U.S. Gulf:
NOLA granular urea barges for September were reported to have traded at $518-$552/st FOB, up from the prior week’s $425-$495/st FOB. Sources reported a very thin market, with some saying NOLA barge supplies were already tight before Hurricane Ida.
The storm brought with it the idling of CF’s major Donaldsonville complex and the CF Sept. 3 declaration of force majeure, though by Sept. 9 the company reported it was restarting ammonia production at the complex, with urea and other products to follow.
Other sources cited logistics problems, with reports of some barges damaged and speculation that others may have sunk. There was also a question as to when import vessels could be offloaded as empty barges were hard to find, with many filled with grain and unable to unload at NOLA grain terminals.
In general, sources expected it would take a while for both production and logistics to return to normal. Sources were more hopeful for October. Those barges were reported to be trading in the $465-$490/st FOB range.
U.S. Imports:
Urea imports for July were up 156.6 percent, to 468,526 st from the prior-year 182,562 st. Russian imports totaled 132,541 st for the period, followed by Qatar at 109,306 st, Saudi Arabia at 57,541 st, and Algeria at 57,479 st.
U.S. Exports:
Urea exports were down 93.1 percent in July, to 9,106 st from the year-ago 131,815 st.
Eastern Cornbelt:
The disruptions to fertilizer production and distribution caused by Hurricane Ida continued to impact urea pricing. The week began with sources quoting the Cincinnati, Ohio, urea market in the $490-$505/st FOB range. By Sept. 9, however, several sources reported new urea offers ranging from $520-$560/st FOB in the region, depending on location.
Western Cornbelt:
Most of the new urea quotes fell in the $520-$555/st FOB range in the Western Cornbelt during the week, depending on location. The range out of most South Central terminals was reported at $520-$550/st FOB on Sept. 9.
Sources reported difficulty sourcing new price quotes during the week, with most attributing the hesitancy to Hurricane Ida and the resulting production outages.
“I am not sure there are any ‘real’ markets yet, but everything is a lot higher,” said one contact “It is still going to be days or weeks before the aftermath of Ida and its market implications are truly known. But supply and logistics look grim today.”
Northern Plains:
Urea was quoted at a solid $550-$555/st FOB St. Paul, Minn., at midweek, while delivered offers in the Dakotas ranged broadly, from a low of $515-$535/st FOB early in the week to a high of $575/st on Sept. 9, depending on location and point of origin. Both prices were up dramatically from the last reported $470-$490/st FOB and $490-$510/st DEL ranges.
Great Lakes:
Urea prices were up significantly in the region, although several sources said prices had been pulled at some locations in the wake of Hurricane Ida and the disruptions to Gulf Coast production and distribution. The market was reported in a broad range at $525-$565/st FOB Great Lakes terminals at midweek, where available, up from $475-$525/st FOB in mid-August.
Northeast:
The last urea offers in the Northeast were pegged at the $510/st level or higher FOB Fairless Hills, Pa., up from $480-$490/st FOB in late August.
India:
The urea industry is still waiting for the RCF tender to be called. Sources said the tender could be called as early as Saturday, Sept. 11, because Friday is a holiday in Mumbai, the hometown of RCF. Others said the call will most likely come next week.
Industry watchers said the delay seems to be related to securing the proper financing for the tender from the Department of Fertilizers. Traders had been saying RCF would need to clear out the lines of credit related to its past tenders before it could move forward with the next one.
The buyer is facing a rising market. Prices in Egypt have now moved to $470/mt FOB for October shipments, and quotes from China for prilled urea have jumped from $410/mt to about $430/mt FOB. Any further delay in calling the tender will also put the shipping period at the same time Chinese demand for urea is expected to pick up.
Some traders said the trend in pricing could lead to RCF paying more than the $510-$517/mt CFR it paid in the last tender. However, to achieve this level, the netback prices would have to dramatically rise, something many said is not likely.
China:
The month started with an award in the TFC tender for 6,000 mt of prilled urea with a netback of $415-$420/mt FOB. Immediately after that tender, small deals in Southeast Asia pushed the netback to $400-$405/mt FOB.
This week, quotes for prilled urea were being circulated in the $420s/mt FOB, while granular urea was being quoted in the mid-$430s/mt FOB. Some sources are also claiming parity pricing, with prilled and granular both at $425-$435/mt FOB.
Sources said the jump in price ideas came from Egypt securing ever-higher prices, the pending Indian tender, and rumors of the Chinese government stepping in to prevent exports beginning on Oct. 1. While everyone is talking of higher prices out of China, sources were clear that no new deals were concluded this week.
Global demand for urea is on hold until the RCF tender is called and awarded. Sources said one thing the buyers are nervous about is the threat that their product could become unprofitable in a falling market. While few see that scenario playing out, it is a consideration.
The bigger fear, said one trader, is that the Chinese government will see too many tons being offered offshore at a time when domestic demand kicks in. Rumors are circulating that Beijing plans to institute some sort of export duty or export ban as early as Sept. 10, or at least by Oct. 1, to build supplies for the domestic season. Either action could make it difficult to export tons that are booked but not sitting in a bonded warehouse.
