All posts by mickeybarb@charter.net

Fertiglobe, Masdar, & Engie to Study Green Hydrogen Plant for Al Ruwais NH3 Plants

Ammonia, Europe, Featured, Green Hydrogen, News

Fertiglobe, the Middle Eastern joint venture partnership between OCI NV, Amsterdam, and Abu Dhabi’s state-energy company, Abu Dhabi National Oil Corp. (ADNOC), has signed a collaboration agreement with Abu Dhabi-based renewable energy company Masdar and France’s Engie SA to study the co-development of a green hydrogen facility to supply Fertiglobe’s ammonia production plants at Al Ruwais in the UAE.

A capacity of as much as 200 megawatts (MW) is being considered for the proposed green hydrogen facility, with the project targeted to be operational by 2025, OCI said in a Jan. 19 statement announcing the collaboration agreement.

The three parties will study the development, design, financing and procurement, construction, operation, and maintenance of “an industrial-scale and globally cost-competitive” green hydrogen facility in Al Ruwais to be installed near Fertiglobe’s ammonia production plants.

“The project aims to strengthen Fertiglobe’s decarbonization roadmap, strengthening the company’s position as a global front-runner in green ammonia production by 2025 in the UAE,” said OCI.

This new project follows the announcement in late November of Fertiglobe’s 100 MW electrolyzer to produce green hydrogen as a feedstock for green ammonia in Egypt (GM Nov. 24, 2021).

The project, a partnership between Fertiglobe and Norway-based renewable power producer Scatec ASA and Egypt’s Sovereign Fund, plans to develop the electrolyzer to produce up to 90,000 mt/y of green ammonia at EBIC in Ain Sokhna (GM Oct. 15, 2021).

Ma’aden, APC Ink MOU to Promote Mutual Cooperation on Fertilizers

Jordan, News, News Briefs, Phosphate, Potash, Saudi Arabia

The Saudi Arabian Mining Co. (Ma’aden), Riyadh, has inked a Memorandum of Understanding (MOU) with Jordan’s Arab Potash Co. (APC) aimed at enhancing cooperation in producing fertilizers in Saudi Arabia and Jordan, drawing on their respective expertise in the phosphate and potash industries in the region, the Saudi company said.

The MOU was inked on Jan. 13 between Ma’aden Phosphate Co. Senior Vice President Hassan Al-Ali and APC President and CEO Maen Al Nsour at the Future of Mining Forum held in Riyadh

Al-Ali said the MOU is in line with Ma’aden’s strategy and initiatives to identify market opportunities and secure raw materials for future growth plans. Few other details were provided in the statement.

Ma’aden and the National Shipping Company of Saudi Arabia (Bahri) also have inked an MOU to explore cooperation across various fields, including chartering ships to transport ammonia and dry cargo, as well as other areas that the two parties will agree to collaborate on in the future.

The MOU signing also took place during the Future of Mining Forum in Riyadh.

Czech Republic’s Spolana Completes Upgrade Of Ag-Grade Granulated AS

Ammonium Sulfate, Eastern Europe, News, News Briefs

Czech Republic’s PVC and caprolactam manufacturer Spolana a.s. has completed a CZK25 million (approximately $1.2 million at current exchange rates) upgrade of its granulated agricultural-grade ammonium sulfate (AS) production.

The new product, which is to be marketed under the name SpolsanRG, compliments the company’s existing crystalline AS marketed as SpolanaRS, and is suitable for both gardeners and large-scale agricultural production, Spolana said in a Jan. 18 media statement.

SpolanaRS is produced as a by-product of the company’s caprolactam production.

The producer, which first mooted the plans for granular AS for agricultural use back in late 2017 (GM Dec. 22, 2017), said it plans to manufacture 45,000 mt of SpolsanRG this year.

“We are returning to the market with a fertilizer for direct use. It is the first step in developing a product range of mixed fertilizers based on ammonium sulfate, and will expand our product portfolio and increase our export capabilities,” said Spolana’s CEO Piotr Kearney.

Neratovice-based Spolana is the sole manufacturer of PVC and caprolactam on the Czech Republic market, and has been part of the Unipetrol group, the country’s largest refining and petrochemicals group, since 2016.

