All posts by mickeybarb@charter.net

Yara Addresses Global Food Security Fears, Alternative Materials Sourcing, Zero Injuries

News, News Briefs, Scandinavia

Yara President and CEO Svein Tore Holsether this week reiterated that although Yara’s business is flexible and resilient, the impact of the war in Ukraine on global food security will be “dramatic.”

“It’s no longer whether there will be a food crisis, but rather how large it will be,” he told participants at a company earnings call on April 27.

“We repeat our calls for government action to strengthen food supply chains and decrease dependency on Russia,” said Holsether.

Yara’s direct investments in Russia and Ukraine are limited, but the company has previously sourced phosphate, potash, and ammonia from Russia, and purchases significant volumes of natural gas from Russia for its production in Europe.

Yara Executive President and CFO Thor Giæver clarified to the earnings call participants that Yara did not have a general Russia ban in place, but, as previously reported by the company, Yara has stopped all sourcing from suppliers linked to Russian sanctioned entities and persons following the implementation of additional sanctions against Russia implemented on March 9 (GM March 11, p. 30), and said it is utilizing its global sourcing, production, and distribution capabilities with the objective to keep supplying customers and secure continuity in food supply chains.

Holsether said Yara continues to supply fertilizers into Ukraine, albeit “small volumes,” due to logistical challenges.

Responding to an analyst’s question about the company’s raw materials sourcing, Giæver agreed that many supply chains of raw materials were having to be reset in current times.

“There are two effects at the moment. There is both some demand destruction for P and K, and there is also supply disruption for NPK producers, including ourselves,” he said.

But Giæver reminded that Yara has always had a number of other suppliers, “some not as big obviously as the Russian ones,” but he said the net effect of this for the time being is that Yara is able “to manage the totality” and that it can continue to operate. He also noted that Russia is still exporting potash.

“Right now, it is more on the question of demand than the company’s own product availability,” Giæver said.

While reporting that the company’s performance related to safety continues to be “at a low and industry leading level,” Yara acknowledged to earnings call participants “the serious accident” in March at its Ambès plant in southwestern France during the ammonia loading of a truck (GM March 25, p. 28).

The company confirmed the accident caused a leak that “was quickly controlled and did not go beyond the site,” but that a Yara France worker and a contractor were injured and suffered burns. Local media outlets at the time had reported some 14 workers were injured, including two “seriously.”

Ammonium nitrate (AN) is among the products produced at the Yara Ambès site, which has some 0.5 million mt/y of AN capacity.

“This and similar accidents illustrate that we still have more work to do to reach our ambition of zero injuries,” Holsether said.

Putin Orders Fertilizer Exports Quota Extension

News, News Briefs, Russia

Russian President Vladimir Putin has ordered the extension of quotas on Russian fertilizer exports to be extended to Aug. 31, Bloomberg reported on April 27, citing Interfax.

The fertilizer export quotas had been set to run until May 31.

Putin also ordered further quarterly extensions of the restrictions to be considered.

The Russian state-owned news agency Tass earlier reported that Russia would extend its fertilizer export quota to the 2022-2023 agricultural year, citing Deputy Prime Minister Viktoria Abramchenko.

The Russian government has also announced new allocations for nitrogen exports. The total nitrogen allowed for export has been set at 231,000 mt for April 26 through May 31 (see Markets).

Russia had increased the export quotas at the beginning of April for nitrogen fertilizers by 231,000 mt and for complex fertilizers by 466,000 mt, respectively (GM April 1, p. 26). The export quota for urea for April was increased by 280,000 mt to account for the launch of new production capacity by the Acron Group.

The Russian government introduced export quotas for nitrogen fertilizers and complex fertilizers containing nitrogen on Dec. 1, 2021, as well as on DAP and MAP, in a bid to safeguard local supplies and stabilize pricing for the country’s farmers, and were to run until May 31 (GM Nov. 5, 2021).

The original cap on nitrogen fertilizer exports was set at 5.9 million mt, and 5.35 million mt for complex fertilizers.

