U.S. Gulf:
The NOLA granular urea range was quoted at $420-$432/st FOB, down just a bit from the week-ago $422-$435/st FOB.
Eastern Cornbelt:
Urea pricing slipped to $465-$480/st FOB in the Eastern Cornbelt in late July, down $5/st from last report, with the low confirmed out of spot Illinois River locations. The Cincinnati, Ohio, market was pegged in the $475-$480/st FOB range for current offers, although sources reported little new interest to test the market.
Western Cornbelt:
The urea market was quoted at $465-$480/st FOB in the Western Cornbelt, depending on location, with the low reported at Camanche, Iowa. Pricing at both Port Neal, Iowa, and St. Louis, Mo., was pegged in the $470-$475/st FOB range in late July.
Northern Plains:
The urea market was quoted at $470-$475/st FOB St. Paul, Minn., down slightly from last report. Pricing in North Dakota was pegged at $490/st FOB, with delivered tons in the $490-$510/st range in late July.
Northeast:
The urea market remained at $485-$490/st FOB in the Northeast in late July, with the high at East Liverpool, Ohio, and the low reported at Fairless Hills, Pa., for July-August tons.
Eastern Canada:
The urea market jumped to C$670-$715/mt FOB for new offers in Eastern Canada, up C$75-$80/mt from the last prompt business in June.
India:
Awards in the July 22 RCF tender came in at 1.2 million mt. This marks the first time this year that awards have exceeded the 1 million mt mark. Sources said the large take will help ease the pressure to buy urea for this season, but still leaves the country short. Sources expect to see another tender called around Aug. 15.
The awards lean heavily to the West Coast at $516.95/mt CFR. The buyer issued awards for about 800,000 mt to be shipped to West Coast ports by the end of August.Traders were awarded 400,000 mt for delivery to East Coast ports at $509.50/mt CFR.
| Awarded Company | Delivery (mt) | Source | ||
| East Coast | West Coast | Total | ||
| Amber | 65,000 | 65,000 | 130,000 | China |
| Ameropa | 145,000 | 204,500 | 349,500 | Oman-Black Sea – China |
| Dreymoor | 52,000 | 50,000 | 102,000 | FSU-China |
| Gavilon | 95,000 | 47,150 | 142,150 | Oman-China |
| Koch | 46,000 | 46,000 | China | |
| Midgulf | 60,000 | 60,000 | China | |
| Samsung | 45,000 | 190,000 | 235,000 | Arab Gulf – China – Indonesia |
| Swiss Singapore | 135,000 | 135,000 | FSU-China |
As the week opened, sources estimated Chinese urea would account for 500,000 mt of the awarded tons. By the end of the week, however, that number rose to 700,000 mt.
Sources said the $17/mt difference between the East and West Coast delivery price meant that traders and producers could get a better netback by shipping Chinese product to the West Coast. Estimates are that the total 400,000 mt for the East Coast will be covered by Chinese product. The remaining 300,000 mt from China will loop around the country and fill in some of the West Coast demand.
The large presence of Chinese product lowered the expectation of supplies from the Arab Gulf. The subsequent displacement meant buyers in Australia and Brazil were looking at softer prices as vessels initially slated for India are shifted to other buyers. One trader noted sales to Australia, Brazil, and other locations might also be giving the sellers a better netback.
Additional tonnage from the FSU, Indonesia, and Egypt is expected to add to the deliveries into West Coast ports. About five cargoes from the Black Sea are expected to be shipped as part of the RCF awards. One cargo each from Indonesia and Egypt is also predicted.
Once this tender is fulfilled, India will have purchased 3.9 million mt of urea in tenders. At the same time last year, the country had booked only 2.8 million mt. In 2020, however, it was also receiving tonnage under a long-term contract with OMIFCO. That contract is now over. Sources noted India needed to make an additional 500,000 mt in the first semester of the year to make up for the loss of the OMIFCO tons.
The Indian buyer took advantage of the low prices offered by Gavilon and Amber. Going into the tender, many in the industry predicted prices in the $520s and $530s/mt CFR. In fact, the bulk of the offers was in those ranges. The average prices were $531/mt CFR for the East Coast and $533/mt CFR for the West Coast.
The fact that producers were willing to accept the lower prices indicated to industry watchers that there was a surplus of August tons that needed to be moved. The final prices showed netbacks that barely moved the price marker for the producers.