Unipetrol in turn has been 100 percent owned by Poland’s PKN Orlen since 2018, and this month was rebranded as Orlen Unipetrol as part of the company’s final integration into PKN Orlen.

FCL, AGT Form JV for Agriculture Complex

News, News Briefs, Saskatchewan

Federated Co-operative Limited (FCL), Saskatoon, Sask., announced on Jan. 17 that it has signed a Memorandum of Understanding to form a joint venture (jv) partnership with AGT Food and Ingredients Inc., Regina, Sask., to construct a C$360 million canola crush facility as part of a new C$2 billion Integrated Agricultural Complex (IAC) in Saskatchewan.

The canola crush facility will supply approximately 50 percent of the feedstock required for a 15,000 barrel/day renewable diesel plant planned for the Regina area, just north of FCL’s existing Co-op Refinery Complex (CRC). FCL announced last November that it had purchased the land for the site for C$5.48 million.

“We are so pleased to have AGT as a partner,” said Scott Banda, CEO of FCL. “We are excited to realize the vision we share to bring value-added opportunities to the agriculture sector in both farm-to-tank and farm-to-fork opportunities that will benefit the communities we serve.”

FCL will hold the majority ownership stake in the jv, at 51 percent. FCL plans to have the renewable diesel facility operational by 2027. FCL also recently reported that it will invest C$500 million in carbon capture and storage at the CRC in Regina and the Co-op Ethanol Complex in Belle Plaine, Sask.

“I applaud the leadership Scott and the team at FCL have shown in working together to pursue this exciting opportunity,” said Murad Al-Katib, President and CEO of AGT Foods. “We believe that AGT’s capabilities in grain logistics and plant protein ingredients, combined with FCL’s strong history in energy and farm inputs, creates a powerful partnership that will benefit the communities in which we operate.”

The projects that comprise the IAC will create an estimated 2,750 jobs during the construction phase, FCL reported. Once complete, the IAC could potentially create up to 300 permanent jobs, with the gross economic output of the complex estimated at C$4.5 billion. The IAC investments are subject to continued due diligence as well as environmental, regulatory, and board approvals, FCL said.

“Our government is grateful FCL and AGT Foods are moving forward with this significant investment that will create thousands of jobs and expand value-added processing in Saskatchewan,” said Premier Scott Moe. “With this project, more than C$12 billion of capital investment has been announced for the province in the last year, including about C$2 billion to build four new canola crush plants. FCL’s new renewable diesel facility will reinforce Saskatchewan’s reputation as one of the most sustainable producers of energy in the world.”

FCL has been in an aggressive expansion mode, having completed a C$5 million upgrade to its Brandon, Man., fertilizer terminal last summer, and launching a recent jv with Blair’s Family of Companies, a family-owned retail business in Saskatchewan (GM Aug. 13, 2021). Under that deal, the jv acquired seven Blair’s ag retail locations in Saskatchewan.

Croatia’s Petrokemija Restarts Production

Ammonia, Croatia, News, News Briefs, Urea

Croatian fertilizer producer Petrokemija d.d. said on Jan. 21 its ammonia plant and other plants for the production of fertilizers at Kutina have restarted operations. The company on Dec. 3 had temporarily shut down its urea and ammonia production facilities due to a technical failure (GM Dec. 3, 2021).

Earlier last year, Petrokemija also suspended production several times due to technical problems and rising prices for natural gas and carbon dioxide emissions.

Croatian media last week reported that Turkey’s Yildirim Holding AS had submitted a binding bid to acquire the Croatian producer (GM Jan. 14, p. 30). The bid is reported to be valid until Jan. 31.

Meanwhile, Petrokemija’s shareholders will vote on a proposal to de-list its shares from the Zagreb bourse on Feb. 21, according to a SeeNews report. The company’s management and supervisory board green-lighted the proposal earlier this month.

CBH Breaks Ground on Fertilizer Facility

Australia, News, News Briefs, UAN

The CBH Group, Perth, said on Jan. 14 that construction has commenced at its new granular and liquid fertilizer UAN storage facility (GM Sept. 10, 2021), located adjacent to the Kwinana Grain Terminal.