Acron to Delist from London Stock Exchange

London, News, News Briefs, Russia

PJSC Acron Group, Moscow, said on April 27 it is seeking to delist its global depositary receipts (GDRs) from the London Stock Exchange (LSE) Main market.

The Russian fertilizer group said it is required to terminate its GDR programs because of the revisions to Russian laws that ban the circulation of depositary receipts that represent Russian issuers’ shares and enforce cancellation of the existing depositary receipt programs.

The LSE listing cancellation is expected to become effective at 8:00 a.m. (GMT) on May 25, with May 24 being the last day of GDRs trading on the LSE.

Acron said GDR holders may convert their GDRs into Acron ordinary shares under the depositary program termination procedure.

Azomureş to Restart Production at Limited Levels

Eastern Europe, News, News Briefs

Romania’s biggest fertilizer producer, Azomureş SA, said on April 26 it will restart production in early May, a month later than anticipated by the company in late March.

The company anticipates limited production of ammonium nitrate, calcium ammonium nitrate, urea, and melamine in the first period, with NPK to follow in the coming months.

Azomureş said on March 28 it would resume production in “the first part of April” if the European Commission (E.C.) granted a financial aid package designed to benefit European energy-intensive fertilizer companies (GM April 1, p. 27).

In early April, the Commission issued a framework for Member States to support essential agricultural companies. Azomureş noted that Poland and Germany already have put forth substantial aid packages, of respectively, €836 million and €20 billion, with special provisions for fertilizer manufacturers.

“The Romanian government has not yet put anything precise in place, but the Ministries of Energy, Economy, and Agriculture are working in consultation with industry participants like Azomureş to issue a similar aid package within the E.C. framework,” the company said.

“All of this leads to our restart of production in early May,” it said.

However, Azomureş cautioned that with natural gas supply remaining tight and “at price levels that lead to high fertilizer cost levels even with government aid,” until the Romanian state aid package is confirmed, the company will remain at below capacity production. At the same time, it believes it is essential for a successful 2022-2023 agricultural campaign to not delay a production restart further.

The company temporarily stopped fertilizer production on Dec. 17 last year due to “the very high prices” for energy, natural gas, and electricity, saying “the resulting fertilizer prices based on the prevailing energy costs would not be affordable to distributors and farmers” (GM Dec. 17, 2021; Dec. 10, 2021).

The Târgu Mureș-based company’s annual fertilizer production under normal operating conditions is 1.6 million mt, with approximately 75 percent of the output destined for Romanian farms, according to the company. It produces granular and prilled AN, granular CAN, granular urea, and NPs as well as NPKs.

Azomureş has been owned by Swiss Group Ameropa, via a subsidiary, since 2012.

Israeli Court Dismisses Application for Certification of Environmental Class Action

Israel, News, News Briefs

ICL Group, Tel Aviv, reported the Be’er Sheva District Court on April 21 dismissed “with prejudice” the application for certification of a class action that was filed on March 18 against the company’s Rotem Amfert Negev Ltd. and Periclase Dead Sea Ltd subsidiaries.

The class action was requesting compensation of about NIS1.4 billion (approximately $435 million) regarding environmental hazards that were caused due to leakage of wastewater to the groundwater aquifer in the vicinity of the Bokek stream, which began in the 1970s, while ICL was government owned, and ended by the year 2000, ICL said in an April 25 statement.

The court’s decision to dismiss “with prejudice” the application means that the plaintiff cannot refile the same claim again in that court.

K+S Participates in Water Recovery Project

Germany, News, News Briefs

K+S Group, Kassel, said on April 26 it is now participating in a joint project to test a new process for treating saline water and recovering dissolved minerals. The joint project, which is funded by the German Federal Ministry of Education and Research and is headed by K-UTEC AG Salt Technologies, will be implemented over the next three years.

In addition to K+S, other partners in the project include the Fraunhofer Institute for Ceramic Technologies and Systems IKTS, Solarspring GmbH, and LMBV mbH.

Using the example of saline waters from tailings piles of the potash industry, it will be investigated whether the membrane distillation process offers advantages in water treatment compared to conventional evaporation on an industrial scale.

