U.S. Gulf:
How much difference a week can make.
NOLA granular urea barges had a big stretch for the week, going from $425/st FOB all the way up to $495/st FOB in late Thursday trading. Prices early in the week easily topped the $454/st FOB level, with sources saying this was in reaction to Hurricane Ida, and to a lesser extent due to pending demand from an imminent Indian tender.
Eastern Cornbelt:
Sources reported stronger urea pricing in the region during the week, fueled by rapidly firming NOLA barge values in the wake of Hurricane Ida. Sources pegged the Cincinnati, Ohio, urea market at the $470/st FOB level at midweek, but pricing reportedly firmed to $505/st FOB there by the end of the week. The market out of Illinois and Mississippi River terminals had reportedly strengthened to $475-$485/st FOB as the week progressed, depending on location.
New urea offers at Memphis, Tenn., were quoted at $485/st FOB at midweek, up from $470-$475/st the week before.
Western Cornbelt:
Urea prices were up slightly in the Western Cornbelt. The market was quoted at $465-$475/st FOB St. Louis, Mo., at midweek, with pricing out of Iowa terminals reportedly climbing to $475-$495/st FOB as the week progressed. The market FOB Catoosa/Inola, Okla., had reportedly firmed to $480-$490/st FOB, up from last week’s $460-$465/st FOB range.
California:
Urea pricing remained in a broad range at $545-$600/st FOB in California in early September, depending on supplier and location, with no current rail-DEL offers confirmed in the state.
Pacific Northwest:
Urea prices moved up $25/st during the week, firming from $525/st to $550/st FOB Rivergate, Ore., and from $530/st to $555/st FOB Aurora, Ore. Rail-DEL pricing was pegged in the $550-$560/st level in the Pacific Northwest.
Western Canada:
Sources reported firming prices for urea in Western Canada during the week. New offers were reported at C$670-$690/mt DEL and likely going higher, depending on time of shipment, up from the last reported range of C$650-$670/mt DEL. The lower end of the range was quoted for September tons, with the higher numbers for October-November.
India:
From China to the Middle East, through North Africa all the way to Brazil, industry watchers are wondering when RCF will call its next urea tender. Rumors in Brazil earlier this week pegged the date as Sept. 6. Sources in Asia, however, said the call could come as early as Friday, Sept. 3.
Indian media reported a number of regional complaints of fertilizer shortages combined with stronger demand for urea. In some cases, said traders, the supplies of DAP are lower than expected, leading farmers to grab whatever fertilizer is available, and urea is readily at hand and cheap. Sources said India needs at least 1.5 million mt to make sure demand in the country is fully covered.
The reports of softening prices in China are said to be an encouraging sign to the Indian buyers. However, the tightness in the Arab Gulf and Black Sea markets could leave RCF more dependent on Chinese urea than they would prefer. Sources are estimating 500,000-600,000 mt could come from China in the next tender.
Even as the world looks at softer Chinese prices, sources said freight rates continue to rise. The freight from China to an East Coast Indian port is now pegged at $40/mt and rising, and does not include the usual extra $5-8/mt or so for additional cost or a margin for profit to the trader.
China:
It took a while, but the final numbers from the Taiwan Fertilizer tender for 6,000 mt of urea were finally revealed. They showed, as expected, a netback to China of $415-$420/mt FOB.
The only problem, said traders, is that the market continued its slide. More recent deals of similar-sized cargoes into Southeast Asia showed netbacks for prilled urea deals at $400-$405/mt FOB. Some traders are even arguing that some of the deal could eventually be pegged below the $400/mt FOB mark.
If the price holds in the low-$400s/mt FOB, the price into India would represent a drop of at least $50/mt to the Indian buyer. Sources said they expect to see China supply 500,000-600,000 mt in the tender.
Traders said the threat of central government action against exports still looms. So far, internal supplies and prices seem to indicate that the domestic season will not be too expensive and there is plenty of tonnage available. If, however, the government planners project the numbers into the next year, they might take steps to prevent producers from chasing more lucrative offshore deals ahead of any domestic demand.
Sources said the Chinese government has traditionally announced policy changes such as an export tax or limited restrictions on exports in December, with the new policy to be implemented in January. There have been times when the new policy had immediate effect, however, much to the detriment of buyers who had not yet signed their contracts or already moved their product to bonded warehouse.
While the world is watching to see when India calls its tender and how much it takes, others are carefully following Chinese government pronouncements on urea production and supplies to domestic distribution centers.
Middle East:
Urea supplies out of the Arab Gulf remain tight. Sources said producers are processing contracts, and the tonnage being handled indicates no chance for price discovery deals on the spot market. With no spot deals around, the public price remains based on the netback from the last RCF/India tender in the $480s/mt FOB.
Sources said once the next Indian tender is called, however, they expect to see lower netbacks in any offers backed by Arab Gulf producers. An indication of how the market is thinking came from reports that the paper market is looking at $445-$455/mt FOB for Arab Gulf urea in September and October.
Even as prices are expected to soften in the Arab Gulf, prices already went down in Egypt and are now rebounding. Just this week, deals started at $440/mt FOB for 15,000 mt of MOPCO granular urea, but then edged up to close out the week at $462/mt FOB as Green Markets went to press. All the deals were for October shipment.
MOPCO reported that as a result of the tonnage booked in the past couple of weeks, it is now sold out for September and most of October.
Just as the prices started moving up, Abu Qir announced it would close a tender on Sept. 2 for 20,000 mt each of prilled and granular urea for shipment in late September.
Iranian exports of urea for January-July were up 70 percent, according to Trade Data Monitor, to 2 million mt from 1.2 million mt during the same period in 2020.The top buyers of Iranian urea so far this year have been Turkey at 721,000 mt, Brazil at 188,000 mt, and South Africa at 150,000 mt.
July 2021 exports were up 11 percent, to 335,000 mt from 302,000 mt in July 2020. Turkey took more than half of the July sales at 188,000 mt.
Thailand:
January-July urea imports were down about 3 percent, according to Trade Data Monitor, to 1.42 million mt from 1.47 million mt during the same period in 2020.Three suppliers accounted for 1.05 million mt, with Saudi Arabia leading at 637,000 mt, followed by Oman at 312,000 mt and Malaysia at 286,000 mt.
July imports were down 27 percent, to 235,000 mt from 323,000 mt in July 2020. Saudi Arabia supplied 142,000 mt in July, with the rest of the suppliers sending less than 35,000 mt each.
Brazil:
Urea prices at Paranagua dropped to $460-$480/mt CFR. Sources said the softening in the price has more to do with built-up reserves in the warehouses than with reports from China of lower prices.
Sources said the full warehouses and a strong line-up of vessels waiting to come in are prompting buyers to be more aggressive in their bids. The most successful buyers are those who already have trucks lined up to move the product from the port to inland distribution centers or blending facilities.
The issue of finding enough trucks to move product is affecting every type of fertilizer coming into the Brazilian ports. The limitations are due partly to COVID-19 and partly because the drivers that are available keep threatening to strike until higher rates are negotiated.
Even as the multi-level talks take place, everyone still has eyes on the Indian tender to see how the price will shift and how many tons will be purchased.
While portside costs are coming down, Rondonopolis is showing a steady price inland at $590-$676/mt FOB ex-warehouse. Prices are expected to come off. Sources said weather conditions are forcing farmers to reassess their prospects in the next season, forcing them to delay their input buying plans.
The barter rate was reported at 1 mt of urea for 80 bags of corn.