“The facility will enable the expansion of our fertilizer business, which last year achieved a 47 percent increase in sales,” said CBH CEO Ben Macnamara. “This new phase of growth will see the business enter the liquid fertilizer market for the first time, and expand its granular fertilizer offering to provide consistency of supply and deliver on our strategy to reduce on-farm input costs for Western Australian grain growers.”

“We’ve seen demand for fertilizer, particularly UAN, grow exponentially in recent years, with the existing market struggling to keep pace during key times,” said CBH Head of Fertilizer David Pritchard. “This new facility will enable us to bring surety of supply to growers, and the efficiencies gained through leveraging CBH’s supply chain will be passed along to growers, bringing further competitiveness to the market.”

The development includes: a UAN ship unloading and transfer pipeline, which runs along the existing Kwinana Grain Terminal jetty; 55,000 mt of granular fertilizer storage in a new warehouse; and 32,000 mt of UAN storage in two 16,000 mt storage tanks, and administration office, landscaping, and security.

The construction schedule will see the UAN storage tanks completed first, with construction due to be completed in 2023. The facility has been designed to provide for further expansion opportunities in future, enabling the business to expand with the continually increasing grower demand.

Belarus Faces Limited Potash Transit Options as Sanctions Start to Bite

Belarus, Featured, News, Potash

The date for the halting of Belarus’ ability to rail its potash exports through Lithuania is fast approaching, and it is looking increasingly problematic for state-owned potash producer Belaruskali OAO and its potash marketing/exporting arm Belarusian Potash Co. (BPC) to set up new transit routes in the near future.

Most of Belarusian potash exports – some 10.7 million mt out of a total of 11.8 million mt in 2020 – are railed via Lithuania’s rail system for onward shipment from the Lithuanian port of Klaipėda. Last week, the Lithuanian government finally reached a decision to end the railway contract between the country’s state-owned railway company Lietuvos Geležinkeliai’s (LTG) and Belaruskali over national security concerns (GM Jan. 14, p. 1). The end of that contract for Belarusian potash transit is set to become effective Feb. 1.

Belarus had signalled earlier it could opt to redirect its potash for transit via Russian ports, including the Russian Baltic port of Ust-Luga and the port of Murmansk. According to Belarus Minister of Transport and Communications Aleksei Avramenko, as cited by a BelTA news agency report last August, the routes for potash transit via Russian ports have been worked out.

But is unclear whether there is spare transhipment capacity at Russian ports for additional potash transhipment. Some industry sources think there currently is not. Furthermore, it is likely Russian potash producers would want “first dibs” on what spare or new potash transhipment capacity there is.

Last week, Kremlin spokesperson Dmitry Peskov, responding to journalists’ questions whether Russia is prepared to transport potash from Belarus, said “it is a sensitive issue,” and refrained from giving a definitive answer, according to reports by Interfax and Russia’s Tass. But the spokesperson also said that Russia “will not abandon its partner.”

A re-direction of Belarus potash exports via Ukraine, with which Belarus shares a border, and through Ukrainian ports, appears unlikely, given the current heighted geopolitical tensions and Ukraine’s current need to keep both the E.U. and the U.S. on its side.

Latvia, which also shares a border with Belarus, has said it will not take over the transport of Belarusian potash when deliveries via Lithuanian railways cease on Feb. 1.

Latvia’s Transport Ministry, as well as private Latvian freight forwarders and the Latvian railway companies contacted by the Baltic News Service (BNS), said at present Belarus does not transit potash and fertilizers through the country and that “there is no basis for this in the future.”

They said Latvia, which like Lithuania is a European Member State, adheres to international sanctions and does not want to violate them, according to the BNS report.

There is some speculation that Belarus may try to supply potash to China by rail. There is a China-Europe Railway Express that links Belarus with China, but it is unclear how viable this is and whether there is much in the way of additional trains and capacity available.

Furthermore, the rail line passes through Lithuania, and reports have indicated trains have not been stopping in the country for the past several weeks due to tensions between China and Lithuania.

China sourced some 16 percent of its potassium chloride imports from Belarus in 2020, importing a total of 1.38 million mt of Belarusian potash, according to Trade Data Monitor (TDM). In 2021, Belarus’s share of China’s potash import trade increased to 23 percent, or some 1.75 million mt, but this was partially accounted for by a lower overall volume of potash imports by China last year (2021: 7.67 million mt; 2020: 8.83 million mt, according to TDM).

