U.S. Gulf:
A preference for moving and upriver barges led to falling values at NOLA for the week, sources said. April-loading barges were heard trading at $350-$370/st FOB, softening from the week-ago $405/st FOB top. Tons slated to load in first-half May were reported transacting in a $345-$349/st FOB range, down from $370/st FOB in the prior report, leaving the 30-day range at a wide $345-$370/st FOB.
Trading was reported down to $325/st FOB for the all-May loading window, while prompt business rumored up to $390/st FOB went unconfirmed on April 15.
Eastern Cornbelt:
Urea pricing was up slightly to $430-$440/st FOB in the Eastern Cornbelt, with the low reported at Ottawa, Ill., and other spot Illinois River terminals and the high out of inland locations. The Cincinnati, Ohio, market remained at $431-$435/st FOB in mid-April.
Western Cornbelt:
Urea continued to be quoted in a broad range at $425-$455/st FOB in the Western Cornbelt, with the high at Sergeant Bluff, Iowa. The St. Louis, Mo., market was reported in a wide range at $425-$440/st FOB at mid-month, depending on supplier, while pricing at Catoosa/Inola, Okla., remained at $435-$445/st FOB.
Northern Plains:
The urea market continued to be quoted at $430-$435/st FOB St. Paul, Minn., with delivered tons pegged at $485-$490/st in North Dakota.
Great Lakes:
The urea market was quoted at $445-$470/st FOB in the Great Lakes region, up another $5-$8/st from last report, with the low reported at Burns Harbor, Ind., and the high at Saginaw, Mich. Sources also reported mid-April prompt offers at $455/st FOB Maumee, Ohio, $460/st FOB Essexville, Mich., and $463/st FOB Webberville, Mich.
Northeast:
Urea prices were quoted at a firm $445/st FOB Fairless Hills, Pa., for April-June tons, up $15/st from last report.
China:
Urea prices out of China slipped all week. Coming out of the weekend, sources put granular urea in the mid-$330s/mt FOB and prills in the upper-$320s/mt FOB. By midweek, however, granular had dropped into the $320s/mt FOB and prills were languishing at $320/mt FOB.
As the week closed, sources reported a granular deal at sub-$320/mt FOB for 45,000 mt to be loaded the last week of April or the first week of May. Sources said the deal appears to have been brokered by a domestic trader, leaving some to wonder about the netback price.
International traders had been talking all week about the steady decline in Chinese prices. Some had predicted the granular price could go below $320/mt FOB under the right circumstances. They noted that producers could easily provide support for higher prices by cutting back on production. The best estimates now are that the industry is running at about 65 percent of its rated capacity, a slight decrease from 70 percent at the end of March.
There is excess material available, partly because RCF did not take as many tons in its tender as expected. Sources said the pending MMTC tender could easily take 1.5 million mt, with the bulk coming from China.
Industry watchers are putting a lot of credence to the rumors that MMTC will call its urea tender soon. Sources noted that by calling the tender as early as next week, awards could be issued before the international Labor Day holidays. They also noted that the bulk of the loadings could be completed before China enters its June domestic season.
India:
The main topic of discussion was the rumor that MMTC might call a urea tender next week. The move, if it happens, would occur while cargoes are still being loaded for the RCF tender. Traditionally, a new tender is not called until after the ship-by date has passed.
The fact that there might be a call before the RCF shipment deadline of April 28 led some industry sources to speculate that Indian demand is expected to be much stronger than earlier anticipated.
When RCF reduced its take in the last tender from 1.2 million mt to about 800,000 mt, sources said the next tender would have to make up the difference to satisfy demand. Sources said the MMTC tender could take 1.5 million mt if the price is right.
Sources said RCF reduced its take largely because of the unusually high price they were forced to pay. Reportedly, Indian buyers were hoping that by taking fewer tons, reserves would build and force prices down. So far, at least in the Asian markets, prices have shown a steady drop.
The lack of business in the Middle East has made nailing down new prices difficult, but sources said the expected prices out of the Arab Gulf and Egypt will be lower than the prices of just a month ago.
Another factor in calling the tender sooner than expected, said one trader, is that the tender can close with awards issued before the international Labor Day holiday on May 1. Any tender called in the last week of the month would face potential delays in finalizing awards and letters of credit because of the holiday break. Meanwhile, waiting until after May 1 would delay the shipment of awarded tons until Chinese domestic demand kicks in, causing more competition and possibly higher prices.
Last year, the second tender of the year was also by MMTC, following an RCF tender. At the time, the awarded prices were about $25/mt lower than the first tender, with the $227-$232/mt CFR prices ultimately reflecting the lowest of the year. While sources do not expect to see the lowest prices of the year in the upcoming tender, they do expect to see lower prices than the $380/mt CFR paid by RCF last month.
Middle East:
Arab Gulf producers appear in no mood to lower prices. Sources said the price for the limited tons available in the Gulf remains in the upper-$340s/mt FOB.
A sale by Fertiglobe of 30,000 mt of granular urea at $345/mt FOB helped create an anchor at a time when pressure for lower prices is growing. Sources said the cargo is for shipment later this month or early May and is most likely bound for Australia. Even with that sale, sources said a cargo from another source is under discussion in the upper-$330s/mt FOB. The rumor adds fuel to arguments that the market is softening.
