U.S. Gulf:
NOLA granular urea inched down a bit this week, slipping to $418-$425/st FOB in recent trading versus the week-ago $418-$428/st FOB.
Eastern Cornbelt:
Urea remained in the $455-$470/st FOB range in the Eastern Cornbelt, with the low reported out of spot Illinois and Ohio River terminals. The Cincinnati, Ohio, market was steady at $460-$470/st FOB, depending on supplier.
Western Cornbelt:
Urea continued to be quoted in the $455-$475/st FOB range in the Western Cornbelt, with the low at St. Louis, Mo., and the upper end reported at Port Neal, Iowa. The St. Paul, Minn., urea market was pegged in the $460-$465/st FOB range in late August.
Southern Plains:
The Catoosa/Inola, Okla., urea market was quoted at $460-$465/st FOB during the week, with the Houston, Texas, market pegged at the $470/st FOB level, down some $20/st from early August.
South Central:
Urea pricing was unchanged at $470-$480/st FOB terminals in the South Central region, with the low reported at Memphis and the high out of Arkansas terminals. The last price reported out of Convent, La., was steady at the $475/st FOB level in late August.
Southeast:
Urea was pegged at a firm $480/st FOB Wilmington, N.C., and other port terminals in the Southeast, edging up to the upper end of the previous range.
China:
The urea market was filled with discussion of dropping prices. However, no new deals were confirmed to reflect the lower prices discussed.
Sources confirmed that offers into the Taiwan Fertilizer tender for 6,000 mt of granular urea this week were at $415-$420/mt FOB. However, no award had been made as Green Markets went to press.
There were widespread reports of offers for granular at $420/mt FOB and prills at $405-$410/mt FOB. These prices are not based on deals done, however, but rather on estimations of an export price based on deals in the domestic market. Sources said traders are taking the ex-plant price and estimating the cost to move the product to a port to get the world price.
The problem, said one trader, is that pressure is still being applied to major producers to not export material. The national government is also restricting the use of the rails to move urea to the export warehouses.
At present, the urea plants are reportedly operating at nearly 67 percent of their rated capacity. This level of output will cover the upcoming domestic season and allow for some tons for export without causing a scarcity of tons. Industry watchers noted that in the past the plants could have easily increased production to provide enough for the local and global markets.
This year, however, the plants are facing an energy shortage. The government is giving the residential markets priority for power, at least until more power stations can come online or step up their output.
Exporters also face a growing issue of vessel availability. Sources said the Chinese government is strictly enforcing its limitations of how many foreign-flag vessels can dock at ports at one time in an effort to control the spread of COVID-19.
The various quarantine rules throughout Asia have also put the smooth movement of ships into question due to scheduling difficulties and higher transportation costs. Sources said the current rate from China to the Indian East Coast is now pegged at $40/mt, compared to the low-$30s/mt just a month ago.
Despite the impact of COVID-19, issues with vessel assignments, and a government looking to stem exports, Chinese producers shipped out 2.7 million mt of urea in the first seven months of the year, according to Trade Data Monitor. This amount represents a 40 percent jump from the 1.9 million exported during the same period in 2020.The main buyers this year were India at 990,000 mt, South Korea at 432,000 mt, and Mexico at 238,000 mt.
June 2021 exports were up 34 percent, to 243,000 mt from 181,000 mt in June 2020. India, South Korea, Chile, and Mexico were responsible for taking 195,000 mt of the June shipments.
India:
The conventional wisdom now says RCF will not call another urea tender until after Sept. 1. Sources said the call could come at any time during the first half of the month, with most bets on the first full week.
Traders said RCF needs to make sure its credit lines are clear and ready for its fourth tender in a row. At the same time, said one trader, it would be useful to the company to make the call after the Aug. 30 shipping deadline of the last tender.
Media reports said India still needs at least 1.5 million mt for this season. The buyer got a bit of breathing space by its surprising 1.2 million mt purchase in the last tender. Sources noted that offtake from the ports to the fields is also going slower than expected, possibly indicating that some inland buyers are not as desperate for product as was originally estimated.