Any disruption to this trade flow threatens China’s food security, something that would be unacceptable to China’s leaders.

The current annual supply contract between Belarus and the Consortium of Chinese Buyers (Sinochem, CNAMPGC, and CNOOC), agreed to in February 2021, expired in December.

Last week, Lukashenko and China’s President Xi Jinping, in a telephone conversation marking 30 years of bilateral contact between the two countries, praised the development of future bilateral cooperation, according to a BNS report.

According to the report, “the stable operation and sustainable development” of the China-Europe Railway Express, was part of the discussions.

China is the largest global buyer of potash able to finance trade with a U.S.-sanctioned company,” Green Markets Research Director Alexis Maxwell said last week. “That means Beijing is in a better negotiating position and is able to leverage a Belarus contract for less than the Southeast Asian spot market price.”

However, according to an article this week by Belarus pro-democracy and pro-human rights news site Charter97, citing the Academic Director of the Belarusian Economic Research and Educational centre BEROC, Katsiaryna Barnukova, speaking with Minsk-based Myfin.by, Belarus may stand to lose about $2 to $3 billion of foreign exchange earnings this year due to Lithuania’s transit ban and problems with setting up new supply routes during this year.

Potash accounts for more than 70 percent of the country’s export income. Barnukova speculated that about 80 percent of Belarus’ revenues from potash exports could be lost this year.

The sanctions against Belarus’ potash industry may push Belarus deeper into Russia’s embrace.

“Lukashenko is being strangled” by U.S. sanctions, said Tatiana Stanovaya, a political consultant and founder of R.Politik, as cited by a Bloomberg report. Russian President Vladimir Putin “will use the situation to bind Lukashenko even more closely to Russia,” she said.

While the Belarus leader has not yet asked Russia for support, the Kremlin expects Lukashenko to make an approach for help with budget shortfalls caused by the sanctions on potash sales, according to the Bloomberg report, citing senior Russian officials with knowledge of the situation. Any assistance is likely to be limited, they said.

Kiev, Ukraine-based Belarusian political analyst Artyom Shraibman, according to the report, believes Belarus will likely try to beat the sanctions by re-directing potash sales through Russia as the only viable channel for exports. Russia may offer to buy supplies at below-the-market price and re-sell it as Russian potash, or consume Belarusian potash in its domestic market while exporting more of its own production, he said.

Meanwhile, Russia said this week it will move forces to Belarus for military drills in February, amid the deepening confrontation with the U.S. and Europe over Ukraine. Russia and Belarus have formed a so-called Union State to coordinate economic and defense policies, according to a Bloomberg report. Lukashenko was cited by the report as saying the joint drills would “practice confrontation” with the Baltic countries, Poland, and Ukraine.

Ammonia

Ammonia, Black Sea, California, China, Eastern Cornbelt, India, Market Watch, Middle East, North Africa, Northwestern Europe, Pacific N.W., South Korea, Tampa, U.S. Gulf, Western Canada, Western Cornbelt

U.S. Gulf/Tampa:

Tampa anhydrous ammonia for January closed at $1,115/mt CFR, up from December’s $990/mt CFR.

While Tampa prices for February will not be concluded until later this month, Nutrien reported this week that it had procured some 15,000 mt from Algeria for delivery to the U.S. Gulf at $1,175/mt CFR, thereby giving some guidance for Tampa’s next round of business. The Nutrien vessel set sail on Jan. 17.

Eastern Cornbelt:

The ammonia market remained at $1,300-$1,400/st FOB regional terminals in the Eastern Cornbelt, depending on location and time of shipment, with the low confirmed on a spot basis in Illinois for January-February tons and the high in Ohio for both prompt and spring prepay pricing.

One contact pegged the bulk of spring ammonia offers at $1,375-$1,380/st FOB in Illinois in mid-January, adding that the market had “gone dead quiet in light of the urea action.”

Western Cornbelt:

Sources continued to report ammonia pricing in the $1,350-$1,395/st FOB range in the Western Cornbelt, with the low reported for limited January-February offers. Most of the spring prepay business remained in the $1,365-$1,395/st FOB range in the region, depending on location and supplier.

