U.S. Gulf:
NOLA granular urea prices continued to strengthen, though not at the same pace as the week-ago surge. New trades were called $685-$710/st FOB, up from the week-ago $665-$700/st FOB. December was heard at $696/st FOB.
Eastern Cornbelt:
Urea prices firmed to $740-$750/st FOB in the Eastern Cornbelt, depending on location, with the lower end of the range confirmed at Cincinnati, Ohio. In the Northeast, urea was up $20/st from last week, to $750/st FOB Fairless Hills, Pa., for October-November shipment.
Western Cornbelt:
Urea prices remained in the $720-$750/st FOB range in the region, with the low reported at St. Louis, Mo., and the high for the last offers at Port Neal, Iowa. The market FOB St. Paul, Minn., was steady at $750-$770/st FOB, with delivered offers pegged in the $810-$830/st range in North Dakota.
California:
Urea prices reportedly jumped to $800/st FOB Stockton for bulk tons and $860/st FOB for bags, up $40/st or more from late the previous week and a full $200/st higher than late September levels. Sources continued to report no current delivered offers in the state. “Most suppliers don’t post and just have ‘ask’,” said one contact.
Pacific Northwest:
The urea market was quoted at $800/st FOB Rivergate, Ore, and $805/st FOB Aurora, Ore., up $200/st or more from late-September levels. Sources quoted rail-DEL urea offers at $848-$855/st in the region at midweek.
Western Canada:
Urea prices jumped to C$1,025-$1,055/mt FOB and C$1,070-$1,100/mt DEL in Western Canada, depending on location and time of shipment, up another C$45/mt or more from the prior week and a full C$175-$205/mt above pricing levels in late September.
China:
New rules for exporting all fertilizers except ammonium sulfate effectively take China out of the export business. The move also has taken away any external market price points for Chinese urea. Sources said for now, the price remains in the $620s/mt FOB until exports are once again allowed.
Major urea-exporting ports in the north were informed earlier this week that only product that clears customs by Oct. 15 will be allowed to be shipped out. As the week progressed, other ports and commodities were added to the list. As of Oct. 14, the list included 29 fertilizer products.
International traders said the tonnage booked by RCF/India for its Oct. 1 tender appears to be in the clear for export. Sources said vessels have been nominated for just about all the material booked, and the remaining tonnage is expected to clear customs by the Oct. 15 deadline.
International traders said the rules are opaque and allow for a great deal of flexibility, based on the political desires of local and national government leaders.
International sources said before any urea can be sent to a port, the factory must get permission from local authorities, with the decision likely based on the current price and availability of urea in their area. Whether the decision will be based on actual supply and demand numbers or on the political concerns of those leaders is not clear, said one trader. The result is that it will be virtually impossible for international traders to combine orders from different factories to one large vessel.
One source said the move makes it difficult for anyone to declare a force majeure if committed tons are held back. Rather than making an outright ban on exports, the central government has left it to the local officials to engage in activities that could forestall exports. For example, a factory looking to bypass the rules may find it difficult to obtain the necessary railcars to ship the product to a port. In other situations, plants may find their energy allocations have been reduced, forcing them to lower production or even shut down.
Everyone is watching the situation closely and hoping to learn more details as the policy is implemented. Until things clear up or the policy is reversed, sources said China is out of the urea export business until well into the first quarter of 2022, at least.
India:
The Chinese announcement to limit exports could have a dramatic impact on India’s future urea purchasing. Sources said any upcoming tender will have to depend on material from the Arab Gulf, with some assistance from Indonesia. Unfortunately for the Indians, sources said these suppliers will not be able to meet the needs of the buyers.
The limited tons available in future tenders could also mean higher prices. Sources said the Indian government has apparently recognized that prices will be going higher. A cabinet meeting this week approved an additional US$3.8 billion in subsidies for the current fiscal year. The increase is designed to deal with higher prices for nitrogen and phosphate fertilizers.
The additional funds will be necessary as urea prices keep rising. The subsidized maximum price for urea is currently at US$76.67/mt, against the latest imported price from the Oct. 1 RCF tender of $665/mt CFR. Besides paying for the urea, the government must also provide for the difference between the imported price and what farmers pay. Sources said any tenders called this year should all show even higher prices.