STB Holds Hearing on Rail Service Issues: TFI, ARA Urge Action on Fertilizer Delays

Featured, News, U.S.

The U.S. Surface Transportation Board (STB) this week held two days of emergency public hearings to address rail service delays, which included testimony submitted by The Fertilizer Institute (TFI). The STB recently announced it can take emergency authority to address the service delays, and the board is now taking public comments on that issue.

The “Urgent Issues in Freight Rail Service” hearing came less than two weeks after CF Industries Holdings Inc. informed customers it serves by Union Pacific (UP) rail lines that railroad-mandated shipping reductions would result in nitrogen fertilizer shipment delays during the spring application season, and that it would be unable to accept new rail sales involving UP for the foreseeable future (GM April 15, p. 1).

CF Industries ships to customers via Union Pacific rail lines primarily from its Donaldsonville Complex in Louisiana and its Port Neal Complex in Iowa, serving key agricultural areas such as Iowa, Illinois, Kansas, Nebraska, Texas, and California. CF said the products that will be affected include urea, UAN, and diesel exhaust fluid (DEF).

“In recent weeks the board has received communications from a broad range of stakeholders of serious problems affecting the freight rail network, namely inconsistent and unreliable service, which has had serious impacts on rail users, particularly those shipping agriculture and energy products,” STB Chairman Martin Oberman said at the start of the hearing on April 26.

In submitted testimony, TFI cited several issues that it claims have led to reduced rail service, high shipping rates, and poor cycle times, including the implementation of precision scheduled railroading (PSR), a lack of competition, and a lack of structural and market-based incentives to be customer-oriented.

Union officials who testified at the hearing also blamed staffing cuts and the implementation of PSR efficiencies for the rail delays. The STB heard additional testimony from Department of Transportation Secretary Pete Buttigieg and Department of Agriculture Deputy Secretary Dr. Jewel Bronaugh, both of whom mentioned the challenges facing fertilizer shippers, as well as other agriculture groups such as the American Farm Bureau Federation and the National Grain and Feed Association.

“Railroads are critical to the on-time delivery of fertilizer to farmers exactly where and when they need it,” said TFI President and CEO Corey Rosenbusch. “The ag economy relies heavily on dependable rail service to get inputs to farmers. The inclusion of so many other groups experiencing the same challenges as the fertilizer industry shows that these issues are felt broadly, are having negative impacts, and must be addressed through modern reforms.”

The Agricultural Retailers Association (ARA) also issued a statement on April 24 addressing UP’s decision to “selectively reduce service to certain customers … without apparent regard for existing contracts or the essential nature of timely fertilizer deliveries.” ARA said it believes UP has “subsequently negotiated some flexibility back for fertilizer suppliers during the spring season,” though it cautioned that there are still likely to be impacts to fertilizer customers.

ARA said it would be submitting testimony to the STB urging federal action on “three urgent matters.” These include rail reforms to restrain the monopolistic behavior of railroads; the suspension of import duties on UAN from Trinidad and Tobago “at least until the market returns to more normal conditions;” and expanding biofuel usage and increasing the supply of domestically produced fuel, especially natural gas, which ARA said “would reduce the cost of a critical input in the nitrogen fertilizer production process.”

ARA said the import duties on UAN “have priced those supplies out of the market” when imported product typically accounts for 85 percent of the UAN used on the East and West Coasts. “By preventing access to imports, these duties make domestic users totally dependent on domestic producers and domestic logistics to secure their supplies of fertilizer,” ARA said “UP’s decision to cut back available logistics in an already-tight supply situation underscores the cost and risk of leaving these duties in place.”

TFI Criticizes Federal Effort to Undo 2020 NEPA Permitting Reforms

News, News Briefs, U.S.

The Fertilizer Institute (TFI) on April 22 issued a statement criticizing the Council on Environmental Quality’s (CEQ) final rulemaking reversing 2020 National Environmental Policy Act (NEPA) updates, saying the new rule will make the “already costly and time-consuming process of obtaining required permitting even more burdensome.”

