U.S. Gulf:
New urea trades were put in the $752-$787/st FOB range, down from the pre-Thanksgiving $805/st FOB. The market started in the $780s/st FOB and fell as the week advanced.
Sources said the drop could have simply been that one large buyer had stepped out of the market. Another player said the dip was just a temporary lack of demand, and he expected the price would soon firm as the U.S. market gets closer to spring and December prepay. He added that the U.S. price is still cheap compared to the international market, which remains in tight supply with strong prices.
Another observer said it could be a reaction to the Yara news that it was bringing European ammonia production back up, which would assure the production and supply of downstream products like urea and nitrates to the European market.
Eastern Cornbelt:
The urea market was pegged at $855-$865/st FOB regional terminals in the Eastern Cornbelt, with Michigan terminal pricing pegged firmly at the $875/st FOB level.
Western Cornbelt:
The urea market was quoted at $855-$875/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and the high in Iowa.
Northern Plains:
Urea pricing was pegged in the $940-$990/st DEL range in North Dakota for new business, up from $885-$945/st in mid-November. The last urea prices confirmed at St. Paul, Minn., were reported at $850-$880/st FOB.
Northeast:
The urea market remained at $850-$875/st FOB in the Northeast, with the low confirmed at Baltimore, Md., and the high reported for the last offers out of Fairless Hills, Pa. The market FOB Savannah, Ga., was steady at the $860/st level for current pricing.
Eastern Canada:
Urea pricing in Eastern Canada remained in a broad range at C$1,200-$1,335/mt FOB in early December, depending on location.
India:
Industry players now talk of a new tender call any day. Sources said it is most likely that NFL will call for a tender to close before the end of the year.
The odds favor an NFL tender, sources said, because the company has a limited time to exercise its license to import urea. Sources said the company has to secure its urea orders before the end of the fiscal year on March 30, 2022.
The need for another tender has been clear, as India is about 2 million mt short of its needs. Some have placed the deficit as high as 2.9 million mt. The situation is so serious that there is a growing number of stories in the Indian news media about complaints from farmers and local distributors regarding the lack of product for the current application season.
The government faces several issues securing enough urea to satisfy local demand. The buying agents face a two-fold problem of limited urea in the global market and record high prices. Sources said when the next tender closes, India will be facing prices in excess of $1,000/mt CFR. While the last tender did feature prices well over that level, in the end IPL was able to buy 1.6 million mt at just under the $1,000/mt mark.
Vessels have been booked for the bulk of the tonnage awarded in the IPL Nov. 11 tender. Sources said ships are booked to handle 987,000 of the 1.6 million mt awarded. About 623,000 mt is headed for West Coast ports, with the remaining 364,000 mt slated for East Coast ports. The shipping deadline is Dec. 31.
| Supplier | Quantity | Vessel Name | Origin | Discharge |
| Amber | 30,000 | KS Grace | China | Paradip |
| Ameropa | 52,500 | Doric Katana | Oman | Mundra |
| 52,500 | Kiran Caribbean | Oman | Mundra | |
| 47,200 | Belisland | Oman | Jaigarh | |
| 47,200 | Sand Topic | Saudi Arabia | Adani Dahej | |
| 47,200 | Elpida GR | Oman | New Mangalore | |
| 47,200 | Cape Trafalgar | Saudi Arabia | Rozy | |
| Dreymoor | 45,000 | Doric Armour | Russia | Pipavav |
| Eurochem | 45,000 | West Wind | Russia | Kandla |
| Fertiglobe | 50,000 | Strange Attractor | Egypt | Gangavaram |
| 50,000 | Kiran Adriatic | Egypt | Kakinada | |
| Koch | 49,500 | La Stella | Egypt | Krishnapatnam |
| 50,000 | IVS Pestwick | Russia | Mundra | |
| Keytrade | 47,500 | Georgia M | Egypt | Kandla |
| 25,000 | Occitan Sky | Nigeria | Kandla | |
| 25,000 | Bell Bay | Nigeria | Kandla | |
| MidGulf | 47,500 | Navios Vega | Saudi Arabia | Gangavaram |
| OCI | 45,000 | Aquatarus | Oman | Krishnapatnam |
| Samsung | 47,000 | Pacific Crown | Egypt | Karaikal |
| 47,000 | Basic Victory | Finland | Tuna | |
| Swiss Singapore | 45,000 | Ince Inebolu | Bahrain | Tuna |
| Transglobe | 45,000 | Perth1 | Indonesia | Kakinada |
That still leaves 608,000 mt to be shipped. Sources said several vessels have already reached India with material awarded in the tender. One such vessel is the Daryabar, which was scheduled to reach Paradip on the East Coast on Dec. 2.
The Daryabar is an Iranian-flagged vessel that has made regular runs delivering urea to Brazil in exchange for corn and soybeans. The vessel’s last stop before arriving at Paradip, according to ship tracking data, was Iran.
