All Posts from November 19, 2021

Urea

U.S. Gulf:

Barges firmed to $800-$815/st FOB, but pricing was reported to have topped out at the $815/st mark and moved lower toward $800/st FOB as the week progressed. The week-ago range was $790-$812/st FOB.

Eastern Cornbelt:

Urea prices continued to inch higher in the Eastern Cornbelt. New terminal prices were up another $5/st from last week and included $850-$865/st FOB Cincinnati, Ohio, and other Ohio River terminals, and a firm $865/st FOB Ottawa, Ill.

Western Cornbelt:

The urea market remained at a firm $850-$875/st FOB in the Western Cornbelt, with the low reported at Caruthersville, Mo., and the high in Iowa. The St. Louis, Mo., market was unchanged at $860-$870/st FOB at midweek.

Southern Plains:

Urea pricing in the Southern Plains had reportedly firmed to $840-$880/st FOB at mid-month, up another $10/st at the top of the range and a full $100/st or more above late-October levels. The low was confirmed at Houston, Texas, with the Catoosa/Inola, Okla., market pegged in a broad range at $855-$880/st FOB, depending on supplier.

South Central:

Urea pricing in the South Central region jumped to $820-$865/st FOB at mid-month, up $15-$20/st from the prior week and more than $100/st higher than late October levels, with the low confirmed at Convent, La, and the high at Shreveport, La. Other terminal prices included $845-$850/st FOB Memphis, Tenn., and $855/st FOB Arkansas River terminals.

Southeast:

The urea market reportedly jumped to $860-$880/st FOB port terminals in the Southeast, up another $25/st from the previous week and a full $130/st higher than late-October pricing levels, with the low confirmed at Savannah, Ga., and the high at Wilmington, N.C.

India:

After giving traders and producers the weekend to consider its counterbid, IPL issued awards for about 1.6 million mt of urea, all to be shipped by Dec. 31.

Awards were issued to 13 trading houses for a total of 1.5 million mt, with 835,500 mt going to East Coast ports at $998.50/mt CFR, and 665,250 mt to the West Coast at $981.64/mt CFR. An additional 95,000 mt was awarded to producers Muntajat and SABIC at $959.06/mt FOB.

The purchase of the urea alone will cost about US$1.6 billion. Once the subsidy that ensures farmers only pay about $72/mt is paid, the cost to the Indian treasury will be about $3.1 billion at a time when there are already reports of reduced income because of COVID-related shutdowns.

The urea will come from a wide range of non-traditional sources. Cargoes are slated to come from Nigeria, Baltic ports, Indonesia, and North Africa. Traditional sources from the Arab Gulf are also included. In some cases, the high price paid by India and a softening freight market make these unusual deals possible.

Sources said some shipments to India will be done at the expense of other buyers, such as Brazil.

Producer Muntajat received an award for 45,000 mt and SABIC received one for 50,000 mt. The purchase will give Indian buyers some breathing room. In the run-up to the tender, India was about 3 million mt behind in its urea purchases. The 1.6 million mt to be delivered in January 2022 will take the deficit down to 1.5-2 million mt.

The next tender will most likely be helped by NFL, which was recently given permission to import urea. Sources said the NFL permission, however, is expected to end with the fiscal year in March 2022. Therefore, said one trader, it needs to move quickly to take advantage of the import opportunity.

Sources said the next tender will most likely be called by Dec. 15, but others said the call could wait until the first week of January, saying the later date gives more time between tenders and allows the market to cool off. The rest of the industry, however, responded that the longer the tender is delayed, the greater the desperation grows to fill a growing deficit of urea in India.

Besides, said traders, there is no evidence that urea prices are looking to calm down as long as China remains out of the global market and as long as the governments in Russia and Egypt argue for restrictions on exports to support local market demand.

A tender by RCF to settle a long-term contract of 1 million mt/y for three years closed on Nov. 17 with only two participants. The tender rules allowed only producers with production capacity of 2 million mt/y, which limited the number of companies that could participate. Muntajat and Fertiglobe were the only two producers who submitted offers. Sources said they offered 500,000 mt each instead of the 1 million mt that RCF wanted.

Sources said no pricing ideas were released by RCF. The general consensus is that the producers were offering the tons on a formula basis that would allow for price adjustments with each cargo shipped. The RCF tender was seen as a move to ease the fiscal pressures caused by a steady flow of public tenders.

Middle East:

Two producers – Muntajat and SABIC – settled with RCF for a total of 95,000 mt at $959.06/mt FOB. The estimated netback from the Arab Gulf tons being sold through traders into India shows a price in the low-$950s/mt FOB.

