U.S. Gulf:
Granular urea barges traded in the $415-$432/st FOB range during the week, up just a tad from the week-ago $413.50-$430/st FOB. These were mainly prompt and loaded barges. August sales were also reported at the $430/st FOB mark.
One player said if prices drift much lower, NOLA may see an uptick in exports, as the international prices remain firm.
Eastern Cornbelt:
Urea pricing remained at a firm $475-$490/st FOB in the Eastern Cornbelt, with the low confirmed at East Dubuque, Ill., for June-July tons. The urea market FOB Cincinnati, Ohio, was pegged in the $485-$490/st FOB range, up $5-$10/st from the previous week.
Western Cornbelt:
The urea market remained at $470-$480/st FOB in the Western Cornbelt in late June, depending on location, with the St. Louis, Mo., market pegged in the $475-$480/st FOB range.
Pricing FOB Camanche, Iowa, was tagged at the $475/st level for June-July tons, with urea pricing quoted firmly at $480-$485/st FOB St. Paul, Minn., and $495-$500/st FOB Catoosa/Inola, Okla.
California:
Urea prices were firming in California, with sources quoting new bulk offers at $590-$600/st FOB port terminals as of July 1, up from $545/st FOB in mid-June. Bagged urea pricing was reported as high as $660/st FOB Stockton, Calif., up from $580/st FOB at mid-month. Sources continued to report no available quotes on rail-DEL urea in California.
Pacific Northwest:
Urea continued to be quoted at $525/st FOB Rivergate, Ore., and $530/st FOB Aurora, Ore., although sources said supplies were out at Rivergate pending the arrival of a new vessel. Rail-DEL pricing fell in the $517-$522/st range in the region in late June.
Western Canada:
Urea prices were climbing in Western Canada. New offers were reported at C$650-$675/mt DEL in the region, up from C$610-$655/mt DEL at mid-month, with the low in Alberta and the high in Saskatchewan.
India:
The RCF tender closed with about 1.8 million mt offered. However, the price of $501.96/mt CFR for West Coast deliveries and $509.95/mt CFR for the East Coast made it difficult for the buyer to take all the tons it needed.
Sources estimated that RCF needed to buy most of the product offered in the tender to get the urea supply chain back on track. In the end, however, only seven companies accepted the low price, for a total of 779,000 mt.
The orders were divided up so that 10 cargoes will go to East Coast ports and six vessels to the West Coast. This reverses a trend in recent tender that favored the West.
| Supplier | Cargoes Awarded | Total MT | |
| East Coast | West Coast | ||
| Dreymoor | 1 | 1 | 102,000 |
| Ameropa | 3 | 2 | 259,000 |
| Samsung | 5 | 225,000 | |
| OQ Trading | 1 | 50,000 | |
| Medallion | 1 | 50,000 | |
| Swiss Singapore | 1 | 48,000 | |
| Continental | 1 | 45,000 | |
| Total | 10 | 6 | 779,000 |
Industry watchers speculated on the source of the cargoes, noting that there is only about 220,000 mt currently in Chinese port-side warehouses. With a little luck, said one trader, Chinese product might then account for 4-5 cargoes.
Two cargoes are expected to come from the Black Sea, and possibly another two might come from Indonesia. The rest would be from Arab Gulf producers.
Sources said vessel owners are still hesitant to send their ships to India. Some are reportedly stipulating that the vessel will only make one stop in India instead of visiting multiple ports. The main concern is that authorities might force the ship and its crew into a 14-day COVID-related quarantine. Sources said this could increase the transportation costs and disrupt vessel availability in the region.
The shipping deadline for the RCF awarded tons is Aug. 11. Sources said many of the traders were already working on securing vessels even before the awards were made final. The speculation is that most of the cargoes will begin loading before the end of the month.
If the tons for RCF do get loaded quickly, sources said a new tender could also come quickly. Even if the traders took the full time through Aug. 11, sources said a new tender would need to be called before the end of July.
In each of the previous three tenders this year, the buyer’s expectation was to secure at least 1.2 million mt. The awards never reached that level, however. The March 22 tender secured 802,500 mt, the May 4 tender brought in 549,000 mt, and the most recent RCF tender of May 25 accounted for purchases totaling 565,000 mt.
Now, with this 779,000 mt, sources said India is still almost 2 million tons behind in what its calculated needs are for the current season. Sources said there needs to be at least two more tenders between now and mid-August.
One trader noted that any cargo arriving after the middle of September would most likely be too late for the current season, and would have to go into storage for the next.
China:
The estimated netback to China from the Indian tender is in the upper-$470s/mt FOB before considering any profit for the trader. Sources said the more realistic price is in the low-$470s/mt FOB. Some even said the price will most likely settle around $465-$470/mt FOB.
One trader said he was approached by a Chinese intermediary offering urea at $460/mt FOB. Others, however, dismissed the offer as unrealistic. The strong domestic Chinese market is helping provide a solid floor on prices, even as international prices show no sign of abating.
The steep climb in prices over a short time has sparked some complaints from farmers in China. With farmers and local distributors facing almost daily increases, the National Development and Reform Commission early this week announced on a social media site that it was investigating the causes of the high prices and what can be done to stem the increases.