International traders said they expect another tender to be called any day. Reportedly, just about all the tons booked under the Oct. 1 tender have vessels nominated. In the past, RCF has moved to call a new tender once it was sure none of the tons committed in a previous tender would be withdrawn and offered into a follow-up tender.
| Vessel nominations for tons awarded in RCF Oct. 1 urea tender | ||||
| Awarded Company | Origin | Vessel | Quantity (mt) | Discharge Port |
| Amber | China | Darya Gayatri | 65,000 | Krishnapatnam |
| Ameropa | China | Athena | 50,000 | Kakinada |
| China | Aepoas | 50,000 | Kakinada | |
| 60,000 | Dhamra | |||
| Koch | China | Aquavita | 65,000 | Gangavaram |
| Dreymoor | China | Ocean Prince | 62,000 | Kakinada |
| Medallion | 45,000 | Gangavaram | ||
| Midgulf | China | Western Singapore | 50,000 | Gangavaram |
| China | BK Alice | 50,000 | Krishnapatnam | |
| Samsung | China | Sea Rider | 50,000 | Kakinada |
| 45,000 | Gangavaram | |||
| Swiss Singapore | China | Beks Cenk | 45,000 | Karaikal |
| 45,000 | Karaikal | |||
| Transglobe | China | Seapower I | 47,500 | Krishnapatnam |
International traders said the tightness of the urea market should lead to a series of government-to-government meetings about urea supplies. One trader noted that in the past, when prices moved dramatically higher, the Indian government would send high-level delegations to fertilizer producing countries looking for some sort of government-to-government deal.
Already there is talk that a delegation may be heading to Oman to put pressure on the Indian-Omani joint-venture company OMIFCO. The old contract between OMIFCO and Indian buyers provided for deep discounts on the plant’s output. When a new contract could not be reached, OMIFCO began selling its product around the world.
Sources said the current idea is to get OMIFCO to agree to supply some discounted material for November and December shipments.
Middle East:
Urea prices remain in the low-$700s/mt FOB, based on business done just after the RCF tender closed. Sources said the lack of any new spot business this week and in the near future could mean this price holds. However, discussion of new prices is already running closer to $800/mt FOB.
Traders said producers are currently offering limited tons for late November shipment at $780/mt FOB and up. So far, no one is taking up those offers.
Sources reported a brief pause in price increases after India rejected any tons from the Arab Gulf. The tons set aside for the Indian tender were quickly offered to buyers in Latin America and North America at netbacks that prevented a crash in pricing. Those tons are now all booked, leaving little available for future sales.
When the next Indian tender occurs, the Arab Gulf suppliers are expected to play a major role in the offers. With China effectively out of the export market, the Arab Gulf remains the only place that can provide large quantities in one go. Even then, said one trader, the amount will not be enough to satisfy India’s needs.
Egyptian producers seemed to have taken the week off. No new sales were reported out of Egypt, leaving the October-November price at $735-$752/mt FOB and December loadings at $820/mt FOB.
More deals are expected as more European plants shut down due to high natural gas prices. Sources said while traders are hesitant to buy too far in advance from the Arab Gulf for unknown buyers, Egyptian tons will find ready buyers in Europe.
Black Sea:
Because of high natural gas prices, the Yuzhnyy export market is essentially closed. Sources said what limited urea tons are available are under contract, leaving no spot tons to assess new market prices.
The Turkish government has banned all exports of fertilizers. Sources said the international market prices of urea and other fertilizers were getting too high, encouraging local producers to try to sell their products outside the country. The move to ban exports was specifically targeted to help build up supplies in the domestic market.
Russian urea exports for January-August 2021 were reported at 4.7 million mt, showing only a minor 0.2 percent increase from the same period in 2020. August 2021 exports were up 44 percent, however, to 805,000 mt from 559,000 mt in August 2020.
Turkish imports of urea for January-August of this year were reported at 1.8 million mt by Trade Data Monitor, down 8.8 percent from the 1.9 million mt imported during the same period in 2020.
The main suppliers into Turkey were Oman at 912,000 mt, Egypt at 416,000 mt, Turkmenistan at 197,000 mt, and Iran at 152,000 mt. Iranian imports showed a dramatic drop from 346,0000 mt in January-August 2020.
August imports into Turkey were up 23 percent, to 223,000 mt from 181,000 mt in August 2020. The single largest supplier was Oman with 150,000 mt.
Brazil:
Brazilian buyers and sellers reacted to early reports that China would be restricting urea exports by moving up the price into Paranagua. Sources reported deals done this week at $800-$830/mt CFR.
The price in Rondonopolis moved up dramatically to $900-$973/mt FOB ex-warehouse. While the move was not unexpected, sources were still stunned by the rapid nature of the steady price increases.