Ammonia in the North Dakota market remained at $1,450/st FOB and $1,550/st DEL for the last spring pricing offers.

California:

The ammonia market remained at $1,085/st DEL in California in mid-January, with aqua ammonia referenced at the $281/st FOB level.

Pacific Northwest:

The ammonia market was quoted at $1,350-$1,400/st DEL in the Pacific Northwest, down from the last offers confirmed in December, with the low reported in Washington for truck tons now through the end of February, and the high for spring pricing offers.

The aqua ammonia market was pegged at $342/st FOB in the region for spring tons.

Western Canada:

The ammonia market in Western Canada was steady at C$2,000-$2,100/mt DEL for spring tons, depending on location and supplier. One Saskatchewan contact pegged the market firmly at the C$2,030/mt DEL level for any offers still on the table in mid-January.

Black Sea:

Ammonia prices shifted upward on the heels of a Trammo deal for 10,000 mt. Sources said prices are now at $1,100-$1,120/mt FOB. Some in the industry are even arguing the price should be at $1,150/mt FOB, but so far, no spot deal has been made to confirm that level.

The tension between Russia and Ukraine is making the market nervous. A Russian invasion of eastern Ukraine could prompt that country to stop the flow of ammonia to Yuzhnyy, leaving buyers high and dry. Moving the product out of Russia by other means would be too costly, said sources.

One trader noted that if Yuzhnyy gets closed to Russian ammonia, there are few viable options. Moving the ammonia by rail to another port would not work because there are not enough railcars to replace the capacity of the pipeline. Also, the ports that would work best as an alternative to Yuzhnyy for ammonia are ones held by Baltic countries. These countries also have no great love for Russia and may cooperate with Ukraine if Russian troops invade.

Middle East:

Arab Gulf producers remain tight on product. Sources said they are fulfilling their contracts but have very little available for spot deals. Sources said prices remain around $900/mt FOB for contracted tons. Any spot deals would be significantly higher, but there are no spot deals.

Sources said India is having problems lining up financing for Iranian ammonia. Apparently, the banks that helped finance previous purchases have backed off because of the economic sanctions imposed by the U.S. The tonnage was shifted to Turkey.

According to Trade Data Monitor, India was Iran’s main buyer in 2021, taking 367,000 mt, accounting for 68 percent of the 541,000 mt the country exported. Iranian ammonia exports for 2021 were down 14.25 percent from 2020.

December exports were reported at 24,000 mt, down 62 percent from 65,000 mt in December 2020. India took 23,000 mt of the December total, with Turkey taking the balance.

India:

The inability to import Iranian ammonia has caused buyers to look elsewhere – and at much higher prices. Sources said one buyer seems to have sent a vessel to China to pick up 10,000 mt of ammonia. However, others are not able to confirm this deal, and no one is able to estimate the price.

Discussion for purchases now seem to be in the $990s/mt CFR. With the Arab Gulf mostly sold out and Iran now taken out of the equation, sources said Indian buyers are having a hard time finding the product they need.

North Africa:

The sale to Nutrien from Algeria caught the attention of the global ammonia market.

While Algeria seemed to be able to cover for what some in the industry suspect is a Trinidad production issue, the ammonia producers in the North African country may also have problems. Sources said Fertiglobe, which handles the marketing for Sorfert, entered the buying market, taking the Libya tender from last week and also concluding talks with Abu Qir in Egypt for tonnage. One trader noted that the only way he could explain the Fertiglobe action is if there is a problem at Sorfert. The Algerian company has not commented on any production issues.

Demand for ammonia in Morocco remains strong. Sources noted that as OCP has shifted to more DAP production, its demand for ammonia has stepped up. The daily consumption of ammonia for MAP production at OCP was pegged at 5,000-6,000 mt/d. The consumption for DAP is put at 7,000-8,000 mt/d. The increased demand has OCP buying as much ammonia as it can from as many sources as possible, said a trader.

Northwest Europe:

Ammonia prices in Antwerp and from Baltic ports remained steady. Sources said the Northwest Europe price is holding at $1,180-$1,250/mt C&F and should remain steady through the end of the month.