Sources said supplies for spot deals are limited. Part of the temporary shortage comes because of the continued shutdown at SABIC-4. One trader reportedly had to go to Indonesia to cover a contracted sale to a Southeast Asian buyer. The limited tonnage available for spot business has not kept market sources from speculating where the price should move to and what the future might look like, however.
Speculators said the paper market price for May and June shows a decided drop to the low-$320s/mt FOB. This price fits in with the pricing trend in China. In recent years, prices of China and Arab Gulf urea have run close to each other. Right now, the Chinese price has come off into the $320s/mt FOB, while the Arab Gulf price has not moved. Sources said a correction is coming.
Egyptian producers remain steadfast that the price of their product should not be falling below the public price of $400/mt FOB. However, no one is willing to pay that level. In fact, sources said no one is willing to pay more than $350/mt FOB at this time.
Sources are quoting prices of $340-$350/mt FOB as the basis for the current round of talks between buyers and producers. The low end of the talks appears to be coming for clients in Latin America, while the higher end seems to be tied to potential sales into Europe.
The paper market for Egypt shows not only a move into the $340s/mt FOB, but a further drop. The May price is pegged at $340/mt FOB, while the June estimated price is $332/mt FOB.
Arab Gulf producers appear to be in no mood to lower prices. Sources said prices for the limited tons available in the Gulf remain in the upper-$340s/mt FOB.
Sources said the lack of material means producers are barely able to cover the contracts they have – for now. Reportedly, one trader even had to go to Indonesia to cover a contracted sale to a Southeast Asian buyer. The lack of any spare material means the region is closed to spot deals and any price adjustments.
The lack of spot deals, however, has not prevented market sources from speculating where the price should be and what the future might look like.
Speculators said the paper market price for May and June shows a decided drop to the low-$320s/mt FOB. This price fits in with the pricing trend in China. In recent years, prices of China and the Arab Gulf urea have run close to each other. Right now, the Chinese price has come off into the $320s/mt FOB, while the Arab Gulf price has not moved. Sources said a correction is coming.
Egyptian producers remain steadfast that the price of their product should not be falling below the public price of $400/mt FOB. However, no one is willing to pay that level. In fact, sources said no one is willing to pay more than $350/mt FOB at this time.
Sources are quoting prices of $340-$350/mt FOB as the basis for the current round of talks between buyers and producers. The low end of the talks appears to be coming for clients in Latin America, while the higher end seems to be tied to potential sales into Europe.
The paper market for Egypt shows not only a move into the $340s/mt FOB, but a further drop. The May price is pegged at $340/mt FOB, while the June estimated price is $332/mt FOB.
Indonesia:
Kaltim closed its tender for 6,000-25,000 mt of prilled urea this week with only four offers. Two additional companies sent regrets.
Samsung met the reserve price of $335/mt FOB. Sources said the Korean company will be taking 12,000 mt of the offered tons. Reportedly, it will be used to supplement material lacking from the Arab Gulf for an order to Thailand.
Sources said Kaltim and another trader closed a deal for 6,000 mt of the offered tons at the same price paid by Samsung. Shipment of the material is slated for early May.
| Kaltim Prilled Urea Tender | |
| Offering Company | US$/mt FOB |
| Samsung | 335.00 |
| Heartychem | 331.00 |
| Agrifert Liven | 320.00 |
| Ameropa | 310.00 |
Sources said the Heartychem and Liven offers were more realistic bids, given the current market. However, said one trader, Samsung apparently needed the product desperately and was willing to meet the reserve price.
Black Sea:
No new spot deals out of Yuzhnyy were reported. Sources said talks are focusing in the $320s/mt FOB, however, reflecting the softness in pricing in other major producing areas of the world.
Urea exports from Russia were up 9 percent in February, to 488,000 mt compared with 447,000 mt in February 2020, according to Trade Data Monitor. Year-to-date exports were down about 13 percent, however, to 929,000 mt from 1.1 million mt in January-February 2020
Brazil:
Sources described softening urea prices in Brazil. Traders said the market dropped $25-$30/mt in just one week, to $345-$360/mt FOB at Paranagua. At least one deal was confirmed at $350/mt CFR, which is still lower than anything from the previous week.
Industry watchers said the lower prices are coming as local buyers are keeping a keen eye on prices out of China and Egypt. While no new business from Egypt has yet been confirmed, the weakening paper market and the willingness of producers to discuss lower prices is giving hope to Brazilian buyers.
Inland buying appears to be done as most farmers have their future deals locked up. Even buying top-off tons has stalled as more buyers see lower prices in the international market and hope that the savings will be passed on.
Rondonopolis showed a tightening of the range to $505-$530/mt FOB ex-warehouse, while Sorriso is holding even, topping off in the low-$530s/mt FOB ex-warehouse. The barter rate for 1 mt of urea in Rondonopolis remains at 71 bags of corn.
| Brazil Urea Prices | ||
| Terminal/City | US$/mt FOB ex-warehouse | |
| Week ending 4/09 | Week Ending 04/16 | |
| Rondonopolis | 475-540 | 505-530 |
| Sorriso | 480-533 | 480-533 |