U.S. Gulf:
Granular barges were reported to be trading at $375-$400/st FOB, averaging slightly higher than the week-ago $370-$401/st FOB, according to sources. All April barges were reported at lower numbers, with sources quoting $363-$375/st FOB.
Eastern Cornbelt:
The urea market remained at $425-$435/st FOB in the Eastern Cornbelt, with the low reported at East Dubuque, Ill., and the high out of spot Illinois and Ohio River terminals. Pricing at Cincinnati, Ohio, was pegged at $430-$435/st FOB at mid-month.
Western Cornbelt:
Urea pricing was pegged at $420-$425/st FOB St. Louis, Mo.; $420-$430/st FOB St. Paul, Minn., for river-open; $425-$430/st FOB Catoosa/Inola, Okla.; $430/st FOB Caruthersville, Mo.; $430-$440/st FOB Port Neal, Iowa; and $475-$495/st DEL in North Dakota, depending on time of shipment.
California:
Urea pricing at California port terminals was moving up, with sources reporting new offers at $520/st FOB Stockton, up from $450-$480/st FOB in late February and $400/st FOB at the end of January. No current rail-DEL prices were confirmed at mid-month.
Pacific Northwest:
The urea market was quoted at $475/st FOB Rivergate, Ore., and $480/st FOB Aurora, Ore., up $25/st from last report, with delivered tons pegged at the $490/st level in Idaho.
Western Canada:
The urea market in Western Canada was quoted at C$650-$690/mt DEL for spring tons, up some C$35-$45/mt from last report, depending on location and supplier. The market FOB Saskatchewan warehouses was reported at C$675-$690/mt, up a full C$50-$75/mt from late February.
India:
Rashtriya Chemicals will close a urea tender on March 22. The move sent the global urea market into a tizzy, with Chinese traders pulling back offers for export tons and Arab Gulf producers digging in their heels on pricing.
The Indian buyer will be facing not only record-high prices, but also soaring freight rates. By the end of the week, international traders had shifted their expectations of the offering prices in the tender from the upper-$360s/mt CFR to the upper-$370s/mt CFR, with some even predicting the low-$380s/mt CFR.
Even as international traders exchange tales of higher delivered prices into India, the big fear seems to be of a player putting in an exceptionally low price. Sources said anything under $360/mt CFR is not workable from any source, adding that even the mid-$360s/mt CFR would be difficult to match.
The current Chinese price is pegged in the low-$340s/mt FOB for prills and about $360/mt FOB for granular. Freight from China to India’s East Coast ports has jumped to $30/mt, setting prices for offers of Chinese product in the $370s/mt CFR.
At the same time, the Arab Gulf producers are holding to their price of $365/mt FOB with freight now at about $20/mt, for a suggested landed price of $385/mt CFR. Sources suggested the only material offered from the Arab Gulf might be directly from the producers on an FOB basis to leave the shipping issue in the hands of the Indian buyer.
Industry watchers are unified in their understanding that RCF will need to buy 1-1.5 million mt of urea to ensure a proper kick-off of the 2021 season. Sources said the most likely breakdown of supply will be about 700,000 mt from China; 300,000 mt from the Arab Gulf, and 200,000 mt from other sources.
Many feel comfortable that the Chinese number could be met. However, getting product from the Arab Gulf will require the producers to drop their prices to meet the Chinese level. The “other” sources, however, are more of a question mark.
The current asking price in the Black Sea is at $360/mt FOB, with freight to India pegged at $80/mt FOB. Likewise, the Egyptian price is steadying at $400/mt FOB. At these levels, both the Black Sea and Egypt are out as possible suppliers.
Sources noted the Kaltim sale at $361/mt FOB for 40,000 mt this week as a possible contender for the Indian market. The material is to be loaded in April, and the freight rates could make such a deal possible. One trader noted, however, that strong demand in Australia could also pull at the Indonesia product.
Sources said financing the tender does not appear to be an issue. Initially, traders figured the tender would be called later in the month so that the awards would be issued when the new fiscal year starts on April 1. As things stand, the awards will be made before March ends. One trader noted, however, that the final contracts for the awarded tons may not occur until after April 1, and therefore on the next budget.
China:
As soon as RCF called its urea tender, sources said Chinese traders looking for export opportunities withdrew their product from consideration. New talks had to start with the idea of selling large quantities to India in a way that will prop up prices.
Prices had dipped in the first week of March into the $330s/mt FOB for prilled and the $340s/mt FOB for granular. Right after the tender was called, granular jumped to the upper-$350s/mt FOB and prills to the low-$340/mt FOB. Sources said the traders holding on to the Chinese product seem determined to keep prices at these levels.
Sources reported about 10 panamax vessels lined up for loading at Chinese ports in the next few weeks. In some cases, the lineup is creating minor congestion that could cause some problems with timely loadings of urea. In other cases, sources said the port facilities are facing labor shortages.
Government-ordered restrictions on the number of people allowed into a workplace remain in place to prevent new large-scale outbreaks of COVID-19. Some ports reportedly are on the edges of so-call virus hot spots, causing workers to stay at home until the all-clear is issued by the government.
