U.S. Gulf:
The NOLA granular urea barge market this week was more like a rollercoaster than a skyrocket. After trading as high as $367/st FOB in early-week trading, sources said prices dipped to as low as $326/st FOB before rebounding back into the $340s/st FOB.
Eastern Cornbelt:
Urea prices in the Eastern Cornbelt reportedly worked their way up from a low of $395/st FOB earlier in the week to a high of $400-$415/st FOB by Feb. 4.
The market FOB Cincinnati, Ohio, was reported at $400-$410/st FOB at midweek, with Louisville, Ky., pricing quoted firmly in the $405-$410/st FOB range. New offers FOB East Dubuque, Ill., ranged from $395-$415/st FOB, depending on time of shipment, with the low reported for April-May and the high for February-March.
Western Cornbelt:
The urea market ranged broadly from $375-$410/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and the high at Camanche, Iowa, for prompt tons.
The Catoosa/Inola, Okla., urea market was pegged at $370-$380/st FOB, while pricing FOB St. Paul, Minn., was quoted at $390-$410/st FOB, up $5/st from the previous week.
California:
Although some urea tons were still reportedly contracted in late January at the $360/st level FOB port terminals, sources said new offers in early February were at $400/st FOB or higher “if anyone has anything to offer for prompt.” Rail-DEL tons in early February were pegged at the $480/st level, give or take.
Pacific Northwest:
The urea market was reported at $450/st FOB Rivergate, Ore., and $455/st FOB Aurora, Ore., up $50/st from mid-January pricing levels. Delivered urea was pegged at $450-$480/st in the region, depending on location and supplier, with the low confirmed in Montana and the high in Washington. The delivered market in Idaho was quoted at the $470/st level in early February.
Western Canada:
Urea pricing in Western Canada had reportedly firmed to C$595-$615/mt DEL for Q1 tons, up from C$510-$535/mt in mid-January, with Q2 offers quoted at C$610-$645/mt DEL, depending on location. Nutrien on Feb. 1 confirmed that it was raising its urea posting in Saskatchewan to C$620/mt DEL, reflecting a C$125/mt increase since Jan. 1.
India:
Sources said the Indian government now seems to want to push a urea tender back to the end of the month. Sources said the delay could be a traditional tactic of the Indian buyers in a bull market.
In the past, the Indian buying houses have tried to hold off buying until the price increase fever burns itself out and a price ceiling is identified. Then as the price appears to crest, the tender will be called with the Indians forcefully arguing that the only place to sell urea is to India – and only at a much lower price.
This time, however, traders report that there appears to be strong enough demand to keep prices up into March. They point to the ever-higher price into April being paid for Egyptian product, with Chinese tons limited because of reduced output and the Arab producers only slowly coming back online.
So even if a price correction is expected, sources said it may not happen until after the shipments are slated to start for awards issued in a late-February tender.
Indonesia:
The price of granular urea jumped about $37/mt FOB in just one week. Kaltim sold 45,000 mt at $366/mt FOB, against a price of $328.70/mt FOB last week. A prilled order of 25,000 mt went for $354.90/mt FOB, against the last purchase of $321.75/mt FOB.
All the tonnage was reportedly picked up by Oracle Commodities of Singapore, which sources described as a new player in the Indonesian urea market. The big question in the industry, however, is where Oracle will be able to sell these tons at a profit.
Sources reasoned that the older granular price of $328/mt FOB could have been used as part of a larger offer into the upcoming Indian tender, while still allowing for some profit. The new price, however, shows an Indian landed price of around $390/mt CFR, a level that some think is much higher than what will happen in the tender once it is called.
Middle East:
Sources reported a Fertiglobe urea sale of $365/mt FOB. Others also reported deals in the low $370s/mt FOB, giving a range of $365-$375/mt FOB. Reportedly, the bulk of the bids floating in the area are $368-$373/mt FOB.
The positive upward force on prices is prompting producers to say their new price is $390-$400/mt FOB. Sources said potential buyers are discounting those prices as not achievable, however, and move right to the $360s/mt FOB. The fact that producers are still willing to talk, said one trader, means the $390s/mt level is aspirational, but not realistic for now.
