The Egyptian government renewed its cutback of natural gas to fertilizer producers in late June, forcing most, if not all urea plants, to shut down. The government shifted its limited natural gas resources away from industrial use to accommodate power needs as extreme heat is causing increased power demand for residential air conditioning.
Sources told Green Markets that all the major urea producers had closed their plants by the middle of this week. Local media reports indicated some plants had shifted from natural gas to hydrogen for some of their operations. Some NPK producers are also reportedly tapping into their solar power reserves to maintain limited blending operations. Sources said they had no indications when the gas supplies would be restored.
The government issued a similar notice to urea producers at the end of May (GM June 7, p. 1). At that time, plants shut down, leaving a large gap in urea availability. Within a week of the May announcement, however, some producers reported a gradual return to normal gas levels.
Prices from granular sales moved up from $310/mt in late May to $340/mt FOB in mid-June because of the cutbacks. No new sales have been reported since mid-June. Producers were hoping to rebuild inventories in case demand stepped up. With the renewal of natural gas restrictions and the calling of a urea tender by India, speculators have moved the price to $375/mt FOB for July shipments, if any tons are available.