U.S. Gulf:
The NOLA granular urea range slipped this week to $400-$417/st FOB, down from the week-ago $420-$432/st FOB.
Eastern Cornbelt:
Urea prices slipped to $453-$470/st FOB regional terminals in the Eastern Cornbelt, down from $465-$480/st the week before, with the low reported at East Dubuque, Ill., for August-September tons. Pricing FOB Illinois and Ohio River terminals generally fell in the $460-$470/st FOB range in early August.
Western Cornbelt:
Sources reported softer urea prices in in the Western Cornbelt in early August. The urea market was quoted at $453-$475/st FOB, down from $465-$480/st FOB at last report, with the low reported at Camanche, Iowa, and the high at Caruthersville, Mo. The St. Louis, Mo., market was pegged in the $460-$465/st FOB range, down $10/st from the prior week.
In the Northern Plains, urea pricing at St. Paul, Minn., had reportedly slipped to as low as $455/st FOB from some suppliers, down from $470-$475/st FOB at last report.
Southern Plains:
Urea prices were slipping in the Southern Plains in the wake of softer NOLA barge values. The Catoosa/Inola, Okla., market was quoted at $460-$475/st FOB during the week, down from recent highs at the $490/st FOB level or above. Sources continued to quote the Houston, Texas, price at the $490/st FOB level early in the week.
South Central:
Despite a softening NOLA barge market, urea pricing remained at $470-$480/st FOB terminals in the South Central region, with the low reported at Memphis and the high at Little Rock, Ark. The last price reported out of Convent, La., was steady at the $475/st FOB level in late July.
Southeast:
Sources reported some urea and ammonium sulfate blends moving on cotton in secondary applications in parts of the Southeast, particularly in areas of recent heavy precipitation. Urea prices remained at $470-$480/st FOB port terminals in the region in early August, down slightly from last report.
India:
Things have quieted down as RCF handles the paperwork to deal with cargoes being shipped under two different tenders.
The June 24 tender has a shipping deadline of Aug. 11. Sources said there are still a couple of cargoes outstanding in that tender. On top of that, RCF has to address the issue of importing 1.2 million mt under its most recent tender, with a shipping deadline of Aug. 30.
Sources said the country is still behind expected urea needs by about 1.5 million mt. Another tender is expected to be called soon, most likely in the next 14 days. Many are betting the call will take place after the Aug. 11 shipping deadline for the June 24 tender and will include only a limited crossover with the most recent tender shipping period.
Industry watchers said RCF will most likely call the next tender as well. Reportedly, there are some issues between the Department of Fertilizers and MMTC, the other major buying house for urea. Sources said they could not describe the exact nature of the disputes, but they all report conflicts that need to be worked out between the cabinet office and the state-run company.
In a reply to a parliamentary inquiry, Chemicals and Fertilizers Minister Mansukh Mandaviya said India had imported 9.8 million mt of urea during the April 2020-April 2021 fiscal year. This amount was up from the 9.1 million mt imported during the 2019-2020 FY, the minister said.
Sales from April through July this year are down about 13 percent compared to the same period last year. Government figures reported in the local press showed that sales were at 4.4 million mt so far this fiscal year. Production was reported at 2.2 million mt and imports at 680,000 mt, leaving a deficit in supply that still needs to be filled.
Some of the demand may ease, according to government numbers. Farmers have planted 4 percent less land than in April-July 2020 due to erratic monsoon rains. While June rainfall was slightly above average, July totals were down and sporadic dry spells continue to plague the country, leaving many wondering how successful the current and upcoming seasons will be.
The price and availability of urea also remains a constant concern. The recent softening of global urea prices has given hope to Indian buyers, but recent actions by the Chinese central government to limit exports of urea could again lead to a shortage in the international market and higher prices.
China:
Sources said urea prices are backing off. Many traders are saying the price movement is a much-anticipated correction.
Sources reported sales to Asian buyers of prilled urea at $461/mt FOB, a major drop from prices based on the RCF tender netbacks in the $480s/mt FOB. Most discussions are now centered on $460-$465/mt FOB for prills, and no one is talking about granular.
The reluctance of traders to engage in pricing discussion with producers comes from repeated efforts by the national government to limit urea exports. Already state-owned plants have declared they will not export urea until they are sure the domestic market is fully supplied. The joint-venture and private plants are said to be looking at ways of lining up with the government’s intentions and offering some tons for export.
Reportedly, the decision to withhold urea will not affect tons already under contract for the RCF/India tender. There are still concerns, however, about what constitutes a contract to move the tons. A strict interpretation, said one trader, would mean only cargoes covered by signed contracts. Others argue that letters of intent and handshake deals should also be covered, but some said they might not.
Sources pointed to the vessel nominations that started coming in at the end of the week as evidence the no-export policy will not affect supplying the RCF tender. So far, ships have been named to move 575,000 mt out of China into India.
At the same time, the National Development Reform Commission is reportedly looking into the rapid rise in urea prices in recent months. The probe was announced at the end of June on WeChat and is gaining more attention from the industry. The commission is looking to see if any of the urea producers conspired to limit urea availability and drive up prices. At the time of the announcement, sources said the investigation could be used as an excuse to impose an export duty on urea to increase domestic reserves and force down prices.