The Baltic export price of $1,140/mt FOB should hold even until a new price is negotiated for February. Sources anticipate higher prices next month.

South Korea:

Ammonia imports for 2021 were reported at 1.4 million mt by Trade Data Monitor. This is up 12 percent from 2020 imports of 1.2 million mt. The main supplier into South Korea was Indonesia with 575,000 mt, representing 42 percent of the import market. Saudi Arabia came in second with 20 percent of the market at 278,000 mt.

December 2021 imports were reported at 120,000 mt, up 58 percent from December 2020 imports of 76,000 mt. Saudi Arabia supplied 68,000 mt of the December tonnage, followed by Indonesia at 20,000 mt, and Malaysia at 15,000 mt.

China:

Imports of ammonia for 2021 were down about 30 percent from 2020 imports, according to data gathered by Trade Data Monitor. The 2021 imports were reported at 809,000 mt, compared to the 1.2 million mt imported in 2020.

The main suppliers of ammonia to China in 2021 were Indonesia with 343,000 mt, representing 42 percent of the imports; Saudi Arabia, with 155,000 mt; and Malaysia with 106,000 mt.

December 2021 imports were reported at 34,000 mt, down 72.5 percent from December 2020, or 123,000 mt. Indonesia supplied nearly all of the December tons at 33,700 mt.

Urea

Africa, Black Sea, Brazil, California, China, Eastern Cornbelt, India, Middle East, Pacific N.W., South Korea, U.S. Gulf, Urea, Western Canada, Western Cornbelt

U.S. Gulf:

NOLA granular urea barges continued to move downward, with the range reported at $545-$610/st FOB, compared to the prior week’s $575-$685/st FOB. While prices had moved down to a low of $545/st FOB midweek, some sources said they were seeing a rebound as the week closed, which was in line with recent weeks.

Thinly-traded NOLA prills were even harder to peg, with sources calling the last done in the $585-$630/st FOB range.

Eastern Cornbelt:

Urea pricing volatility continued to grip the Eastern Cornbelt market during the week. The Cincinnati, Ohio, urea price reportedly fell to $645/st FOB by Jan. 20, down from $670/st FOB earlier in the week and the previous week’s range of $675-$735/st FOB.

Low urea prices out of spot river terminals in the Illinois market were reported at $635-$650/st FOB at midweek.

Western Cornbelt:

Urea prices continued to fall in the Western Cornbelt, driven by still lower NOLA barge values.

The St. Louis, Mo., market reportedly ranged from $620-$635/st FOB, depending on supplier and time of the week, with the upper end of the regional market pegged at $640-$650/st FOB in Iowa. A low of $620/st FOB was also reported in the Catoosa/Inola, Okla., market during the week

In the Northern Plains, delivered urea pricing in North Dakota reportedly fell to $675-$705/st for prompt tons and $765-$795/st DEL for spring prepay. No urea tons were reportedly available at St. Paul, Minn.

California:

Sources reported a broad range of urea prices in California in mid-January. While the Stockton market reportedly fell to $810/st FOB, down some $70/st or more from December, reference price levels at West Sacramento remained at $910/st FOB for bulk and $970/st FOB for bags.

Rail-DEL urea pricing was pegged in the $885-$895/st range in the state, but, as one source put it, “if we were pressing for a concrete amount, I think we could get some concessions.”

Pacific Northwest:

Sources reported softer urea pricing in the Pacific Northwest in mid-January. The latest offers as of Jan. 20 were quoted at $790/st FOB Rivergate, Ore., down from early-week pricing at $810/st FOB Rivergate and $815/st FOB Aurora, Ore.

Even softer values were reported for delivered urea, including $710-$735/st DEL for prompt tons in Montana and $740-$790/st DEL in Washington.

“I don’t know (or expect) that much has transacted as most people out West were already full, or nearly full,” said one regional contact of the lower urea prices.

Western Canada:

Slightly softer urea prices were reported in Western Canada in the wake of plunging NOLA barge values in recent week, but sources were quick to note that the region has sustained “no hard price drop” amid limited supply and spring pricing offers.