Under then President Donald Trump, CEQ in July 2020 made wholesale revisions to the NEPA regulations for the first time in more than 40 years. In response to President Joe Biden’s Executive Order 13990 on Jan. 20, 2021, however, CEQ said it would engage in a “comprehensive review” of the 2020 rule and launch a phased approach to amending the NEPA regulations.

CEQ issued an Interim Final Rule on June 29, 2021, which extended the deadline by two years, to Sept. 14, 2023, for Federal agencies to develop or update their NEPA implementing procedures to conform to the CEQ regulations. CEQ issued the Phase 1 Final Rule on April 20, 2022, which the agency said finalizes a “narrow set of changes” to generally restore regulatory provisions that were in effect for decades before the 2020 rule.

CEQ said the final rule changes “better align the NEPA regulations with CEQ and agency expertise, as well as NEPA’s statutory goals and purpose of promoting sound decisions informed by science.” In response, however, TFI said a more efficient permitting process is needed to ensure that critical mining projects in the U.S. have a clear path to compliance and approval.

“Positive steps were made with changes to NEPA in 2020, but those updates have been removed and the permitting process has regressed to the badly ineffective 1978 review process,” TFI said. “This is not progress, this is regression. It’s more red tape, duplicative regulations, and delays that will cost consumers in the end. We are moving in the wrong direction.”

“We have a member company who has already spent over a decade and more than $20 million dollars for a mining project that still has not been approved,” said TFI President and CEO Corey Rosenbusch. “The current fertilizer market has policymakers asking for solutions that will help farmers have an affordable and abundant supply of fertilizer, yet here is a regulation that will do just the opposite. What the administration has done here not only doesn’t help the current market environment, it hurts it.”

TFI said it supports broader permitting reforms as outlined in the Building U.S. Infrastructure through Limited Delays and Efficient Reviews (BUILDER) Act (H.R. 2515), which it said would make environmental reviews more efficient, reduce duplicative regulatory burdens, and provide clear paths to approvals. TFI also noted bipartisan support in Congress for permitting reform, as evidenced in the Infrastructure Investment and Jobs Act passed in 2021.

“Our country has resources, and we should access them responsibly,” Rosenbusch said. “With this move by CEQ, accessibility and the feasibility of utilizing these minerals is thrown into question and the ones who will pay the price for this shortsighted move are individuals and families already struggling with the rising costs of everyday goods.”

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, India, Market Watch, Middle East, North Africa, Northwestern Europe, South Central, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

U.S. Gulf/Tampa:

Tampa for May stands at $1,425/mt CFR. Sources point to new international trades a few hundred dollars lower, however, which could pull Tampa down again in June.

Eastern Cornbelt:

Ammonia pricing remained at $1,450-$1,550/st FOB in the Eastern Cornbelt, depending on supplier and location, with the low reflecting referencing pricing from Koch and the high reported for CF pricing in Illinois and Indiana. The market FOB Lima, Ohio, remained at the $1,475/st level in late April.

Western Cornbelt:

The ammonia market remained at $1,425-$1,450/st FOB in the Western Cornbelt, depending on location, with the low reported at Beatrice, Neb., and the high at Palmyra, Mo., and out of most Iowa terminals. “We’re just in weather-waiting time,” commented one source at midweek. “All across the Cornbelt, we’re running into some pretty big weather issues.”

Southern Plains:

The ammonia market continued to range from $1,250-$1,275/st FOB Enid and Woodward, Okla., up to $1,325/st FOB Pryor and Verdigris, Okla. The last truck business FOB Beaumont, Texas, was reported at the $1,475/st level, down $25/st from last report.

South Central:

Sources continued to quote truck offers for anhydrous ammonia at $1,300/st FOB Donaldsonville, La., and $1,400/st FOB Cherokee, Ala. No prices were reportedly being offered at El Dorado, Ark., or Midway, Tenn. Despite the return to production at Waggaman, La., no current truck pricing was being offered at that location in late April.

Black Sea:

The war in Ukraine is keeping the main ports in the northern part of the Black Sea closed to all traffic. The absence of any ammonia from the area makes price discovery impossible, sources said.