International traders noted that many of the urea producers have been working at 60 percent capacity because they had limited access to coal and natural gas, which the government diverted to ensure a steady supply of heat in the winter, and now electricity to run air conditioners in the summer. The traders said cutting back on production at a time when there was strong demand locally and globally could only lead to higher prices.
The government now reports that increased supplies of coal and natural gas will allow for the plants to step up production and ease the spot shortages.
During the past couple of months, the government leaned on the urea producers to ensure a plentiful supply of urea for the domestic market. As a result, fewer tons were available for export, driving up international prices. The focus away from exports has led to reports that only about 220,000 mt of urea is available in the warehouses for offshore sales.
Indonesia:
Kaltim sold about 85,000 mt of urea last month at $458/mt FOB. The two main companies securing tons were Koch and Liven. Sources said Koch is in the freight market to move its cargoes to Australia later this month or early August.
Another tender is expected to be called soon for August and September loadings. Sources said the producers should be able to continue to take advantage of the hot urea market.
Middle East:
Just as people began to wrap their minds around an Arab Gulf price in the mid $470s/mt FOB, Fertiglobe confirmed it sold 30,000 mt of granular urea to an African buyer at $555/mt CFR. The estimated netback on the deal is $500-$505/mt FOB. This new price is a $30/mt jump from the netbacks estimated from the RCF tender. Shipment is slated for late-July.
Even before the final awards were issued in the RCF tender, the Arab Gulf producers began pushing for $490/mt FOB as a minimum price for any new talks. At first, this pricing expectation fit in with what the derivative market was thinking. Sources said the paper market is quoted at $477.50/mt FOB for July and $485/mt FOB for August. But now, the actual market has again outpaced the paper market.
Producers in the region all claim to be sold out through August. Even Iran, which often has a more difficult time finding buyers willing to risk U.S. sanctions, said its major suppliers have full order books through August.
Egyptian producer MOPCO inked a couple of deals for September shipments that moved the price up. Early in the week the producers sold cargoes of 15,000 mt and 6,000 mt at $470/mt FOB. By the end of the week, the producer sold another 3,000 mt of granular urea at $475/mt FOB.
The tons offered by MOPCO are the first to surface following a government edict that producers had to ensure sufficient material for the domestic market for July and August. Because the government was slow in allocating how many tons each plant had to hold back to help the local market, none of the producers were actively seeking new August business. By offering tons in September, MOPCO is operating outside the period set forth by the government.
Movement into the mid-$470s/mt FOB fits in with the expectations of the paper market. Sources said the paper market was calling Egyptian urea at $471.50/mt FOB for July and August. The anticipated price reflects how quickly prices have shifted in Egypt. Prior to the lull in offers due to the government edict in early June, reported deals for August shipments were at $435-$450/mt FOB.
Pakistan:
The national Fertilizer Development Company of Pakistan reported that May 2021 urea offtakes of 501,000 mt were up about 110 percent from May 2020. The state-owned company said the lower number in 2020 was due to COVID-19 restrictions.
The government agency said estimated urea needs for the upcoming year will be about 3.5 million mt of urea. They noted that local production is at 3.2 million mt, so the balance will have to be made up from carryover tons from the current season.
The subsidized price for urea is at $210-$220/mt FOB ex-warehouse. The price of imported urea, however, was reported at $435-$501/mt CFR for the month of May.
The government signed a three-year agreement with the International Islamic Trade Finance Corp. that will help with the imports of more fertilizer as needed.
South Korea:
January-May urea imports in South Korea were down 7 percent, according to Trade Data Monitor, to 431,000 mt from 464,000 mt during the same period last year. The main supplier in 2021 was China at 332,000 mt.
May imports were up 5.8 percent, however, to 78,000 mt from 74,000 mt in May 2020. Again, China dominated the market in May, supplying 77,000 mt this year.
Thailand:
Thai urea imports were down slightly for the first five months of 2021, according to Trade Date Monitor. January-May imports were reported at 888,000 mt, compared with 908,000 mt during the same period last year. The top two suppliers this year were Saudi Arabia at 250,000 mt and Oman at 219,000 mt.
May 2021 imports were up 74 percent, to 467,000 mt from 268,000 mt in May 2020.
Turkey:
January-May urea imports were down 19 percent, to 1.2 million mt from 1.5 million mt during the same period last year. The main suppliers so far this year are Oman at 519,000 mt, Egypt at 371,000 mt, Turkmenistan at 137,000 mt, and Iran at 114,000 mt. May 2021 imports were down 21 percent, to 179,000 mt from 233,000 mt in May 2020.
Brazil:
Pressure from the RCF/India tender was felt in Paranagua. Sources said urea prices moved up to $490-$515/mt CFR.
Even before the prices in the Indian tender were revealed, international traders were reporting discussions at $505/mt CFR. Bidders, hoping to hold back the onslaught of higher prices, kept bidding at $485/mt CFR but were getting nowhere.
Buyers inland faced a much more aggressive selling situation. The Rondonopolis price jumped $100/mt on the upper end, to $590-$700/mt FOB ex-warehouse.
Buyers remain nervous about stepping forward, while at the same time are also fearful that waiting too long will mean paying even higher prices. For now, limited tons are being sold as everyone waits to see how the international market shapes up.