U.S. Gulf:
Granular urea barges that were on the water and ready to move were reported to still be trading in the $400-$405/st FOB range. Stepping out into first-half and all-April, however, trades were called $361-$382/st FOB.
Sources said as time passes, so does the opportunity to get barges upriver in time for the season. In addition, there were fears that higher NOLA prices may have attracted more imports than were needed. The fact that India’s RCF cut its urea tender take from 1.2 million to 800,000 mt was also a factor depressing international price ideas.
Eastern Cornbelt:
The urea market was quoted at $420-$440/st FOB in the Eastern Cornbelt, with the low reported out of spot Illinois River terminals in late March. The Cincinnati, Ohio, market was pegged at $430-$440/st FOB, up $5/st at the high end of the range.
Western Cornbelt:
Urea remained in a broad range at $425-$455/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and the high at Sergeant Bluff, Iowa. Sources quoted the Caruthersville, Mo., urea market at the $430/st FOB level at midweek.
Southern Plains:
Sources pegged the urea market at $420-$440/st FOB in the Southern Plains, with the low confirmed at Houston early in the week. The Catoosa/Inola, Okla., market was quoted in the $430-$440/st FOB range at midweek, up $5-$10/st from the previous week, with some suggesting the market at Catoosa/Inola and Enid, Okla., had edged up to $440-$445/st FOB late in the week.
“Trucks are not too hard to find if you don’t wait until the last minute,” said one source. “Empty railcars are at a premium, and if you are relying on rail, you need to plan ahead.”
South Central:
Sources reported a slightly softer urea market in the South Central region in late March. Terminal prices ranged from $410-$430/st FOB, down $10/st from last report, with the low confirmed at Convent, La., and the upper end at Shreveport, La., Little Rock, Ark., and Pendleton, Ark. The Memphis, Tenn., market was pegged at $420-$425/st FOB.
Southeast:
The urea market in late March was quoted at a firm $430/st FOB Wilmington, N.C., and other port terminals in the Southeast.
India:
After counterbidding with traders for about 1.2 million mt soon after its tender closed on March 22, it now appears that RCF will take only 802,500 mt with an emphasis on West Coast purchases.
Letters of intent (LOI) to buy were issued on March 31 for the tonnage. The 537,500 mt to be delivered to West Coast ports means tons from China will not play as major a role as had previously been expected. LOIs were issued for only 265,000 mt for East Coast deliveries.
Under the initial offers in the tender, East Coast offers were 947,500 mt against East Coast offers of 889,500 mt.
| RCF Awards as of March 31 | |||
| Offering Company | Quantity (mt) | Discharge Port | Source |
| Koch | 50,000 | Gangavaram | China |
| 50,000 | Krishnapatnam | ||
| 50,000 | Pipavav | ||
| Transglobe | 50,000 | Karaikal | China |
| 50,000 | Vizag | ||
| Amber | 65,000 | Kakinada | China |
| Agrifert Liven | 50,000 | Mundra | China |
| Ameropa | 51,500 | Kandla | Arab Gulf-China |
| 51,500 | Mundra | ||
| 51,500 | Tuna | ||
| Gavilon | 45,000 | Rozy | China |
| Swiss Singapore | 46,000 | Jaigarh | Oman |
| Samsung | 50,000 | Kandla | UAE |
| 45,000 | Dahej | ||
| Dreymoor | 52,000 | Pipavav | FSU |
| Continental | 45,000 | Hazira | China |
Some sources said the reduction of tons from China was because of limited vessels available to move the tons by the April 28 shipping deadline. One trader had calculated 600,000 mt as the maximum tonnage that could be moved by vessels already on hand or bound for China.
Many in the industry said that level was the most optimistic view, however, given the potential for delays in loading due to weather and reported staff shortages at some ports due to COVID-19 limitations on personnel.
Industry watchers pointed to the high price paid in the tender. The $380/mt CFR for either coast represents about a $95/mt jump since the last tender and a rate not seen for many years. More than one trader wondered if the Department of Fertilizer had enough money in its coffers as the fiscal year came to an end in March.
Sources noted that while the payments will be made after the April 1 beginning of the new fiscal year, the commitment took place in the old year, which could have caused some concern with the government’s bean counters.
The tons slated for the West Coast are expected to come from Indonesia, Russia, and the Arab Gulf. Initially, industry watchers were concerned that the Black Sea material might have difficulty getting to India because of the blockage at the Suez Canal. However, the release of the Ever Given and Egypt’s declaration that it would quickly clear the vessel backlog eased concerns that the right vessels will be in place in the Black Sea to ship the urea.
Another tender will need to be called soon to ensure enough urea for the spring season. The next call is expected in late April or early May, but most likely after the April 28 shipping deadline for the current tender.
Sources said the Indians may have reduced the amount of tonnage in this tender to force down global urea prices by building up large reserves in the global market. Just before RCF announced it would take fewer tons, the Indonesian price for granular urea dropped to $345/mt FOB from $361/mt FOB.