Pricing ideas in the $360s/mt and $370s/mt FOB fit in with the deals recently cut in Egypt. Sources said traders often look at prices from the Arab Gulf to be about $10/mt less than the Egyptian settled prices.
This week the price increases continued out of Egypt. Alexfert sold 15,000 mt each to two traders at $380/mt FOB for April shipment. MOPCO also settled at $380/mt FOB for 5,000 mt for late April and possibly early May.
Prices for February-March in Egypt topped out at $362/mt FOB with a small Abu Qir order. Prices jumped into the $370s/mt and $380s/mt FOB for April. Producers said it is still too early to predict May prices, but many in the industry said they do not see much to slow down the upward trend.
Algeria showed sales at $363/mt FOB for April and $380/mt FOB for May. Algeria is often seen as a supplier with slightly lower prices, which are used more to confirm existing price trends rather than leading them.
Black Sea:
Limited urea tons from the area make nailing down the market difficult, said sources. However, there are reports of deals at $330-$340/mt FOB for some small cargoes. Reportedly, producer offers at $360/mt FOB are being quickly dismissed by buyers.
China:
A numbers of factors are keeping Chinese urea from the global market, but traders have talked with producers about obtaining some material. The results of these talks show little movement in the $340s/mt FOB price for prilled and granular, even as producers begin their offers in the low-$360/mt FOB. Sources said while some Southeast Asian buyers are looking for product, they are not willing to pay what producers are asking.
Availability of Chinese urea is limited for a number of reasons. Sources said many plants are still shut down or in reduced output because of limits on electricity to run the plants. While this situation is slowly correcting itself as more power plants get the coal they need to operate, additional impediments remain.
Some plants are located in hot spots of renewed COVID-19 outbreaks, forcing them to close as part of aggressive quarantine efforts by the government. In some cases, the quarantine orders affect the road and rail systems out of the plants, meaning the urea cannot be delivered to the distribution terminals or export ports. In other cases, the shutdown orders directly affect the staffing of the terminals and ports.
With delays being seen all around, some plant operators are letting their workers off early for the week-long Chinese New Year Golden Week centered on Feb. 12. One trader said it looks as if many plants will be closing this weekend and not reopening until Feb. 22.
Sources said if India does call its tender at the end of the month, as is now expected, production will be back up and many of the COVID-related restrictions may be lifted, allowing Chinese urea to play a role in the tender. Some sources said even if production is slow to start, there are reportedly a lot of tons sitting in railcars waiting to be sent to an export port or domestic terminal.
Nigeria:
Dangote told the Nigerian government its new plant will be ready for production during the first quarter of 2021. This announcement counters earlier reports that the plant may not be ready for full operation until the last half of the year.
The 3 million mt/y plant is expected to turn over the first quarter of its production to the domestic market. The Dangote company had earlier said half of its production would be geared to the 750,000 mt Nigerian domestic market and to neighboring African countries. The other half would be available for offshore clients.
Buyers in Brazil remain anxious to get some of the Dangote tons. The Brazilians are attracted by the shorter steaming time across the Atlantic compared to their current suppliers in North Africa and the Arab Gulf. Sources said some traders are also asking for favorable netback prices on top of cheaper freight to help the new plant gain a foothold in the Brazilian market.
Other traders are also looking at the Dangote tons for additional markets, mostly in North America and Latin America.
The Dangote plant will have to compete with the other major urea manufacturers in the country for the limited domestic market. The competition might be more than the 750,000 mt reported annual demand for urea. Press reports said the government no longer plans to pay for food imports but will, instead, encourage more agricultural output. This proposed increase in farmed acreage could also increase urea demand.
One of the long-time producers in the country, Notore, announced this week that it will be taking down its plant for maintenance to get it set up to produce at levels close to 95 percent of its rated 500,000 mt/y capacity.
Brazil:
Deals at the ports and inland reflect the global fire that is going on in the urea market.
Sources said prices at Paranagua have moved up to $385-$390/mt CFR. Sellers are pushing even harder for $390/mt CFR, and are expected to achieve that level soon. They point to increased optimism by farmers for the 2021/22 planting season as farmers and cooperatives make plans to step up their fertilizer purchases.
Inland, the main selling center at Rondonopolis showed a move to $475-$510/mt FOB ex-warehouse. The barter rate stayed even at 60 bags of corn for 1 mt of urea.