Sources said making the call in the first half of September could take advantage of all the talk of softer prices in China and the Arab Gulf. At the same time, shipments from China would not directly compete with the height of the Chinese domestic season. Any call in the second half of the month, however, could see reduced interest from Chinese suppliers.
No matter the time of the call, the Indian buyer is not expected to enjoy the full benefits of the lower prices being quoted. Because of disruptions in regional shipping schedules due to COVID-19, sources said freight rates are going up. Traders are now quoting $40/mt for 45,000 mt from China to the Indian East Coast, up from the low-$30s/mt just one month ago.
Middle East:
Arab Gulf producers are steadily fulfilling contracts and previously purchased spot deals. Sources said no new spot business was reported this week.
However, the price under discussion has dropped from the $480/mt FOB last seen in completed spot business to $420/mt FOB. Traders are careful to point out that while everyone is talking about $420/mt FOB from the region, no deals at that level have been consummated.
The paper market is also skeptical of the $420/mt FOB price. The September and October paper price is pegged at $442/mt FOB.
While no new business was done in the Arab Gulf to confirm lower pricing expectations, sources reported a few sales out of Egypt that confirmed lower prices.
Abu Qir reportedly sold 30,000 mt of granular at $450/mt FOB and small lots of prills as low as $440/mt FOB. Sources said efforts to push the prilled price into the $430s/mt FOB and the granular price into the $440s/mt FOB have been rebuffed by producers.
Egyptian producers had reportedly made it clear that their solid floor is $450/mt FOB for granular and $440/mt FOB for prills.The latest deals done by Abu Qir fit in place with reports that Algeria also closed a deal to a European buyer at $440/mt FOB.
Black Sea:
Sources said there are no spot tons available out of Yuzhnyy, but older contract tons are being loaded without incident. Traders added that following the increase in natural gas prices, the price of urea out of Ukraine may be too high to be considered for any international buyers.
The only discussions about material in the area were reports of Turkmen granular urea being shipped across the Caspian Sea, through Russia, and into Romania and Bulgaria across the Black Sea. The pricing for this product was pegged at $440/mt CFR.This material, if from Yuzhnyy or other Black Sea ports, would show a new price of $415-$425/mt FOB.
Indonesia:
Rumors are circulating that another selling tender will be called soon. Asian traders said it would be foolish for Kaltim or the others to call an auction until after the Indian tender is closed, however.
Sources said the last done price of $457/mt FOB is too high for the current market. Until the Indian tender is closed and people can digest the price settlement there, however, no one would be willing to step forward and make a bid on the Indonesian product.
Nepal:
A tender for 25,000 mt of granular urea by KSCL closed this week with only two offers. The lowest price of $609/mt CFR bagged and delivered to a river warehouse showed a netback to China of $460/mt FOB. Sources said given all the talk of softer prices this week, this tender might be scrapped and re-issued.
Another tender by the same company will close on Sept. 24. KSCL will be looking for another 25,000 mt of bagged material to be delivered to its riverside warehouses in Nepal.
Brazil:
Paranagua urea prices tightened a bit to $468-$490/mt CFR. Sources said there was little activity, because everyone was waiting to see when the next Indian tender will be called.
Sources also said there is no rush to make any purchases. There is a reported delay of 40-45 days to get a berthing site in the ports. At the same time, there is limited ground transportation to move the product from the ports to the inland NPK producers or distribution centers.
Rondonopolis showed a jump at the upper end of its range to $590-$676/mt FOB ex-warehouse. The move up reportedly came as buyers were looking to top off their needs without committing to large-scale purchases. As with the importers, inland buyers are looking to India for a signal as to where the urea market is going.
They are also keeping a close eye on complaints by truck drivers about pay and availability. There are already complaints of not enough trucks to move the grain to the ports and the fertilizer back inland.