The urea market in Western Canada was reported at C$1,220-$1,250/mt FOB for March-April, down from C$1,250-$1,265/mt before the holidays, with the low describing recent offers from “brokered warehouses.” The last spring urea offers for delivered tons were reported firmly at the C$1,240-$1,250/mt level in the region.

India:

Sources said the Department of Fertilizer finalized a deal with OMIFCO for 1 million mt to be delivered each year for at least the next three years. The arrangement will ease some of the pressure to import urea under tenders. Reportedly, the price of each cargo will be based on an agreed formula just before loading.

Sources said even with the good news for farmers that 1 million mt of imported urea is now guaranteed for 2022, the country is still short about 1.5 million mt for this season. Sources said the softening of the global urea market could move the Department of Fertilizer to designate a buyer to hold another tender soon. However, most seem to think nothing will happen until February.

Details of the 2022/23 budget are seeping out. Indian media report that the government will propose an increase in the subsidy budget to US$19 billion. None of the reports have detailed how the subsidies would be divided among the main fertilizer groups. Sources noted, however, that urea has traditionally taken the lion’s share of the subsidy payments.

Middle East:

Most producers are shipping material from long-term contracts or fulfilling orders won under the IPL/India tenders. Supplies from the area are tight, with only limited tons available for possible spot sales.

Sources said at least one producer was quietly shopping around material for shipment in February, with prices out of these discussions quoted at about $750/mt FOB. Nothing was reported at this level, but a drop from the $860s/mt FOB in the last Indian tender was not surprising to industry watchers. The amount of the drop, however, has more than a few traders stunned.

As the year began, sources were reporting a steady drumbeat of calls for lower prices out of the Arab Gulf. The lack of any spot deals made price checking more an exercise in gossip management than actual trading, however. Besides the reports of the tonnage being offered from the region, a strong indicator of softer prices came at the end of the week, when the Brazilian delivered price dropped about $180/mt to under $600/mt CFR in just a week.

The paper market for the Arab Gulf anticipated the drop. The price was put at $680/mt FOB for February and $670/mt FOB for March orders.

A deal between India and OMIFCO will guarantee shipment of at least 1 million mt of product from the Omani producer to India each year for the next three years. The price for each shipment will be determined by mutual agreement just prior to loading.

The deal with India leaves OMIFCO with another 1 million mt to sell on the open market. Sources said the Omani trading house, OQ, will be handling the sales. Traders expect to see more product being offered to the U.S., and possibly to some Asian buyers. Reportedly, OQ prefers to work with end users rather than international traders. This would mean leaving out sales to Brazil, which are primarily handled through trading houses.

There are reports that some small cargo deals have been done at $780-$800/mt FOB. Some deals are even pegged at $760/mt FOB, but sources are careful to point out that these lower-priced deals still seem to be more talk than action.

Reportedly, European buyers, the mainstay of Egyptian sales, are pushing hard for lower prices and are willing to walk away if the price is not to their liking. One source noted the Europeans still have some time before they need to begin fresh buying. This break in strong demand could play into their hands for lower prices.

Egyptian producers continue to argue for higher prices, but they seem to have abandoned hopes of maintaining the $960/mt FOB price they got a month ago for early January shipments. Sources said producers are now arguing for $800/mt FOB against $750/mt FOB bids.

The rumored Egyptian prices fit in with the reported discussions taking place for Algerian tons. Sources said the discussions for a granular cargo are focused on $710/mt FOB, without much pushback from the producers.

Iranian urea exports for 2021 were reported at 3.8 million mt by Trade Data Monitor. This is down about 5 percent from 2020 exports of 4 million mt. The main recipients of the Iranian tons in 2021 were Turkey at 1.4 million mt, accounting for about 37.6 percent of the exports, then South Africa at 387,000 mt, and Brazil at 349,000 mt.

December exports from Iran were reported at 359,000 mt, down 5.4 percent from December 2020 exports of 379,000 mt. Turkey dominated December shipments with 154,000 mt, followed by Sudan at 65,000 mt, and Mozambique at 60,000 mt.

China:

Sources reported that some small cargoes of urea may still be allowed out of the country to South Korea and Japan to deal with their emissions control program. The exports are expected to be just a few thousand tons at a time and at prices off the normal market rates.

