipped the entire 118,000
mt in February.
Middle
East:
The
bulk of the material offered into the RCF tender from the Arab Gulf appears to
be destined for India’s East Coast, with netbacks estimated at $330-$335/mt
FOB. At the same time, the urea heading for the West Coast shows a netback of
$325-$330/mt FOB. Sources said the pricing is valid for both prills and
granular.
Soon
after the RCF numbers were released, reports of a granular urea sale to
Australia from Qatar circulated at $335/mt FOB, while another granular deal to
Thailand was noted at $330-$335/mt FOB, confirming the higher price range for
Arab Gulf material.
For
now, producers claim they are in decent shape for April. However, there are
reports that May orders are not where sellers would like them to be. By taking
less than 1 million mt, RCF did not absorb the surplus tonnage that was expected
for May shipments. Unless other major buyers step up, sources expect prices to
soften for late May and June shipments, just as more Chinese urea hits the
marketplace.
Helwan
closed a 20,000 mt granular urea deal early in the week at $328/mt FOB, while a
5,000 mt deal with Kima quickly followed at the same price. Producers went
quiet for the rest of the week.
Egyptian
urea has always played an important role in the southern European markets,
largely because of the favorable tax rates. In recent years, however, Egyptian
urea has also had an impact on the Turkey and Ethiopia markets. In Turkey,
Egyptian volumes are surpassed only by imports from Oman, but the margin thins
each year. Egypt dominated the Ethiopian market in 2023, supplying 66% of the
urea imports.
China:
Sources
do not expect to see any Chinese product in the RCF tender awards. The timeline
to approve a shipment of urea to India under the tender is too close to the May
20 shipping deadline set by RCF, traders said.
With
no exports planned from China until late May, the domestic prilled urea price
took another dip. Sources reported the ex-plant price at $275-$278/mt FOB
during the week. Once costs are added to cover transporting the urea to port
and completing the export-related paperwork, the export-equivalent price was
estimated at $300-$305/mt FOB, down from last week’s price.
At
the same time, sources working the math for an estimated export price using the
RCF tender results showed a netback of $330-$335/mt FOB, based on the tender’s
East Coast price. There are reports that China’s limited granular available for
export could also be offered at that level.
Industry
watchers are expecting lower prices in the second half of the year, due both to
the return of Chinese urea in the market and because RCF failed to absorb all
the surplus urea already available in the market.
Ethiopia:
Ethiopia
imported 247,000 mt of urea in January-March, according to Trade Data
Monitor, up 64% from the 150,000 mt received in first-quarter 2023. Egypt
supplied 82% of the tonnage with 203,000 mt, followed by Nigeria with 44,000
mt. March imports were 51,000 mt, a slight increase from 50,000 mt in March
2023, with all the material sourced from Egypt.
Brazil:
Brazil urea prices
lost ground for a fourth consecutive week. Imports fell to $330-$340/mt CFR, a
$5/mt decline, while the paper market was noted trading at $310/mt CFR. Players
reported offers from North Africa and the Arab Gulf against bids in the $300-$320/mt
CFR range.
Following
the import market lower, Rondonópolis urea prices dropped to $475-$490/mt FOB
for prompt deliveries, below last week’s $475-$500/mt FOB. Sellers are
targeting crops to be planted in the first half of the year, while interest
remains slow for the region’s next corn safrinha. Sources expect safrinha
demand to begin ramping up in July.
