US Gulf:

Prompt urea barges continued to garner a premium at $400-$420/st FOB, while cargoes already moving upriver fetched about $20/st more. May product was called $360-$385/st FOB, with first-half June coming at $340/st FOB. Full-month June was reported as low as $270-$275/st FOB, although some players remained skeptical that prices had fallen quite that far.

Eastern Cornbelt:

The urea market tightened to $490-$500/st FOB in the Eastern Cornbelt on continued reports of tight supply, with the low confirmed at Cincinnati, Ohio.

Western Cornbelt:

Urea was pegged at $490-$510/st FOB in the Western Cornbelt, depending on location, with the St. Louis, Mo., market firming to $500/st FOB from last week’s $480/st level amid ongoing reports of tight supply.

Tight supply contributed to a wide urea range at Catoosa/Inola, Okla., during the week. While last week’s prices were generally reported in the $480-$500/st FOB range, the latest offers for June 1 loading were quoted as high as $530/st FOB, while mid-June prices fell in the $485-$495/st range FOB Catoosa/Inola.

California:

Urea was pegged at $560-$600/st FOB in California, unchanged from early May, with the low confirmed at Stockton.

Pacific Northwest:

Urea remained at $520/st FOB Rivergate, Ore., and $525/st FOB Aurora, Ore. Delivered urea was quoted in a broad $535-$625/st range in the Pacific Northwest, depending on location and point of origin.

Western Canada:

Urea pricing in Western Canada was quoted at C$670-$730/mt FOB and C$720-$760/mt DEL, depending on location and time of shipment.

Black Sea:     

The price of prilled urea followed the global market lower, softening to $275-$285/mt FOB.

The Russian government said late in the week that unless its demands were met, it would end its agreement to allow for the safe passage of grain and fertilizers through the Black Sea. In turn, Russian fertilizer exports were to be allowed on the global market without sanctions.

The US and EU have issued several notices that the sanctions against Russian products do not apply to fertilizers. However, the sanctions do not allow Russian banks access to the international payment network known as SWIFT.

In its latest statement, the Russian foreign ministry demanded that the Russian agricultural bank be allowed access to SWIFT, or Russia would end its agreement in the Black Sea Grain Initiative and find other ways to ship its product. Under the agreement, instead of allowing the Russian bank access to SWIFT, JP Morgan agreed to process the export payments, but this option was rejected by Moscow.

A new initiative worked out by the UN and the African Export-Import Bank this week created a platform to handle the sale of Russian fertilizer to African countries.

India:     

Expectations grew at the annual IFA meeting in Prague that a urea tender will be called soon. Some traders continue to argue the tender call may not come until mid-June, however.

The arguments for a call during the last week of May largely depend on the volatile nature of urea in Indian politics. In an election year, said one source, the government must be seen to ensure a plentiful supply of urea. Even if the regional warehouses are full, sources said the distributors and farmers like to hear of more tons being put into the supply pipeline just in case demand jumps and leaves some areas short of product.

The argument for a mid-June call comes from reports that urea supplies are at record levels. Sources also noted that annual monsoon rains are late. Urea application is not needed until the rains fill the paddies and replenish the water table. Additionally, a few cargoes from the March Indian Potash Ltd. (IPL) tender will arrive by mid-June to ensure a plentiful supply, even if demand jumps.

Reports that most Chinese urea producers were reaching out to traders to handle exports over the next few months has led sources to speculate the next tender will show prices well below the last one. Some predicted that prices could land at $300/mt CFR.

January-March urea imports fell 48%, Trade Data Monitor reported, to 1.7 million mt from the year-ago 3.2 million mt. Increases in domestic urea production reduced the need for large imports in 2023, sources noted.

March imports were tabbed at 235,000 mt, a 79% year-over-year decline from 1.1 million mt. Oman sent 182,000 mt, for 78% of the imports, while China added 27,000 mt.

Pakistan:       

A government commission said the country will need to import at least 200,000 mt of urea to meet farmers’ demands. The report came on the heels of news that some domestic urea production had to be shut down because of a shortfall of power to run the plants.

The government was given various options from a study group. In addition to importing urea, the group recommended the government divert natural gas from electricity production directly to urea production. It also recommended that TCP, the main importing arm of the Pakistan government, be allowed to purchase foreign urea outside of normal tender procedures.

