U.S. Gulf:
Loaded granular urea barges were quoted as high as $455-$465/st FOB, with other June and July cargoes dipping to as low as $430/st FOB, according to sources, versus the week-ago $405-$450/st FOB range.
U.S. Imports:
April urea imports totaled 1.051 million st, rising 0.3 percent from 1.049 million st in the prior year. July-April imports were up 8.3 percent, to 4.11 million st from the year-ago 3.80 million st.
Qatar led July-April imports with 1.13 million st, a 1.0 percent increase from the year-ago 1.12 million st. Saudi Arabia added 593,293 st for the period, rising 11.3 percent from last year’s 532,918 st, while Russia sent 770,563 st, up 54.2 percent from the prior year’s 499,557 st.
U.S. Exports:
Exports of urea firmed 28.7 percent in July-April, to 682,669 st from the year-ago 530,270 st. April exports fell 3.0 percent, however, to 29,647 st, from the prior year’s 30,567 st total.
Eastern Cornbelt:
Urea prices moved to $470-$490/st FOB in the Eastern Cornbelt, up another $5/st from last report, with both the low and high reported in Cincinnati, Ohio. Spot pricing in Illinois was quoted at $475/st FOB East Dubuque and $480/st FOB Ottawa at midweek.
Western Cornbelt:
Urea prices continued to climb at river and inland terminals in the Western Cornbelt, fueled by stronger NOLA values and tight supply. Terminal prices were reported at $465-$470/st FOB Port Neal, Iowa, $475/st FOB Camanche Iowa, and $475-$480/st FOB St. Louis, Mo.
Northern Plains:
The urea market was quoted at $465-$475/st FOB St. Paul, Minn., with the upper end of that range also reported out of terminals in central North Dakota. Delivered tons were pegged at $505-$515/st in North Dakota, up some $30/st at the low end of the range.
Great Lakes:
The urea market had reportedly firmed to $475-$505/st FOB in the Great Lakes region, with the low in Wisconsin and the high at Saginaw, Mich. The market FOB Webberville, Mich., was quoted solidly at the $480/st FOB level at midweek.
Northeast:
Urea prices surged to $485/st FOB Fairless Hills, Pa., at mid-month, up another $20/st from offers in early June and a full $45/st higher than late-May pricing levels.
Eastern Canada:
Despite firming prices south of the border, most Eastern Canada sources reported only minimal changes to the urea market since mid-May. The regional market was quoted at C$590-$640/mt FOB for the last business, up C$10/mt at the low end of the range, but some wholesale suppliers were out of product until resupply happens later in the summer.
India:
Once the last of the vessels was nominated from the May 25 RCF urea tender, the company turned around and called another tender. The latest tender will close on June 24 with a shipping deadline of Aug. 11.
Industry watchers had expected MMTC to call the tender. A standard practice had developed that RCF and MMTC would alternate calling urea tenders until the country achieved enough material to satisfy demand. This time, however, sources said there were some disputes between MMTC and the Department of Fertilizer that would have delayed the buying house calling the tender. Details of the dispute were not clear to sources. However, several said it involved financial issues.
The latest tender has an unusually long validity and shipping period. If past practice is followed, awards in the tender will be issued and accepted by June 30. One trader said the long validity date – through July 2 – could offer the buyer options to delay a final decision longer than usual. The longer shipping period, said one trader, could be an effort to encourage deliveries over a longer period of time to avoid congestion at the ports in the final week of the tender period.
This will be the fourth tender called so far this year. Sources said the amount of tonnage purchased is way behind expectations. In each of the previous three tenders, the buyer hoped to bring in at least 1.2 million mt. The average take was about 640,000 mt, with a strong emphasis on West Coast deliveries.
Besides the usual 8-9 million mt India has purchased in the past, it has to make up for the loss of the annual contract with OMIFCO, which accounted for about 3 million mt. The high prices and limited availability from producing states has led to fewer tons bought and a growing deficit in urea reserves.
Sources said the most likely take from this tender will be around 800,000 mt. If that is the case, said one observer, yet another tender will have to be called soon.
Pricing of the product remains an issue, largely because of the heavy subsidies offered by the government. Not only will the government pay the much higher global price for the urea, but it must also pay the subsidy required to ensure farmers do not get hit with the full impact of the higher prices.
The government guarantees farmers a price of about $72/mt for urea. The higher the price paid to import the product, the more the government pays in subsidies. Efforts to wean farmers from urea have shown limited success because all other fertilizers are not as heavily subsidized and therefore not as cheap.
Sources started the week speculating that the tender price would be around $440-$450/mt CFR. By the end of the week, however, estimates began to settle around $470-$480/mt CFR, with a few arguing for $490/mt CFR.
RCF is facing not only higher urea prices, but also higher freight rates. Sources said quotes for vessels from China to the West Coast of India are now coming in at $35/mt, up from the $18-$20/mt seen at the beginning of the year. Freight rates from the Arab Gulf to the Indian East Coast have seen a similar hike.