Besides facing uncertainty about how much urea will be available in the near future, sources said restrictions on foreign vessels at loading ports could also play a role in how much urea is exported and how quickly. The restrictions are being put in place to combat the Delta variant of COVID-19, said traders.
Indonesia:
Kaltim scrapped its June 30 tender for 6,000-90,000 mt because no bid reached the reserve price of $479/mt FOB. Sources said the highest bid was by Medallion at $470/mt FOB, with all the other bids in the $450s/mt FOB and below.
After Kaltim entered into talks with Medallion, sources said the potential buyer realized the market had moved in such a way that placing tons at $470/mt FOB would be difficult. The talks broke down, and Kaltim called another tender that closed on Aug. 4.
Sources said the second tender did not have a reserve price, but expectations were for higher prices to be offered. In a way, Kaltim got its wish. However, the higher price only came from those who initially bid in the low- to mid-$450s/mt FOB.
The highest bid came from Swiss Singapore at $457/mt FOB. After the tender closed, Kaltim opened talks with Swiss Singapore and the other traders who participated in the tender. In the end, they agreed on $457/mt FOB. Swiss Singapore and Ameropa were each awarded 30,000 mt. Aries got 24,000 mt.
Sources speculated that some of the material might be used to fill in for cargoes slated for India under the RCF tender. Another view is that tons will be set aside for the next Indian tender or maybe sent to Nepal or Australia.
Indonesia urea exports were up about 10 percent in the first half of the year, to 1.14 million mt from 1.03 million mt during the same period last year, according to Trade Data Monitor.
More than half of the buying took place in the second quarter of the year. April-June exports were reported at 676,000 mt, against second quarter 2020 exports of 605,000 mt.June exports were up dramatically at 271,000 mt, compared with 139,000 mt in June 2020.
Turkey:
Imports of urea were down about 12 percent in the first six months of the year, to 1.4 million mt from 1.6 million mt during the same period last year, according to Trade Data Monitor.
Second-quarter imports showed a slight uptick, however, to 675,000 mt from 665,000 mt last year. June 2021 imports were up dramatically, to 206,000 mt from 113,000 mt in June 2020.
Middle East:
Urea supplies remain tight in the region, offering no new spot deals to adjust pricing. However, buyers are now bidding in the $450s/mt FOB, a significant drop from the $480s/mt FOB calculated to be the netback from the RCF/India tender.
The paper market is following the view of traders and the general perception that the urea market is facing a price correction. The August paper price is reported at $472/mt FOB and September at $452/mt FOB.
Sources reported a small cargo of 4,000 mt sold by Alexfert at $472/mt FOB, dropping the upper end of the range from the earlier $476/mt FOB. There are now reports that buyers are bidding in the $460s/mt FOB – and producers are listening. No deals under $470/mt FOB had been reported as Green Markets went to press, but sources said it is only a matter of time.
The paper market for Egypt reflects the softer view of the general market. August paper is put at $462.50/mt FOB, and September at $455/mt FOB.
Brazil:
International reports of deals being discussed in the low-$480s/mt CFR at Paranagua did not match up with the actual deals reported. Sources in Brazil put the landed price at Paranagua at $485-$498/mt CFR, but with a definite downward trend.
There was a lot of discussion about cargoes from Algeria and Turkmenistan being settled at $481/mt CFR into Brazil. Sources said large-scale buying by Brazil in the first half of the year has put a lot of urea into warehouses for later distribution, and is putting some downward pressure on prices. Some traders are even saying that the price will drop into the $470s/mt CFR by the middle of the month.
Traders are looking at the softer prices being discussed around the globe and hoping that Brazilian prices will follow suit. The turnaround in pricing was also seen in Rondonopolis, where the market slipped to $580-$658/mt FOB ex-warehouse.
How much softer the inland price goes will depend on the transportation situation from ports to distributors, sources said. Along with a steady drumbeat for a strike by independent truckers, sources said more and more distributors are finding it difficult to locate enough trucks to move their cargo.
Uncooperative weather is also raising concerns. Dry spells within the country are playing havoc with the crops, leaving many farmers in a quandary about what to do about fertilizer applications for the next season.
The barter rate for 1 mt of urea is now pegged at 40 bags of corn, down from last week’s 41 bags or 17 bags of soy.
Imports of urea for January-July 2021 this year were up about 26 percent, to 4.1 million mt from 3.3 million mt during the same period last year, according to Trade Data Monitor.
The biggest change between the two years was the inclusion of Oman in the mix. Imports from Oman – probably OMIFCO – were reported at 759,000 mt this year, compared with no tons in 2020 or 2019. During that time, OMIFCO had an agreement to exclusively supply India. That contract has since ended, allowing for OMIFCO exports to the world.
Algeria took the biggest hit, dropping 34 percent to 461,000 mt from 698,000 mt. The largest gain came from Turkmenistan at 134,000 mt, up 309 percent from last year’s 33,000 mt total to Brazil.
July 2021 imports were up 10 percent, to 637,000 mt from 580,000 mt in July 2020. Qatar and Oman were the two major supplier in July at 131,000 mt and 125,000 mt, respectively. Imports from Qatar were down about 12 percent compared with July 2020. No tons were imported from Oman in the past two years.