Sources said that TCP has already started talks with Chinese producers for a government-to-government deal for the full 200,000 mt. This type of deal will allow Pakistan to nurse its limited foreign reserves while still getting the urea it needs.

The government decided to divert natural gas to urea producers in addition to importing urea. The diversion will be in effect through August.

Southeast Asia:     

Sources reported that Pupuk/Indonesia is holding back on issuing another selling tender for granular urea. The company reportedly wants to build reserves for the domestic market. At the same time, the government is still mulling how many tons will be allowed to be exported during the second half of the year.

Despite the lack of sales from producers, sources reported the sale of what appeared to be a cargo of previously-purchased Indonesian granular urea, noting 6,000 mt sold by a trader to Petronas at $350-$360/mt FOB for prompt shipment.

Kaltim 3 is expected to go down in June for a routine maintenance turnaround. There are reportedly enough reserves on hand to cover contracted demand.

There is still no word from Brunei regarding when the BFI plant will be coming back online, though reports circulated that it could be in the next week or so. The plant closure has kept local availability of urea limited, causing some buyers to look for tonnage from as far as the Arab Gulf.

Middle East: 

Offers from the Arab Gulf were reported at $310-$315/mt FOB, but with most producers trying to hold the line at $320/mt FOB. No new deals were concluded to confirm the prices that traders and suppliers put forward.

Supplies are reportedly building up at producer warehouses, as June demand appeared lackluster to industry observers. Interest from some Latin American buyers to increase their contracted tons lifted producers’ spirits, as sellers were hoping to move out more product.

Arab Gulf producers are not expected to have the same kind of windfall from the upcoming Indian tender as they had in the previous few tenders, as sources reported a growing interest from Chinese producers to sell their product to the global market. There are some who predict Chinese urea could dominate the next Indian tender, returning the Arab Gulf to the role of a supplier of last resort.

The lack of new deals out of Egypt has not stopped discussion. Producers are now reportedly offering granular urea in the $320s/mt FOBfor May and early June shipment, but with no deals concluded. Some producers were even reported considering $310/mt FOB just to move their tons.

For now, the spot price remains at the last-completed $366-$367/mt FOB level, but with the expectations that the price could easily come down at least $30/mt in a flash.

Iranian producers were calling anyone who would listen to offer a cargo of prilled urea at $320/mt FOB. Just one week ago, producers were quoting $360/mt FOB and refusing to listen to bids at $330/mt FOB.

Iranian granular is still pegged in the $290s/mt FOB. Prills are being sold at a premium because of a general absence of the product from the global market. That is changing, however, as many Chinese producers are reaching out to international traders offering product for export.

China:   

Traders at the IFA meeting in Prague reported that Chinese urea producers were looking to export material in June and July. Sources said they expect a flood of Chinese urea to be available for the upcoming Indian tender.

Offers are now at $310/mt FOB for prilled and $320/mt FOB for granular. However, no one could – or would – confirm any deals at these levels. What was clear, however, is the current price was at parity for the two grades of urea in the $320s/mt FOB.

Softer pricing ideas are expected to extend well into June. If the Indian tender price comes in at $300/mt CFR, as some have predicted, the netback to China would track closer to $275/mt FOB. For now, however, sources are predicting that early-June prices will land in the $290s/mt FOB, with more downward pressure to come.

January-April urea exports totaled 603,000 mt, according to Trade Data Monitor, a 33% increase from 452,000 mt recorded through the same period of 2022. April exports were 76,000 mt, down from the prior-year 150,000 mt. South Korea led April buyers with 17,000 mt, followed by 8,000 mt sent to India.

Brazil:

Urea dropped to $295-$305/mt CFR, a level not seen since January 2021. Buyers continue to push for lower prices. Bidding was reported at $290/mt CFR, but with nothing concluded.

Rondonopolis came down about $15/mt to $420-$430/mt FOB ex-warehouse. The sales all appear to be for future delivery instead of for prompt demand. Buyers remain hesitant to commit to the last of their Safrinha needs, exacerbating the bear market in urea. Further declines in prices are expected inland.

Argentina:    

Trade Data Monitor reported January-April urea imports at 34,000 mt, off 67% from the year-ago 104,000 mt. April imports were noted at 5,600 mt, down from 90,000 mt received in April 2022.