U.S. Gulf:
The nitrogen plant closures in Europe impacted the NOLA urea market, with prices quickly reacting. Sources also pointed to India finally pulling the trigger on its urea tender, but that factor was at least expected.
While early-week trades were reported as low as $529/st FOB, prices continually rose during the week. By late day Thursday, October was reported to have traded as high as $600/st FOB. At midweek, loaded barges were reported to have traded in the $582-$585/st FOB range, with first-half October at $575/st FOB. December was put at $560/st FOB. However, with each new day, sources said prices were on the rise.
NOLA has not seen $600/st FOB urea since 2012.
Eastern Cornbelt:
The urea market had reportedly jumped to $585-$630/st FOB in the region, depending on location and time of the week, up from the previous week’s $525-$570/st FOB. The low was confirmed at Cincinnati, Ohio, as the week began, but pricing ramped up to the top end of the range at Cincinnati, Louisville, Ky., and other river terminals by the end of the week.
In the Northeast, the Fairless Hills, Pa., urea market was quoted at $550/st FOB early in the week for September/October tons.
Western Cornbelt:
Urea pricing surged to $600-$620/st FOB in the Western Cornbelt, up a full $50/st from the prior week, with the low reported at Port Neal, Iowa, and the high at St. Louis, Mo.
Sources said the Catoosa, Okla., market also moved to a high of $620-$635/st FOB for new offers, up from $570-$575/st FOB the week before, while urea pricing at St. Paul, Minn., was reported in a broad $610-$650/st FOB range for the week.
California:
Urea pricing in California edged up to $600/st FOB Stockton for bulk tons, up from a recent low of $545-$550/st FOB, with reports of bagged urea moving at the $660/st FOB level at that location. No current rail-DEL offers were reported in the state.
Pacific Northwest:
Urea prices covered a broad $600-$650/st FOB range in the Pacific Northwest, depending on timing, with the upper end reported late in the week at Rivergate, Ore., and likely to move higher for the next round of business.
Western Canada:
The urea market had reportedly jumped to C$850-$870/mt FOB and C$870-$895/mt DEL in Western Canada, depending on location. Those levels reflect a roughly C$200/mt increase since the first of September.
India:
The much-anticipated RCF urea tender call came on Sept. 21. The tender will close on Oct. 1 with offers valid through Oct. 12 and shipping by Nov. 11.
Last year by the first week of October, Indian buyers had secured 6.8 million mt of urea. So far India has only imported 3.9 million mt through the tender process. To meet estimated demand, sources said the country will need to import at least 1.1 million mt each month through January 2022.
Sources said RCF had to keep pushing back the tender call because of fiscal reasons. The company was said to be looking for ways to protect its line of credit by getting guarantees of funds from the Department of Fertilizers (DoF). At the same time, the DoF was facing a pinch from the state treasury.
Indian media reported that the government is now planning to increase the budget for fertilizer subsidies. All told, they plan to move the fund up to US$16.19 billion from the earlier budgeted US$10.8 billion. The planned increase in urea subsidies alone is $1.21 billion, and will be needed.
Most international traders did not want to get nailed down on what prices might look like once the RCF tender closes. Some, however, did point to news reports that the paper market was at $518/mt CFR. From that basis and looking at talk of prices from urea producing regions, some ventured guesses that the offers could be $520-$540/mt CFR.
The buyer will face a tight market. Sources noted that even though there are reports that China has about 600,000 mt of urea sitting at port warehouses or available to be shipped to the ports, an edict issued by the National Development and Reform Commission has shut down talks between traders and producers to book product for October and November shipment.
At the same time, Arab Gulf supplies remain tight with little evidence that will change soon. The closure of urea plants in Ukraine due to high natural gas prices removed 100,000-200,000 mt that has been sent in the past from the mix. And, said sources, the latest price out of Indonesia could be too high for consideration into India.
While RCF works to import more urea, there are media reports of spot shortages of urea throughout the country. Some reports include stories of farmers resorting to buying urea smuggled in from Nepal at Rs350-400 for each 45-kg bag instead of the official maximum price of Rs262/45kg bag.
One international trader said he has begun to see some interest by farmers to buy DAP just for the nitrogen content. He noted that this move is more costly, but evidence of the measures some will take to get nitrogen for their crops.
China:
A document circulated by the National Development and Reform Commission and 13 other government agencies created an end to talks between international traders and Chinese sources of urea for export sales.
The commission called on the urea producers to ensure a plentiful supply of urea at stable prices for the domestic market. The commission’s action came as global prices kept rising and more producers were looking at moves to take advantage of those prices.
Sources reported that about 600,000 mt are available at various ports in China for export. Some of the tonnage is already committed to specific buyers, while other tonnage is waiting for a buyer. However, the commission’s demand that the domestic market be covered first led to a nervous withdrawal by international traders.