China:
Strong demand in the Chinese domestic market is keeping the urea price up. At the same time, sources reported rumors that the central government is considering a 30 percent export duty on urea through the month of August. This combination has essentially frozen talks with exporters.
Sources said those willing to talk about exporting product are offering up prices in the upper-$440s/mt FOB for prills. There was talk that some producers were holding off for $460/mt FOB for granular urea, but a deal quickly moved the market to $450/mt FOB and finally into the upper-$440s/mt FOB. There were also reports that deals have been done in the low- to mid-$450s/mt FOB.
Portside facilities are said to have limited tonnage available for export. Sources said the extra shipping time allotted in the RCF tender will be needed to move product from the factory to the ports to avoid issues moving the product offshore.
Getting the quantity of at least 1 million mt that India wants will require a lot of tons from China. Production in China, however, is reportedly cutting back. Sources said some plants are having difficulty getting the necessary gas or coal supplies needed to power their plants at full capacity. At the same time, the looming export duty has producers looking more to the domestic market rather than to offshore buyers.
Middle East:
The urea market remains tight, with no excess tons to help drive a spot market price. The paper market for the Arab Gulf moved up this week, from $462/mt to $465/mt FOB for July shipments. Those levels, however, are now seen as lower than expectations going into the RCF tender.
Sources said supplies from Saudi Arabia remain limited because a major ammonia and urea line remains down, with no word on when it will be back up and running.
Iranian urea exports for January-May of 2021 were up 94 percent from the same period last year, according to Trade Data Monitor, to 1.3 million mt from 648,000 mt. The main buyers were Turkey with 159,000 mt and Brazil with 69,000 mt.
May exports were down 15 percent, to 301,000 mt from 354,000 mt last year. The top three buyers were South Africa, Brazil, and Nigeria, with each taking about 66,000 mt.
Egyptian producers remained quiet as they wait for orders from the Egyptian government. Earlier this month the government said producers would be required to ensure plentiful supplies for the domestic market. Allocations based on production rates would be issued to fulfil this requirement. By the end of the week, however, sources said the allocations had not been issued.
The producers are facing problems with the delay. Sources said buyers from Europe and other areas are looking for tons. At least one deal was reported for August at $455/mt FOB. This represents a $20/mt jump in price from the last reported August deal.
July tons remain priced at $412-$415/mt FOB from deals concluded back in early May. Sources said even before the government edict, producers were sold out for July and August supplies were limited. The price moved up smartly into the $440s and $450s/mt FOB. Export prices are expected to go up even more once the tons for the domestic market are subtracted from what the producers have available to sell.
Adding to the tightness, Egyptian Fertilizer Company announced it would be taking one urea unit down for the second half of June for routine maintenance.
Sorfert of Algeria stepped in to take advantage of the hesitancy of Egyptian suppliers to sell a cargo to a European buyer at $475/mt FOB for the first half of July. The price fits in with estimations of the Egyptian and Arab Gulf markets if those producers had tons for July.
Producer AOA, also of Algeria, is reportedly sold out through August. Sources said talks for early September tons are focusing on $465/mt FOB, which could reflect a softening of the market as the third quarter ends.
Black Sea:
Sources reported a deal for 15,000 mt of urea at $420/mt FOB. No one could offer details about the deal, but all agreed the price fits in with what other producing countries are charging.
Indonesia:
Kaltim closed a granular urea tender on June 18 for 6,000-45,000 mt. The company awarded 30,000 mt to Liven at $458/mt FOB. The next highest bid came from Koch at $450/mt FOB.
At this level, offering tons into the RCF tender seems unlikely. Sources said the two most likely destinations are Australia or Mexico, with an edge to the latter. Sources said the current offers in Mexico of around $520/mt CFR would fit with the price Liven paid.
Nigeria:
Sources said urea from the new Dangote plant is flowing out in trucks to domestic buyers. At this point, sources said none of the product is expected to be used for export.
Brazil:
All eyes in Brazil remain on the India tender. Sources are looking for guidance on how far prices will go up and how many tons will be pulled out of the market to satisfy Indian demand.
Throughout the week, buyers were focusing on the upper level of a range that rolled over from last week. Even as traders talked about good liquidity, the uncertainty generated by the India tender made everyone nervous. As the week ended, sources reported a deal closing at $515/mt CFR at Paranagua.
The move came as traders were abandoning the lower end of the old range and focusing more on the $475/mt CFR end. Now, the once top of the range has become the floor, putting the upper end at $515/mt CFR.
Rondonopolis buyers were also looking at sufficient supplies, but hesitant buyers. The uncertainty of the inland market was reflected in higher prices at $540-$616/mt FOB ex-warehouse. Some of the buying seemed to be exploratory missions – looking to see what could be achieved – rather than efforts to secure long-term agreements.