Southern ports of the Black Sea are showing some activity. Sources said the Gas Cobia was slated to unload part of its cargo in Bulgaria this week, but some issues reportedly came up about whether the product was or was not under sanctions. As the week ended, sources said the vessel was at anchorage outside a Bulgarian port.

Small lots of Iranian ammonia are being bought and delivered to a variety of unnamed Turkish buyers, sources said. The deals are not unusual. Turkey is a regular buyer of limited quantities of Iranian product. Of the 116,000 mt Iran exported in the first quarter of this year, Trade Data Monitor reported that Turkey bought about 5,000 mt.

India:

Large ammonia buyers are not venturing into the spot market, sources reported. It seems the main buyers – the DAP producers – are finding it difficult to produce DAP and make a profit, even after the government raised the allowable price and subsidy for DAP. Importing DAP still seems to be the more economical action.

The spot tons that are purchased are by small buyers, said one trader, and most of the cargoes seem to be from Iran. So far this year, India is the single largest buyer of Iranian ammonia. Trade Data Monitor reported that of the total 116,000 mt that Iran exported, India bought 88,000 mt in the first quarter of the year.

Northwest Europe:

The lack of a strong reaction to the Russian move to stop sending natural gas to Poland and Bulgaria, along with a steady flow from North Africa and the Western Hemisphere, has pushed down prices. Sources report the price is now at $1,490-$1,500/mt C&F, with more downward pressure.

Natural gas prices in Europe took a momentary leap, sources said, after the Russian announcement about Poland and Bulgaria. Within a day or so, however, industry watchers said they saw little impact on the overall market, and prices quickly corrected downward. The stability that appears to be found in the gas market is apparently making it easier for ammonia producers to decide to keep running their plants in Europe.

Sources said pressure to lower the Northwest European price even more is coming from the lower Tampa price for May and a stable European market.

Middle East:

Arab Gulf producers continue to cover contracts with little to spare for the spot market. Producers are looking at $1,400/mt FOB, citing the tight balance between supply and demand in the area. Buyers, however, note that they can look from Indonesia to Trinidad for material to back up their bids at $1,000/mt FOB.

Sources said there may be a few extra tons coming out of Ma’aden in May. However, the extra tonnage is not expected to be a major factor in lowering prices. If production ramps up in the third quarter, as expected, prices could soften even as the market looks to replace the tons that can no longer be supplied out of the Black Sea.

North Africa:

Sources said OCP picked up 25,000 mt from Trinidad at $1,125/mt CFR, for an estimated netback of $1,060/mt FOB.

Urea

Black Sea, Brazil, China, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Pakistan, South Central, Southeast, Southern Plains, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf:

NOLA granular barges took a steep drop to as low as $620/st FOB on April 26. The market quickly climbed back up from that point, particularly after news of the 1.5 million mt Indian tender. Early-week trades had been reported as high as $720/st with the same number being discussed again for new business at the end of the week.

Sources cited several reasons for the drop, including wet weather inland, projections of lower corn acreage, imports up over year-ago levels, and the perception that inventories were starting to swell at some inland production points.

Eastern Cornbelt:

The plunging NOLA barge market sparked a dramatic decline in pricing at regional terminals. Urea pricing slipped to a broad $700-$825/st FOB range in the Eastern Cornbelt, down from the previous week’s $810-$850/st FOB. The lower end of the range was confirmed out of Ohio River terminals, and the high out of spot Illinois River locations.

Western Cornbelt:

Urea pricing in the Western Cornbelt fell precipitously during the week, fueled by a much softer – but extremely volatile – NOLA barge market. The St. Louis, Mo., market ranged from a low of $680-$700/st up to a high of $765-$770/st FOB, depending on supplier and time of the week, down from the prior week’s $790-$800/st FOB range.

The high end of the regional urea market was pegged at the $790/st FOB level in Iowa, while the St. Paul, Minn., market was generally reported at a low of $700-$725/st FOB during the week.

Southern Plains:

Fueled by what one source described as a “whipsawing” NOLA barge market, urea prices fell to a broad $670-$775/st range FOB Catoosa/Inola, Okla., depending on supplier and time of the week, down from $790-$820/st FOB at last report.

