U.S. Gulf:
The NOLA granular urea barge market rollercoaster continued this week. Sources reported trades as low as $320/st FOB, with prices eventually rebounding to settle in the $338-$342/st FOB range.
Sources gave a multitude of reasons for the past two weeks of price swings, including a delay in the Indian tender; Arab Gulf paper trades; cold and wet weather halting movement; and volatile corn and soybean prices. While some feared that inland UAN and urea inventories might be sizeable due to low prices in the second half of 2020, others disagreed, arguing there is still plenty of product left to sell.
With the big run-ups in prices for all the major commodities, sources speculated that profit taking is also taking place in some cases, as some players who bought low can make an easy profit on resales.
U.S. Imports:
December urea imports were down 16.5 percent, to 151,230 st from the prior year’s 181,006 st. Imports for the July-December period fell 11.3 percent, to 1.34 million st from 1.51 million st.
Qatar led the fertilizer year-to-date imports with 540,915 st, up 1.5 percent from the year-ago 532,798 st, while Saudi Arabia’s 299,131 st was 26.2 percent higher than the prior year’s 237,094 st. Canada was third at 213,990 st, up 7.7 percent from the prior year’s 198,691 st total, with Russia following at 195,904 st. Egypt’s 551 st July-December total represented a 99.4 percent decrease from the previous year’s 91,132 st tally for the same period.
U.S. Exports:
July-December 2020 urea exports were up 48.8 percent, to 516,073 st from the previous year’s 346,883 st. Offshore movements were down 4.7 percent in December, however, to 88,672 st from 93,091 st.
Eastern Cornbelt:
Urea reportedly backed off to $375-$410/st FOB in the Eastern Cornbelt on reports of weaker NOLA barge pricing, with the low reported at Ottawa, Ill. In the Great Lakes region, urea out of Michigan terminals ranged from $425-$440/st FOB during the week, depending on location.
Western Cornbelt:
Urea was steady at $375-$410/st FOB in the Western Cornbelt, unchanged from the prior week, with the low reported at St. Louis, Mo. Sources quoted the Port Neal, Iowa, urea market at $395-$410/st FOB at midweek, with the Catoosa/Inola, Okla., market pegged at $375-$380/st FOB.
Northern Plains:
The urea market FOB St. Paul, Minn., was quoted firmly at $390-$410/st FOB in early February. Delivered urea was pegged in the $425-$455/st range in North Dakota, up from $380-$405/st DEL in mid-January, with the lower numbers for prompt and the higher for spring tons.
Northeast:
The urea market had reportedly edged up to $400/st FOB Fairless Hills, Pa., for February tons, up $35/st from mid-January, with forward offers at Fairless quoted at $405/st FOB for March-April and $410/st FOB for Q2.
Eastern Canada:
The granular urea market was pegged at C$545-$580/mt FOB in Eastern Canada in early February, depending on location, up some C$90-$115/mt from pricing levels at the end of 2020.
China:
Sources said an advisory issued by the central government in Beijing could have been the genesis of a rumor that the country was considering implementing an export tax on urea.
The advisory reportedly was sent to all urea producers and traders in the country telling them the government considered maintaining adequate stockpiles of urea for the domestic market to be of national importance. Supposedly, the notice further expressed the government’s displeasure that export sales have been running up the domestic price.
Some in the industry interpreted this as a veiled threat that China might re-institute export duties on urea to force product back into the domestic market.
Sources outside the country said they have had discussions with their sources in China about the possibility that such a duty might be imposed. The consensus is that nothing will happen until the end of the month because the country spent most of this week slowly shutting down for the Lunar New Year holiday.
Officially the Golden Week is February 11-18. However, sources said many offices this week were operating with limited staff as people took time off early. Few are expected to be back to work until Feb. 22.
Some of the extended shutdowns by urea producers are also being attributed to the pandemic. In some cases, factories are being shut down because a COVID-19 hot spot occurred in the area around the plants. In other cases, the transportation infrastructure to move its product has been impacted, leaving them few opportunities to move out their product.
There were reports of sales of product in small lots to regional buyers. Sources put the netbacks in the low-$360s/mt FOB.
India:
Sources now said the much-anticipated urea tender in India will not be called until the Chinese industry comes back to work after Feb. 22. Sources said the rise in price from every producing area is an incentive for the Indian buyers to wait until the maximum number of sources and tons are available for offer.
One trader said it would be to India’s advantage if they could play China against the Arab Gulf for supply and price. If the tender is called while China is still on its extended Lunar New Year holiday, the Arab Gulf producers would be favored as the main suppliers.
Sources noted that the current price of $375/mt FOB from the Arab Gulf would mean extraordinarily high prices into India, which is already cash-strapped and looking for ways to reduce what it has to pay for fertilizer.
Middle East:
Reports from the Arab Gulf indicate that some deals have been done at $375/mt FOB. The new range for pricing from the region is now anchored in the $370s/mt FOB, removing the lower-priced product that was available just a week ago.
Egyptian producers continue to push for higher prices as European demand remains strong. Sources said the current price that producers are offering for April shipment is $400/mt FOB after deals were closed at $380/mt FOB last week. Material shipping this month and into early March is pegged in the upper-$360s/mt FOB.
Sources said the $400/mt FOB price for late April shipment may not be difficult to achieve. They point to strong prices from the Arab Gulf to Indonesia and continued strong demand from Europe, Egypt’s main customer.
Indonesia:
Producers have quieted following the sale of 45,000 mt of granular material by Kaltim at $366.90/mt FOB and 25,000 mt of prilled at $354.90/mt FOB.Sources said another selling tender could occur by the end of the month.
The higher prices of urea are reportedly causing Indonesian NPK producers to forego buying urea in favor of imported ammonium sulfate.
Black Sea:
Limited availability of product is also limiting the possibility of spot sales. Lacking any new public sale, the urea price in the region remains in the $330s/mt FOB.
Brazil:
The price of urea in Brazil moved up all week.At the beginning of the week, sources reported a deal from China at $380/mt CFR into Paranagua. By the end of the week, sources quoted the market at $390-$400/mt CFR.The increase in prices into Brazil mirrored increases from producers in the Arab Gulf and China.
Prices at Rondonopolis softened a bit at the upper end of the range, with quoted prices at $475-$490/mt FOB ex-warehouse, dropping from $510/mt FOB. The tightness in the range, however, is indicative of a tighter market, said sources. In many inland areas, urea availability is limited.
Sorriso reported prices at $540/mt FOB ex-warehouse, up from just under $500/mt FOB at the end of January. The barter rate for 1 mt of urea remains steady at 60 bags of corn.
| Brazil Urea Prices | ||
| Terminal/City | US$/mt FOB ex-warehouse | |
| Week ending 02/05 | Week Ending 02/12 | |
| Rondonopolis | 475-510 | 475-490 |
| Sorriso | NA | 540 |
Imports of urea in January 2021 were up 25 percent compared with January 2020, according to Trade Data Monitor. Buyers brought in 545,000 mt in January, compared with 437,000 mt last year. The main suppliers were Qatar and Russia, with a total of 315,000 mt coming from the two countries.
| Brazil Urea Imports | |||
| Partner Country | January (mt) | ||
| 2019 | 2020 | 2021 | |
| World | 580,395 | 436,752 | 545,183 |
| Qatar | 66,000 | 42,873 | 158,426 |
| Russia | 138,904 | 66,005 | 157,384 |
| Algeria | 125,000 | 123,272 | 101,829 |
| Nigeria | 41,142 | 79,851 | 59,530 |
Source: Trade Data Monitor