The MMTC urea tender closed January 27 with lower delivered prices but with little difference in the netback. Sources say lower freight rates made it possible for the Indians to save money on their purchases and for the Chinese producers to avoid lowering their prices to secure a deal.
Of the 2.4 million mt offered, about 500,000 tons were less than $300/mt CFR. Another 860,000 mt were offered at $300-$304/mt CFR.
The sub-$300/mt CFR material has an estimated netback to China of $285-$288/mt FOB, the level traders were calling the market leading into the tender. Sources say the stability in the netback price came because freight is now $9-$10/mt for shipments between northern China and East Coast India.
The material offered at $300/mt CFR and up fit better into the pricing ideas of producers. Sources say the producers were quoting prices of $290-$291/mt FOB in the run up to the tender.
Stockpiles are reportedly limited for the first half of February. With the Lunar New Year starting Feb. 19, sources say there will most likely be a scramble for shipments the last week of February up to the shipment deadline of March 13.