Sources said international traders are concerned that the commission could impose an export duty on tons contracted but not paid for, thus making the product too expensive for the final buyer. Another option available to the commission to enforce its policy is to impose a ban on exported urea.
Discussion of prices this week started in the upper-$470s/mt FOB. By the end of the week, on the heels of the RCF tender call and the release of the commission statement, sources said discussions were focusing on $495-$500/mt FOB. A dramatic run-up in prices, said one trader, could trigger action by the commission to limit export tons.
Even though there was a lot of discussion about what pricing should look like out of China, sources were clear that no new business was done this week to indicate a shift in pricing from the $420s-$430s/mt FOB.
Adding to the concern are reports that due to environmental concerns, production either has or is about to drop to under 60 percent of the rated capacity in the country.
Chinese urea exports for January through August of 2021 were up 39 percent, according to Trade Data Monitor, to 2.9 million mt from 2.1 million mt exported during the same period last year.The main buyers were India at 1.1 million mt, South Korea at 489,000 mt, and Mexico at 285,000 mt.
August 2021 exports of 264,000 mt showed a 31.7 increase from the August 2020 amount of 200,000 mt. India took 103,000 mt of the shipments, followed by South Korea at 57,000 mt, and Mexico at 48,000 mt.
Middle East:
The lack of spot sales from the Arab Gulf hindered price exploration. Sources said the cargoes that were moving out were all tied to contracts or formula-based deals.
Talk in the area is of prices in the upper-$470s/mt FOB. This represents a climb back to levels achieved after the last RCF tender in the $480s/mt FOB. Sources said talks dropped into the $440s/mt FOB and then slowly moved up as expectation rose for an Indian tender and as Egyptian prices began moving through the roof. Sources said the tightness of the market has made price discovery discussions difficult.
The paper market for the Arab Gulf is very bullish. September pricing is pegged at $525/mt FOB and October is at $530/mt FOB.
Last week, Egyptian producers predicted they would soon hit $600/mt FOB. They achieved that level when Helwan settled a deal for 6,000 mt of granular for November shipment. Prior to the Helwan deal, AlexFert sold 10,000 mt of granular at $595/mt FOB.
A deal earlier in the week for an October loading helped move the price up. Abu Qir reportedly sold 10,000 mt of granular at $555/mt FOB. By the time that deal was closed, Egyptian prices had moved up more than $100/mt since the end of August.
The paper market for Egypt did not keep up with the actual price. The September price was reported at $565/mt FOB and October at $572.50/mt FOB.
More production is being planned by various Egyptian producers, which sources said will allow the companies to expand beyond the European and eastern Africa markets they currently depend on.
Indonesia:
Kaltim closed a selling tender for 30,000-45,000 mt on Sept. 21 for October shipment. The winner was Liven with its bid of $502.50/mt FOB. An additional 10 companies also participated.
| Bidding Company | US$/mt FOB |
| Liven | 502.20 |
| Amber | 501.50 |
| Samsung | 498.70 |
| Eurochem | 488.00 |
| Oracle | 485.00 |
| Swiss Singapore | 480.00 |
| Gavilon | 475.28 |
| Aries | 470.09 |
| Ameropa | 463.00 |
| Indagro | 460.00 |
| Koch | 440.00 |
The Koch offer was seen as a serious outlier by industry sources. Its price was $17/mt below the last done deal out of Indonesia. Sources said even the winning amount seemed low given the current state of the urea market. One trader said the $502/mt FOB winning price equates to about $540/mt CFR into India, which some estimate could be the high end of the offers to RCF.
Reportedly, Kaltim is willing to engage in further talks with any of the traders in the hopes of moving possibly another 100,000 mt for the same price.
Malaysia:
Petronas helped nail down higher prices in the region. Reportedly the state-owned company sold a cargo of granular urea at $530/mt FOB for November shipment as the week waned. An earlier deal was also reportedly done at $515/mt FOB, also for November.
Brazil:
Throughout the week buyers and sellers were trying to assess how the turmoil in the global urea market will affect Brazil. Sources began quoting prices early in the week at $540/mt CFR in Paranagua, but discussions moved the price to as high as $670/mt CFR throughout the week, although with no actual business done at that level.
By Friday morning, however, sources confirmed a sale at $640/mt CFR. Reportedly Ameropa handled the deal. Sources said they expect to see a continued rise in prices until the global urea market settles down.
Rondonopolis moved up to $660/mt FOB ex-warehouse. Sources said inland buyers were spooked by the Chinese commission demand that more attention be paid to the Chinese domestic market, the cutbacks in European urea production due to high natural gas prices, and the RCF tender call.
Reportedly, sellers are pushing for the upper $660s/mt FOB, but with no luck so far.
Croatia:
Petrokemija on Sept. 22 reported the shutdown of its ammonia and urea plants at Kutina due to a technical failure. The urea plant has an estimated capacity of around 500,000 mt/y. The producer said its other fertilizer plants are continuing to operate normally and supplies to customers have not been impacted.