Sources are unsure how many tons China will supply to the Indian tender. Last week, traders estimated that if the tender was called in the first week of September, Chinese urea could account for 500,000-600,000 mt in awards. Now, with more pressure from the central government, sources said fewer tons may find their way to India.
Reportedly, the amount of urea in the export warehouses is only about 250,000 mt. One trader estimated that at best the producers could send another 100,000 mt in October. The October deliveries could be reduced or eliminated if the government steps in.
One source said Beijing could take a number of steps to ensure lower prices and plentiful supplies in the domestic market. The most dramatic move would be to declare a ban on exports, likely for a short duration, as the government has done in the past. Another move could be to increase the duty on railway transport for any product headed to a bonded warehouse. And a third option is to impose a duty on exported product, again for a limited time.
Sources said stepping up the production rate, which is currently reported at about 65 percent of rated value, would be difficult. The government is still diverting electricity away from industrial facilities in favor of residential use.
Clarification: The recent Taiwan Fertilizer urea tender for 6,000 mt cited in the issue dated Sept. 3, p. 4, was for prilled urea.
Middle East:
Arab Gulf urea producers remain tight with their product, letting just enough out to cover contracts and other long-term arrangements. Sources said nothing will be offered on the spot market until India calls its tender.
The lack of any spot deals keeps the public price in the $480s/mt FOB. However, sources reported that most of the discussions for product once the Indian tender is called seem to be in the low-$440s/mt FOB. This price would match with the pricing ideas discussed out of China, leaving traders to think this is where the Indian tender may settle.
The paper market for the Arab Gulf is reported at $475/mt FOB for September and $482/mt FOB for October.
Egyptian producers continue to secure higher prices. By the end of the week, deals for granular urea were secured that nailed down $450/mt FOB for late September shipments and $475/mt FOB for late October shipments.
Reportedly, Kima has set aside 50,000 mt to be sold to Ethiopia under the EABC. The netback for this tonnage was pegged at $440-$450/mt FOB. The deal came through just as Abu Qir closed its Sept. 2 tender for 35,000 mt of granular urea at $462/mt FOB for late September/early October shipment.
Throughout the week, sales by Helwan and Alexfert moved the price to $470/mt FOB in a series of smaller-lot October deals. By the end of the week, Helwan reported one last sale at $475/mt FOB for 10,000 mt of granular to be shipped in October. The sale reportedly leaves Helwan with only 10,000 mt left for sale next month.
Prills for October shipment by Abu Qir were reported at $440/mt FOB.
Egyptian producers now claim they are sold out of granular and prilled urea for September and, like Helwan, claim to have limited tonnage available for October.
The paper market for Egyptian urea exports is put at $472/mt FOB for September and $487/mt FOB for October.
A deal out of Algeria at $470/mt FOB for an October shipment added further confirmation to the Indian business. AOA is now reportedly asking $480/mt FOB.
Black Sea:
Estimates of a sale to Incofe showed a netback to the Black Sea of $405-$415/mt FOB for 10,000-13,000 mt. Sources said that price level sounds about right, despite the lack of any other business in the area.
Supplies out of the Black Sea are limited. Sources said the higher gas prices in Ukraine will most likely remove that country from the supplier side of the market.
Indonesia:
Producers are reportedly ready to call an auction to move out October material. However, they are said to be waiting for the Indian tender so they can get a better feel for where the market is headed.
In the meantime, sources said producers are ready to sell but are in no great rush, and are still processing many of the sales secured last month for September shipments. Plus, said one trader, there is plenty of storage space to hold tons if a deal to export cannot be negotiated in a timely manner.
Brazil:
Urea prices in Paranagua tightened to $460-$480/mt CFR. The increase came as Brazilian buyers try to calculate the impact of Hurricane Ida on New Orleans and what will happen when India finally calls its tender.
The rising prices in North Africa are also getting the attention of traders, with Egyptian and Algerian producers turning out product at ever-higher prices. Brazil imported 573,000 mt from Algeria so far this year, and another 69,000 mt from Egypt. Better prices elsewhere, along with some production issues in Algeria, led Brazil to reduce its take from that country by 31 percent compared with the same period last year.
Rondonopolis also saw a tightening of its price range to $605-$628/mt FOB ex-warehouse.The barter rate for 1 mt of urea is now placed at 80 bags of corn in Sorriso.
Supplies of urea inland are becoming problematic. Sources said a politically motivated strike by truckers has halted all shipments of material. This move comes on the heels of a growing problem finding trucks to move the fertilizer from the ports to the inland distribution centers.
Urea imports for January-August 2021 were up 21.7 percent, according to Trade Data Monitor, to 4.7 million mt from 3.8 million mt during the same period in 2020.
The main suppliers so far this year were Qatar at 1.15 million mt, Russia at 995,000 mt, Oman at 819,000 mt, and Algeria at 573,000 mt. According to trade figures, Brazil did not import any Omani material in 2020. The tonnage is most likely from OMIFCO, once that producer was able to sell its product on the global market via traders.
August 2021 urea imports were marginally down, at 551,000 mt from 565,000 mt in August 2020. Algeria, Russia, and Nigeria were the main suppliers in August.