At the same time, increased freight rates are forcing producers to scale back on prices, with traders now calling the Chinese prilled market in the $340s/mt FOB, down from the $350s/mt FOB based on the initial estimate when the tender closed. Even Egyptian producers are expecting the long string of rising prices to be broken when Abu Qir closes its tender on April 1.
China:
Prices have come off as freight rates continue to climb. Sources now report prilled urea deals done at $340-$345/mt FOB, with some talk of both prills and granular being offered in the $330s/mt FOB.
The new rates seem to be the result of continued tightness in the freight market. Sources said producers are adjusting their netbacks to conform to the landed price of product they promised to traders.
For the prilled producers, the lack of a larger sale to India is not seen as a major blow. Sources said there is still residual demand in China for some of the tonnage. Observers also noted that demand for granular and prills from other buyers, including those in Latin America, will help absorb some of the tons that otherwise would have gone to India.
Several traders are saying that the producers will seek some sort of retribution against India for reducing their take in this latest tender. Just how much vengeance they can get is uncertain, however.
By the time of the next tender, no other single buyer will have as big an influence on the market as India. While some demand is expected from a few regional buyers, sources said they will not have as much influence on the market as India. The general sense is that India will achieve lower prices in the next tender.
Indonesia:
The PIH tender that closed on March 29 showed a softening in the urea market. The producer had set a reserve price of $340/mt FOB for the 30,000-45,000 mt of granular urea it was offering. In the end, Agrifert Liven bought the full 45,000 mt at $345/mt FOB. Sources reported another cargo of 30,000 mt was also picked up at the same price by another trading house.
The final price is about $16/mt lower than the last public sale by an Indonesian producer. Sources said the fact that PIH set its reserve at $340/mt FOB was a firm indication that producers would have to adjust their prices downward.
Sources pointed to rising freight rates and a general unwillingness by buyers to keep paying ever-higher landed prices. Producers needed to drop their prices to compensate for the freight rates, said one trader. Even before the PIH tender closed, Chinese producers had indicated they would accept lower prices to ensure sales into India.
Middle East:
Arab Gulf producers are facing the same issue as other producers: higher freight rates pushing against their netbacks.
Sources said freight to India is now almost $15/mt, when just a month ago the price was under $10/mt. The difference is forcing producers to rethink their efforts to keep moving up the price of their product. Expectations of higher freight are keeping the Arab Gulf price in the mid-$350s/mt.
Product from the Arab Gulf remains tight. The shutdown of the SABIC-4 plant is expected to add more support to producers looking to prevent a collapse of prices in the area.
Abu Qir in Egypt closed a tender on April 1 for 25,000 mt of prilled and 10,000 mt of granular urea, with shipment in the second half of April. Sources said the tender will be the first real test of the new pricing environment in the Middle East. Expectations are that bids will be way under the current rate of $400/mt FOB, which producers have been able to secure for smaller lots in the past few weeks.
Iranian urea exports in February 2021 were reported at 110,000 mt, according to Trade Data Monitor. No numbers were available for February 2020, but February 2019 exports were at 271,000 mt. The main buyers in February were China and Mozambique with about 25,000 mt each, followed by Oman at 22,000 mt and Afghanistan at 20,000 mt. A handful of other countries bought less than 10,000 mt of the Iranian product.
So far this year, Iran has shipped 468,000 mt to the world. The single largest buyer was Turkey with 119,000 mt, followed by Brazil at 58,000 mt.
South Korea:
February urea imports moved up 28 percent, to 110,000 mt from 86,000 mt in February 2020. The main supplier was China at 41,000 mt, even though the amount was slightly down from the February 2020 total of 47,000 mt.
Year-to-date imports were reported at 186,000 mt by Trade Data Monitor, down 17 percent from 224,000 mt during the same period last year.
Black Sea:
Russian producer TOAZ announced thar it has increased its supply of urea to the domestic market by 20 percent compared with 2020. The move to step up supplies was seen as one reason why fewer Russian tons were being made available for export.
Brazil:
The urea market in Brazil turned quiet as Holy Week took over. With most offices slated to close by midweek, sources said there was little business concluded. The resulting doldrums softened the market to $393-$410/mt CFR at Paranagua.
Traders said they expected the price to shift upward if RCF made large purchases as part of its tender. News that fewer tons will be taken could have an impact on pricing ideas in Brazil, however.
The inland Rondonopolis market moved up as demand in the area stayed steady and traders expected a tighter and higher global market following the RCF/India tender results. The price was pegged at $475-$555/mt FOB ex-warehouse. Sorriso remained steady with a high of $530/mt FOB ex-warehouse.
The barter rate for 1 mt of urea is holding at 71 bags of corn.
| Brazil Urea Prices | ||
| Terminal/City | US$/mt FOB ex-warehouse | |
| Week ending 03/26 | Week Ending 4/02 | |
| Rondonopolis | 465-540 | 475-555 |
| Sorriso | 480-530 | 480-530 |