The caller of the next tender, if it comes in mid-August as expected, may not be as lucky, said sources. Shipment for the next tender will take place in September, when Chinese traders and producers will be under intense pressure to avoid exporting tons in order to ensure a plentiful supply for the Chinese market.
China:
The netback from the RCF/India tender kept prilled and granular urea prices at $470-$475/mt FOB. Producers had been hoping to move the price into the upper-$480s/mt FOB going into the tender. Predictions of an Indian East Coast price in the $520s/mt CFR would have at least moved the netback into the $480s/mt FOB.
The impact of the steady price was felt in some small sales in the Southeast Asian region. Sources said small lots of less than 10,000 mt were sold at $468/mt FOB, but these deals could not be confirmed. There was also a confirmed report of a sale to South Korea that showed a netback of $470/mt FOB.
Sources said the acceptance by producers of the Indian numbers, plus the reported smaller sales in the region, indicated they were anxious to sell. That selling interest, however, is not expected to carry over into late September, when tons for the next Indian tender will be shipped.
The National Development and Reform Commission of the central government issued a statement on July 30 that a number of urea producers will stop exporting material in order to ensure plentiful supplies of urea for the domestic season. The move came following talks between the commission and the producers.
Earlier this week, sources reported the government told state-run plants to stop offering tons directly to international traders for export. However, sources said some of these companies did sell product to Chinese traders, who then offered the tons for offshore sales.
Buying for the domestic season is expected to pick up in mid- to late-September. The central government has made it clear that producers are to first ensure a plentiful domestic supply before offering any tons for export.
The government has threatened to impose a duty to make exported urea too expensive for the global market. So far, it has held this threat back, but sources said it is still on the table as a real possibility in September and October.
Sources were unsure if the ban on exports is to take immediate effect. If it does, the decision would adversely affect awards to India. Traders reportedly received awards for about 700,000 mt from China to service the tender.
Middle East:
The netback to Arab Gulf producers from the RCF/India tender knocked a few bucks off the spot price for the region. Sources said the netback is now put at $480-$485/mt FOB, with some arguing it might even be in the upper-$470s/mt FOB.
The paper market backs pricing in the $480s/mt FOB for August, but September pricing is put at $475/mt FOB. Sources said if China limits the amount of urea available for the next Indian tender, that $475/mt FOB will have to be scrapped for a much higher price.
The sole producer offer in the RCF tender was from PIC at $498/mt FOB. Reportedly, RCF countered with $469.50/mt FOB, a bid that was rejected by the producer. Sources now report that at least one of the cargoes going to RCF via a trader will be backed by PIC. The estimated netback in the low-$480s/mt FOB is better than the RCF bid, but dramatically less than the initial offer.
The presence of at least 300,000 mt of Chinese urea into India’s West Coast, along with tons from the FSU, Indonesia, and Egypt, cut into the tons Arab Gulf producers could sell to India. The resulting displacement of tons away from India has shown up as buyers talk of lower prices in Brazil and Australia.
So far, non-Indian buyers are reportedly seeing some softer prices in discussions for August loadings. One international trader noted that depending on what the Chinese government does regarding September exports, the non-Indian buyers may end up seeing this dip in pricing vanish just as quickly as it came.
Reportedly, Iranian suppliers were trying to push their price up to $430/mt FOB, but were unable to break $415/mt FOB. Working against the producers are strong freight rates. Sources said one cargo that was being discussed for either Brazil or Thailand will most likely go to Thailand solely because the freight to Brazil could make the landed price too expensive for that market.
Sources said the one cargo from Egypt expected to be delivered under the RCF/India tender is most likely material purchased more than a month ago. To avoid losing money, the Egyptian product would have to be no more than $460/mt FOB. The current price out of Egypt is $465-$475/mt FOB, with producers arguing for $480/mt FOB.
Sources said producers remain hesitant to be too aggressive in offering tons for export. The government still has a decree in place that mandates producers first ensure a plentiful supply of urea for the domestic market. This decree stays in effect through August.
The paper market for Egyptian material is at $472.50/mt FOB for August and $465/mt FOB for September.
Black Sea:
Sources said about five urea cargoes are expected out of the Black Sea for the RCF/India tender. At least four cargoes are to come from Ukraine and one from Russia. The netback to Yuzhnyy is pegged at $450-$455/mt FOB.