Sources said the Indian buyer will try to place pressure on Chinese producers to lower their prices because of the higher freight rates currently in place. At the present prices, India could be facing offers in the $370s/mt CFR, which would be at record levels.
The buyers could argue, said one trader, that with the end of the Chinese domestic season, the producers have no other place to go to place their tons, especially now that the plants are running at higher production rates. Sources noted, however, that strong demand in Brazil and Australia, along with limited material from other sources, could allow the Chinese producers to hold firm on their pricing ideas.
Middle East:
Arab Gulf producers are holding to pricing ideas centered on $365/mt FOB, despite pressure to come down to levels that would be in line with those from China.
Sources speculated that Chinese prilled urea going into the Indian tender could be in the $370s/mt CFR. The landed price of Arab Gulf material would be closer to $385/mt FOB, given the current estimates of freight at around $20/mt.
Some producers might offer discounts to trading houses with whom they have long-term offtake agreements, but few think the producers will drop their price into the $350s/mt FOB to be competitive with China. Others think it might happen.
Some producers are expected to offer tons only on an FOB basis, leaving the issue of finding cheap freight to the Indian buyer.
Producers have told traders they are under no pressure to lower their prices. Brazil and Australia are both hot markets for urea, giving them customers who are willing to pay at the current market.
Some producers have already stepped up to cover sales to regional buyers. Oman has reportedly sold three cargoes totaling 120,000 mt to a Turkish buyer for shipment in late March. Iran has also reportedly stepped in with a sale into Turkey at $380-$385/mt CFR, which could make it more difficult for Egyptian material to enter that market.
Egyptian producers continue to make sales at $400/mt FOB. Sources reported a sale by Fertiglobe of 6,000-10,000 mt at $400/mt FOB for April loading. Producers appear to be happy the price has not gone down, but neither has it moved up. Recent sales by Egyptian producers for April shipments have all been at $400/mt FOB despite their efforts to move the price up.
Sources said for now the price is holding because European buyers have been willing to pay top dollar for small cargoes of material to ensure they have full inventories for the spring application season. Once the European demand drops, however, sources said they expect to see Egyptian prices fall to better accommodate Indian demands for lower prices, or to be competitive in Brazil against suppliers with cheaper freight rates.
Stories spread this week of a deal at $370/mt FOB for a prilled cargo. Sources, however, dismissed the deal as one from a trader holding older material that was purchased just as the price started its steady move up earlier this year.
Black Sea:
Sources said offers are now firmly at $360/mt FOB, but no one can point to a deal done at that level. The only confirmed sales were from the previous week at $330-$335/mt FOB. The price is expected to remain firm, with some possible growth because of strong and steady demand from European buyers, which includes several Turkish firms.
Product from Yuzhnyy is said to be too expensive to be considered in the RCF/Indian tender. The combination of the current spot price and the estimated $80/mt for freight puts the product well above $400/mt CFR, against the anticipated Chinese landed price in the $370s/mt CFR.
There are reports that about 90,000 mt will be available for sale during the last half of March. Sources said some of that amount will be needed for the domestic market. No one could tell how much would be available for export once those tons are siphoned off.
Indonesia:
A selling tender of 40,000 mt of granular urea by Kaltim closed this week. The reserve price of $365/mt FOB was not met. However, within a day or two, Kaltim came to an agreement at $361/mt FOB with the lowest bidder.
| Bidding Company | US$/mt FOB |
| Eurochem | 360.00 |
| Samsung | 354.00 |
| Koch | 350.80 |
| Ameropa | 349.00 |
| Agrifert Liven | 345.00 |
| Swiss Singapore | 341.03 |
Sources reported that besides settling with EuroChem, Kaltim also sold cargoes to Swiss Singapore and Keytrade. The final deal at $361/mt FOB could allow for the material to be competitive in the upcoming RCF/India urea tender. It could also be sold to Australia at a reasonable profit.
Sources said the acceptance of a price well below the reserve price indicates that Kaltim was more interested in moving out product than holding on to a high price. The previous tender closed at $366/mt FOB for granular product.
Brazil:
International traders said the Brazilian urea market is hot enough that traders are looking for product from any source. The current landed price at Paranagua has moved up at the upper end to $395-$413/mt CFR.
Farmers are said to be more interested in taking care of the harvest right now than making long-term deals for urea, according to sources. Even at that, however, inland buying is showing stronger prices. Rondonopolis has tightened, with its high-end price dropping a bit. Sources now peg the market at $475-$578/mt FOB ex-warehouse.
Sorriso is steady at $503-$508/mt FOB ex-warehouse. The barter rate remains steady based on strong sales price of corn at 60 bags for 1 mt of urea.
| Brazil Urea Prices | ||
| Terminal/City | US$/mt FOB ex-warehouse | |
| Week ending 03/11 | Week Ending 03/19 | |
| Rondonopolis | 480-600 | 475-578 |
| Sorriso | 503-508 | 503-508 |