International traders seem resigned to not being able to snag any Chinese urea for the global market until at least May. There are now reports that exports might even be delayed into June, depending on the domestic Chinese demands.

Production is slowing down in China under orders from Beijing, with some plants even closing. The central government is determined that skies be free of pollution for the upcoming Winter Olympics. They are ordering most factories to either cut back or close for most of February.

Sources noted that most of the industrial sector would either shut down or drastically reduce output during the first week of February, when the country takes a week off to celebrate the Lunar New Year. Soon after that holiday break, China will host the Winter Olympics.

Sources said local and regional warehouses now appear to have enough urea on hand to kick off the next application season in China at lower prices than what had been expected in the international market. Even though the global price is coming down, sources said the central planners in Beijing are still concerned enough about supplies and prices to keep the export ban in place through the first quarter of the year.

Urea exports in 2021 were reported at 5.3 million mt by Trade Data Monitor. This represents a drop of 2.8 percent from the 2020 exports of 5.45 million mt. The largest single buyer of Chinese urea remained India, which took 2.8 million mt from China, representing 52.5 percent of the Chinese exports. In distant second place was South Korea with 655,000 mt, or about 12 percent of total urea exports from China.

December exports showed the most visible impact of the urea export ban. The December 2021 exports of urea were reported at 35,000 mt. This is down dramatically from the 582,000 mt exported in December 2020. It is also a large drop from November 2021 exports of 500,000 mt and October 2021 exports of 740,000 mt.

The export ban took effect on Oct. 15. Sources said permission was given to move out tons in November as long as the paperwork was completed by the Oct. 15 deadline. Since that time, the Chinese government has allowed limited tonnage to be exported. South Korea received the bulk of the December exports, with five other buyers getting lots of 1,000–2,000 mt.

Brazil:

Urea prices in Brazil plummeted $180/mt in one week. Softer prices were being reported at the beginning of the week. By the end of the week, however, completed business showed a collapse in the market.

Sources said deals at the beginning of the week topped off at $770/mt CFR, but fell to $590/mt CFR by the end of the week. Further declines in prices are expected. About 800,000 mt of urea is said to be in ships waiting to berth in Brazil and unload their cargoes. Sources said delays in docking are now 45-60 days.

Some of the earlier deals that led to the price drop reportedly came from traders looking at softer prices being discussed in the Arab Gulf and from North Africa. Afraid of being stuck with too many tons purchased at much higher levels earlier on, the traders dumped their product to protect what they could in the deals.

The softer prices at the ports began to be felt inland. The price in Rondonopolis was centered on $936/mt FOB ex-warehouse, with buyers looking only to buy what they need. Reportedly, they are unwilling to make major purchases in a down market.

Black Sea:

The growing softness in the urea market is also impacting discussions in the Black Sea. Prices had been pegged in the $840s/mt FOB from the IPL/India tender. Sources said discussions are now looking at $835/mt FOB and below. However, the lack of product and deals in other areas offer few opportunities to test the market.

South Korea:

Urea imports in 2021 were reported at 877,000 mt by Trade Data Monitor. This is up about 5 percent from the 836,000 mt imported in 2020. The main supplier to South Korea was China at 655,000 mt, representing about 75 percent of the import market. Vietnam came in a distant second at 60,000 mt, for 6.9 percent of the market.

December imports were reported at 87,000 mt, up from the 55,000 mt in December 2020. Because of the Chinese restrictions on urea exports, Vietnam dominated the imports with 36,000 mt. Chinese product accounted for 23,000 mt in December, down 50 percent from December 2020.

Ethiopia:

Urea imports in 2021 were reported at 531,000 mt by Trade Data Monitor, down about 8 percent down from 2020 imports of 579,000 mt. The main suppliers in 2021 were Egypt at 241,000 mt and Saudi Arabia at 125,000 mt.

There were no urea imports in December 2021, compared with 50,000 mt in December 2020. The lack of imports near the end of the year is not unusual. Ethiopia receives most of its urea in the first half of the year.

In the first six months of 2020 Ethiopia bought 529,000 mt; in the same period last year, it brought in 343,000 mt. The second half of 2021 showed imports of 188,000 mt. Similarly, the second half of 2020 was low at 50,000 mt.