A weekly low of $680-$690/st FOB was reported at Enid, Okla., while urea pricing at Houston, Texas, was pegged at the $730/st FOB level at midweek, down from $870/st FOB in early April.

South Central:

South Central urea terminals were quoted in the $800-$830/st FOB range in late April, with the low confirmed at Convent, La., and the high at Memphis, Tenn. Most Arkansas River terminals were reported in the $820-$825/st FOB range for new offers.

Southeast:

Urea prices in the Southeast slipped to $950-$1,010/st FOB port terminals, depending on location, down from $1,000-$1,025/st FOB at last report, with some sources citing the recent NOLA weakness for the downturn. The lower end of the range was confirmed at Wilmington, N.C., with the high reported at Charleston, S.C., and Brunswick, Ga.

“It will correct itself eventually, but not yet,” commented one source about the stronger urea market at some locations.

India:

Back-to-back tenders are expected to shake up the urea market.IPL closed a tender for 78,000 mt April 26. Before the week closed, RCF called a tender to close on May 11 with a target of buying 1.5 million mt.

The IPL tender called for 33,000 mt to be unloaded at the East Coast port of Kakinada and 45,000 mt at the West Coast port of Mundra. Sources said the tender was called to cover product that was not delivered under its February tender.

Only four companies participated in the IPL tender, and the lowest prices for each coast came from OQ Trading. The West Coast price was $750/mt CFR, while the East Coast price was $716/50/mt CFR.

Offering Company Quantity (mt) US$/mt CFR Discharge Port  
OQ Trading 33,000 716.50 Kakinada
45,000 750.00 Mundra
Ameropa 33,000 787.90 Kakinada
45,000 787.90 Mundra
Samsung 33,000 791.00 Kakinada
45,000 793.00 Mundra
Midgulf 33,000 819.50 Kakinada
45,000 870.00 Mundra

Sources said the tonnage bound for the East Coast is most likely Indonesian urea stored in a Chinese bonded warehouse. There is some speculation that these tons were originally to be included in servicing the last tender, but were withdrawn at the last minute. The cargo for West Coast delivery is expected to come from Oman.

The price reflects an increase of $120-$150/mt from the previous tender. However, the range also represents a large drop from the prices paid in the last quarter of 2021. West Coast prices in the three November and December tenders averaged $933/mt CFR, while East Coast prices averaged $949/mt CFR. Prices at that time were the highest recorded by Green Markets for Indian urea tenders.

Some in the industry were surprised at the low price offered by OQ Traders. Of particular note was that a deal brokered by OQ Trading between OMIFCO and India calls for a monthly cargo of urea for up to 1 million mt. The price of each cargo is to be determined by negotiations based on published prices.

While the price is higher than the previous tender, sources said it could have been much higher if OQ had been more aggressive. The price set in this tender will be a factor in the May OMIFCO cargo to India under the long-term deal.

No sooner had the letters of intent been sent that another tender was called, this time by RCF. Sources had expected a follow-up tender before the end of the month or in the first week of May.

The RCF tender will close on May 11. The longer than usual time between the announcement of the tender and its closing was put off to the EID holiday, which begins on May 1. The deadline to ship the tons purchased under this tender is July 5.

In the tender documents, RCF said its target purchase is 1.5 million mt. Sources said this needs to be the bare minimum the company takes. Estimates based on recent purchases indicate that even if RCF is able to purchase the full 1.5 million mt, the country will still be shy about 1 million mt. Some traders said by mid-July India will actually need to buy closer to 2.5-3 million mt to just break even on demand.

Speculation about pricing in the RCF tender started immediately. Sources seem to agree that prices will not falter from the IPL price levels. One trader said at best RCF can hope for the same prices, maybe a little more for the East Coast. The dearth of Russian and Chinese urea in large quantities could mean a tighter market, with traders jockeying to secure backing from producers as far afield as Nigeria.

The Indian government is reportedly ready to increase the budget for urea subsidies, according to local media reports. The publicized plan is to increase the current amount of US$8.8 million to US$15.6 billion.