The new range of $950-$959/mt FOB showed a slight movement up in pricing from the previous week, but a dramatic jump from the Nov. 1 RCF tender that was only for producers and was settled at $923/mt FOB.

Egyptian producers kept pushing up their prices. Sources reported that Abu Qir sold 50,000 mt to be used in the IPL tender at $930/mt FOB. KIMA also reported a sale of 6,000 mt at $945/mt FOB.

Reportedly, producers are now telling potential buyers that December tonnage is limited. They are also pushing for $965-$970/mt FOB. Traders said they would be surprised if the producers do not achieve those levels next week.

China:

Some industrial grade and standard prilled urea was allowed to be shipped out of China. Sources said the 18,700 mt was already in a bonded warehouse when the deadline to block exports arrived on Oct 15. Reportedly the tons are headed for South Korea, which is facing a severe shortage of urea necessary for its emissions control program.

Rumors that the move might lead to a further easing of the export ban started circulating right away. However, most traders said the rumors were based more on the hopes of buyers than any concrete information. The general consensus among global traders is that China will maintain its restrictions on urea exports through the first quarter of 2022.

The estimated price to China, based on the East Coast price into India, would be $960-$970/mt FOB. However, to be clear, no actual sales took place at that level.

Indonesia:

Sources reported a few small deals that reflect a price in the low-$950s/mt FOB. Some of the sales of Indonesian product into the Indian tender may be covered under these deals, and traders said some could also be early purchases when the price was closer to $500/mt FOB.

There were a number of delays in moving out tons purchased several months ago for October and November shipping. These tons now seem to be part of the urea going to India at much higher prices.

Reports circulating around the world that Indonesia sold a cargo for $1,000/mt FOB were dismissed by traders in the area. The deal, they said, came out of Malaysia and was an outlier to the general market.

No new exports are expected for the rest of the year. Sources said the export permits have all been used up for 2021, and even if producers asked for additional permits for December, the government would be reluctant to issue them. Sources said the focus of the government overseers is first to the domestic market.

The Kaltim V plant is slated to go down for 30 days at the end of the month.

Black Sea:

About three cargoes are coming out of the Black Sea for the Indian tender, with some from the far eastern shores of Georgia. Reportedly, one trader is looking for a vessel to pick up material in Poti for India’s West Coast.

Sources said the freight from Yuzhnyy to West Coast India is about $50/mt, leaving the netback at $930-$932/mt FOB. Some material may come from Yuzhnyy, because the higher price for the product and stabilizing freight rates makes moving some tons out of Yuzhnyy possible.

Pakistan:

The TCP tender for 100,000 mt closed on Nov. 22. Sources said the buyer will face prices above $1,000/mt CFR.

Fulfilling the tender may be a problem, said traders. The tender documents call for shipment within 20 days of the issuance of a letter of credit. Nailing down 50,000 mt for the first lot in the tender by the end of November – assuming a rapid LC issuance – would be difficult.

South Korea:

January-October 2021 urea imports were reported at 751,000 mt, up 5 percent from the 713,000 mt imported during the same period in 2020, according to Trade Data Monitor. The single largest supplier was China at 607,000 mt.

October 2021 imports were reported at 48,000 mt, down 27 percent from 66,000 mt in October 2020. Only August showed a lower import number so far this year.

Lower numbers of tons from China will show up in the November trade tables. China began restricting urea exports on Oct. 15, and only material with cleared paperwork by that date was allowed out. In the past week, however, China has allowed some industrial grade urea to be exported to deal with a shortage of product in South Korea for its emissions control program.

Brazil:

Urea prices at Paranagua remain relatively stable at $850-$900/mt CFR, despite the price increases seen around the globe. Sources said the closing of the Indian tender with its take of 1.6 million mt, some of which may have been initially pledged to Brazilian buyers, will eventually have an impact on the Brazilian market. For now, sources said the already high price is making any kind of deal difficult to make.

Prices in Rondonopolis have strengthened a bit as news of the high prices paid by India filter inland. Sources now put the local market at $1,000-$1,096/mt FOB ex-warehouse. Any deals being closed are only coming when the buyer needs the product immediately. No one seems to be in the mood for taking any serious forward position.

The barter rate for 1 mt of urea remained steady at 125 bags of corn.

Ethiopia:

The EABC granular urea tender for 800,000 mt closed Nov. 19 with no offers. The tender called for multiple cargoes to be shipped through 2022. The tender was called after an Oct. 29 tender closed with only one offer, which was later disqualified.

Sources said many international traders are hesitant to participate in the Ethiopian tenders because of past issues securing financing.