U.S. Gulf: Granular prompt barge prices moved up last week, with most putting the market within the $167-$179/st FOB range for new business. There were unconfirmed reports of $164/st FOB.
Sources attributed the uptick to several factors, including fewer imports than previously expected, new international business, and attractive pricing compared to the new UAN fill numbers. Second-half August trades were called $180-$181/st FOB, although some wondered if the market had much stamina beyond the $180s/st FOB due to fears that higher numbers might attract additional imports.
Prill prices continued to be called $183-$194/st FOB.
Eastern Cornbelt: The granular urea market was quoted at $205-$220/st FOB in the Eastern Cornbelt.
Western Cornbelt: Granular urea was pegged in the $205-$215/st FOB range for prompt tons in the Western Cornbelt.
California: The granular urea market had reportedly slipped to $310-$320/st FOB port terminals in California, down $10/st from last report.
Pacific Northwest: The granular urea market remained at $270/st FOB port terminals in the Pacific Northwest, with delivered tons quoted in the $280-$290/st range in the region.
Western Canada: Granular urea remained at $370-$380/mt DEL in Western Canada.
India: Sources said another tender from MMTC could come as early as this weekend. The most likely scenario will be a tender call that places restrictions on tonnage and discharge port, in a manner similar to the IPL tender that closed earlier this month.
When IPL did not buy the full 420,000 mt called for in its tender, government planners reportedly got nervous because urea availability is a politically sensitive issue. Sources said the government needs to have enough urea in the pipeline and also on hand in order to prevent outcries from farmers and their elected officials.
IPL did not buy the full tender amount this month because offers into two ports were too high for the company. Instead, IPL only picked up 300,000 mt at $179-$181/mt CFR. The two remaining cargoes were priced in the upper-$190s/mt CFR.
Sources said they expect the pending MMTC tender to also be for just under 500,000 mt. One trader noted, however, that the Indian government publicly stated it would import a total of about 7 million mt by the end of the year, but only about 2 million mt have been imported so far. Sources said that leaves the government having to arrange for imports of about 1 million mt per month.
The amount of material to be imported this year is less than last year. The government has stepped up its campaign to produce more urea in the country or with joint venture operations with dedicated sales contracts into India so the government can reduce the amount it pays in urea subsidies.
Traders expect to see continued softening in prices. The restrictive nature of the IPL tender, which is likely to be replicated in the upcoming MMTC tender, means traders will only have one shot at getting an award. With everyone talking about a glut in the urea market, sources said it should not be difficult to secure tons that support a mid-$170s/mt CFR price.
China: New figures show Chinese exports for the first half of 2015 were 25-30 percent lower than the same period last year. Sources said they were not surprised at the decline.
The reduction in exports is explained by a number of factors, said traders. A strong domestic season this year encouraged producers to keep more material in the country. At the same time, a glut of urea in the global market pushed prices well below the domestic price, leading to fewer tons being offered offshore.
The lack of exports was further aggravated by aggressive offers from Iran, Yuzhnyy, and North Africa into the Indian tenders, which left Chinese producers out in the cold.
Finally, said one trader, Chinese production has been cut back in the past few months. Some plants have shut down for extended maintenance work, while others have cut back output. Sources estimate the entire Chinese urea production output is only at 65 percent of rated capacity.
Granular and prilled urea remain at parity at $187-$188/mt FOB. Sources said, however, that one deal with Fu Dao material to Australia came in at $190/mt FOB. One trader called that price an aberration rather than a signal of a price rebound.
Indonesia: Producers are still holding firm at $221/mt FOB for granular material. Sources said they might be willing to accept a few dollars less for prilled product.
Industry observers estimate that Indonesia has 60,000-90,000 mt of granular product and about 20,000 mt of prilled available for export. One trader added that producers are not desperate to export, and appear willing to wait for the global price to rebound.
Middle East: Sources reported spot sales this week at $181-$185/mt FOB out of Oman and Kuwait. Contracts deals continue to hover in the $170s/mt FOB.
Brazil continues to fight for – and often get – lower prices in spot deals. Some of the deals are close to contract prices. A reported but unconfirmed sale of $185/mt CFR into Brazil has a netback to the Arab Gulf at just under $170/mt FOB. The last confirmed deal showed a price closer to $190/mt CFR, for a netback in the low-$170s/mt FOB.
Australian buyers appear to be helping hold up the price by accepting deals with higher netbacks, sources said. However, said one trader, the trend remains on a downward projection across the board.
Egypt is in an on-again/off-again situation. The government needs to occasionally divert natural gas from industries to step up electrical production.
Sources said the announcement earlier this month that production would stop was more drama than reality. According to one trader, the reduction in natural gas simply means that production will have to either slow down or temporarily shut down until supplies are reinstated.
Prices in Egypt are now pegged at $184-$185/mt FOB, reflecting producers responding to the global slide in prices.