A shipment to Brazil out of the region from Turkmenistan reportedly has a netback closer to $415/mt FOB. Sources said that price is most likely being quoted from the factory rather than the export port, however. Traders said while there is often a slight discount for Brazil from Turkmenistan, the gap between this price and the netbacks from the RCF tender indicates to some unequal comparisons.
AGT in Turkey closed a 6,000 mt urea tender on July 28. The small cargo is to be delivered by the end of August. As Green Markets went to press, no information on the tender was released.
Indonesia:
As soon as the letters of intent were sent out by RCF/India, closing off the tender process, Kaltim called a tender to sell 3,000-90,000 mt with a reserve price of $479/mt FOB to close July 30. The reserve price is the same level paid in early July after Kaltim scrapped a tender and went into private talks with the bidding traders.
The highest bid of about $455/mt FOB came from Ameropa and Samsung. Other bids from four other traders came in at $449-$451/mt FOB. Even the highest bids are below the reserve price. Sources said Kaltim will most likely scrap the tender and enter into private talks.
Sources provided conflicting information in the wake of the tender announcement. Some traders argued that the tender was called to empty out existing stockpiles as Kaltim shuts down parts of its operations for a routine maintenance turnaround. Others said Kaltim is putting off the turnaround to take advantage of the current market out of fears that lower prices are coming.
Sources said a cargo earlier purchased from Indonesia will be part of the RCF/India awards. Only Samsung has publicly identified offering Indonesian material.
Bangladesh:
BCIC bought 30,000 mt of granular urea from SABIC with a netback of $481/mt FOB to the Arab Gulf. The price fits in with the range set under the Indian tender.
Brazil:
As soon as the RCF/India tender closed, traders in Brazil began arguing for lower prices. In the end, they got their wish. The upper end of the price range in Paranagua dropped $20/mt, to tighten the range at $490-$500/mt CFR.
The large amount of Chinese urea going into India is expected to release more material from the Arab Gulf for other buyers, including Brazil. Sources said this respite from higher prices could end in September, however, if the Chinese government takes steps to restrict exports. If that happens, Brazilian buyers will once again find themselves competing with their Indian counterparts for tons in September and October.
There are reports of traders looking for vessels to ship material from the Black Sea to Brazil. One deal from Turkmenistan for August arrival is pegged at $481/mt CFR, which is significantly below the range traders were discussing this week.
There are also reports of a possible cargo being loaded out of Iran. Sources said the current Iranian price, coupled with higher freight rates, could make this deal difficult to pull off, however.
So far, reports of limited truck availability have not seemed to hurt supplies or prices in Rondonopolis. While the entire fertilizer industry is keeping a close eye on strike threats from independent truck drivers and on the dearth of available trucks to move product inland, some softening has occurred in prices.
Sources put the Rondonopolis market at $600-$658/mt FOB ex-warehouse, bringing the upper end of the price range down a few bucks. The barter rates for one mt of urea are now pegged at 41 bags of corn or 17 bags of soy.
Thailand:
Urea imports for the first half of the year were up about 4 percent, to 1.2 million mt from 1.15 million mt during the same period last year, according to Trade Data Monitor.
While Saudi Arabia was the main supplier at 310,000 mt, its exports to Thailand were down about 43 percent compared to the first semester of 2020. Filling in the gap was Oman, which sent 278,000 mt after sending nothing in 2020. Sources said the tonnage most likely came from the OMIFCO plant, which used to send product exclusively to India.
Rounding out the top three suppliers for the first half of the year was Malaysia at 263,000 mt, which is about the same amount it sent in the same period last year.
June 2021 imports were up 27 percent, to 302,000 mt from 238,000 mt in June 2020. Malaysia was the top supplier at 70,000 mt, followed by Qatar at 61,000 mt, Oman at 60,000 mt, and Saudi Arabia at 59,000 mt.
Second-quarter 2021 imports were up 13 percent, to 844,000 mt from 745,000 mt last year. Oman topped the list at 253,000 mt for the period. The tonnage sent by Oman almost completely matches the losses faced by Saudi Arabia and Qatar in their sales to Thailand from the 2020 second quarter.
Turkmenistan:
Turkmenhimiya’s Garabogaz urea plant in Turkmenistan’s Balkan province on the Caspian Sea has produced 481,600 mt of granular urea since the start of the year, according to Azerbaijan’s Trend News Agency, citing Turkmenistan’s official media.
The plant was commissioned in September 2018 and has a design production capacity of 1.155 million mt/y of urea and 660,000 mt of ammonia (GM Sept. 21, 2018).