Black Sea:

The war in Ukraine continues to keep the main shipping ports closed, denying industry watchers any solid deals to determine pricing.

Estimates of what the Yuzhnyy price would be if Yuzhnyy was allowed to ship product are based on the IPL tender results. Sources peg the price at $710-$715/mt FOB, which would be in line with the calculated netbacks to the Arab Gulf and China as well.

The Russian government announced new allocations for nitrogen exports. The limit for all nitrogen exports from April 26 through May 31 was put at 231,000 mt. The urea portion of that allotment was reported at 194,224 mt. So far, only Acron with 66,465 mt and EuroChem with 63,123 mt have publicly been given urea export allocations.

At the same time, the Russian government extended the time that export restrictions will be in place. The restrictions were slated to be lifted at the end of May, but they are now set to expire the end of August. No limits were announced for the period of June through August.

Trade Data Monitor reported June-August 2021 urea exports at 1.9 million mt. This number will be different in 2022 because of the sanctions against Russia. So far, the only 2022 export numbers released by the Russian government go through January, which was before the sanctions were put into effect.

Indonesia:

Pupuk Holding closed a tender for Kaltim, selling 45,000 mt of granular urea. The final price was reported at $725/mt FOB. The name of the winner was not revealed. Shipment for the cargo is slated for May, which could make the cargo competitive in the Indian tender as long as offered prices remain firm.

An accompanying auction for 20,000-30,000 mt of prilled urea was scrapped. The company did not reveal the best bid.

Middle East:

Oman is expected to supply the 45,000 mt awarded to OQ Trading for West Coast India delivery. The netback from the IPL tender to the Arab Gulf is put at $720-$725/mt FOB.

Producers were reportedly holding back on offering material for spot sales until the next large Indian tender was called. Now that RCF has made the call and has indicated it wants to buy 1.5 million mt, producers are expected to work closely with traders to ensure large orders and prices at least no lower than the IPL settlement.

Egyptian producers remain quiet about market conditions, and no new sales have been reported. The last public deal was more than a month ago when prices hit levels above $1,000/mt FOB. Now, with Arab Gulf and Indonesian prices falling, the Egyptian producers are holding back. Reportedly some bids to producers in the low-$700s/mt FOB have been rejected.

China:

Sources said limited cargoes of urea are being cleared for export. The tonnage is often small – no more than 10,000 mt – and at prices no one seems interested in talking about.

The netback for a hypothetical cargo out of China for the Indian East Coast, based on the IPL tender, puts the price around $690-$695/mt FOB. However, the tons flowing out of the Chinese port for India are reportedly Indonesian urea that was parked in a bonded warehouse for re-export.

The estimated price based on the IPL tender has the theoretical netback at a much lower rate than has been seen in the past. In the past few years, the Arab Gulf and Chinese prices were within $10/mt of each other. This time, the gap is about $30/mt.

Pakistan:

The Pakistan government authorized the purchase of 200,000 mt of imported urea to cover the country’s needs through September.

Government estimates state that demand for urea this season will be about 3.4 million mt, against an estimated domestic urea production output of 3.2 million mt. The need for urea also prompted the government to step up border patrols to stem what was reported as increased smuggling of urea to other countries for much higher prices.

Because of the higher production costs, the government also approved a higher price for urea, to $1,040 per 50 kg bag, or about $208/mt. Media reports noted that even with natural gas subsidized at 80 percent of its cost, producer Engro has already put its price for urea at $217/mt.

Brazil:

Urea prices are stable, with only a bit of tightening at the edges. Sources put the landed price at $815-$900/mt CFR.

Sources are reportedly concerned that availability in the third quarter could be limited because of sanctions against purchasing Russian urea and China’s continued efforts to limit its exports in favor of maintaining a large domestic reserve. The tension over how the global urea market will react to Indian tenders, just as Brazilian needs to buy, is leading sources to assume that even with stepped up production, prices could see a steady rise.

While the portside buyers see a stable market with upward possibilities, prices softened in Rondonópolis, falling to $940-$1,090/mt FOB ex-warehouse. The drop in price is attributed to suppliers offering bargains to empty their warehouses in anticipation of getting more product later.