The rising price of urea is causing some concern in the Indian fertilizer industry. New reports note that to keep the subsidized price of urea stable to the farmers, more funds have to be allocated to the subsidy budget. Officials with the Fertilizer Association of India expressed concern that timely subsidy payments to importers and domestic producers is vital.
In past years, the Indian urea industry has complained of late payments, with some almost two years past due. The high cost of inputs, including energy, has many of the local producers watching the budget process closely, all the while keeping up the pressure to ensure timely payments of their subsidies.
Russia:
If a pending Indian tender was the background to industry conversations this week, the announcement by the Russian government that it was setting allocations for the export of various nitrogen products was front and center.
The government announced that beginning Dec. 1 and lasting through May 31, 2022, urea, UAN, and ammonium nitrate producers will have a strict allocation of product they can export. The urea allocation for the December-May period is 4,004,000 mt.
Once the allocation was released, industry sources relaxed a bit. According to Trade Data Monitor, the allocation exceeds the urea exports during that period in the previous three years.
| Russian Exports | ||||
| Product | December-May Exports (mt) | |||
| 2018-2019 | 2019-2020 | 2020-2021 | 2021-2022 (allocated) | |
| AN | 1,537,988 | 1,566,957 | 1,760,826 | 744,000 |
| UAN | 1,226,923 | 1,148,058 | 927,336 | 1,146,000 |
| Urea | 3,330,813 | 3,606,086 | 3,685,838 | 4,004,000 |
Rumors had been circulating for several weeks that Russia would follow China’s lead and limit urea exports. The Russian government announced that it would be limiting some nitrogen exports and would be making allocations to individual producers. The delay in making the final announcement, the government said, was because it wanted to understand the needs of the domestic market as served by the various producers.
The final allocations by commodity and plant were released earlier this week.
| Company | Allocation (December 2021 – May 2022) | |||
| Urea | UAN | Ammonium Nitrate | Sodium Nitrate | |
| Eurochem | 890,102 | 487,566 | 147,964 | |
| Phosagro | 759,632 | 48,963 | ||
| SBU | 587,945 | 67,988 | 142,981 | |
| Uralchem | 551,519 | 22,905 | 160,235 | 4,000 |
| Togliatti Azot | 427,954 | |||
| Acron | 360,215 | 465,120 | 161,803 | |
| Salavat | 310,828 | |||
| Kuibyshev Azot | 116,695 | 99,461 | 41,490 | |
| Bui Chemical Plant | 3,386 | |||
| Rossosh | 41,404 |
The Russian government said limiting exports was necessary to ensure a full supply of nitrogen products for the upcoming domestic application season.
Black Sea:
There are reports that the Azerbaijan company SOCAR sold a 10,000 mt cargo of granular urea to a trader out of the far-eastern port of Polti at $850/mt FOB.
Producers are now looking at $900/mt FOB from that region. Earlier estimated netbacks to Yuzhnyy and other ports on the west side of the Black Sea were put at $930-$932/mt FOB. Sources said the Polti deal widens the range from the Black Sea.
Europe:
Urea buying demand in Europe was described as flat, with supply remaining tight across the region.
Middle East:
Arab Gulf producers continue to claim limited availability through January. Sources said some of the tons tied up are for the November IPL/India urea tender. Some other tons were booked by traders in anticipation of a follow-up tender.
Rumors are now circulating that the producers are not only sold out through January, but are close to being sold out well into February. The quietness of the deals leaves the price out of the Arab Gulf at the same levels settled in the IPL tender from last month.
The paper market for the Arab Gulf puts the December price at $880-$900/mt FOB. Traders noted that this price differs significantly from the actual December price paid by IPL in the $950s/mt FOB.
Iranian output is said to be down about 30 percent as natural gas gets diverted from industrial use to home heating. One trader said he expects to see a further decline in output as the winter intensifies.
Egyptian producers are now offering January product at $950-$965/mt FOB. They claim they are sold out for December and most of January. The current price as calculated from the IPL tender comes to $930-$945/mt FOB. Sources said the January price ideas fit in with the general view of how the market will continue to move well into the first quarter of the new year.
The paper market for December Egypt granular urea is reported at $880/mt FOB.
China:
Some small cargoes of about 3,000 mt each are being allowed out of China for South Korea. The shipments all seem to be in containers.
The movement of urea to South Korea seems to be part of an 18,000 mt deal settled in late November to alleviate the urea shortage in South Korea. Urea is needed for the country’s emission control program. A shortage of the so-called liquid urea threatened to shut down the South Korean transportation network.
Ethiopia:
After two failed tenders, the Ethiopian Agricultural Businesses Corporation is looking for 785,000 mt for 2022 beginning in January. Reportedly, EABC is scouting out direct offers including from traders and producers.
The move comes after tenders called in October and November did not receive any support from traders or producers. Sources said the reluctance by traders to participate in the EABC tender came from past delays in issuing awards and securing agreements on shipping.
Ethiopia imports the bulk of its urea during the first semester of each year. The first half of 2020 urea imports was reported by Trade Data Monitor at 529,000 mt, against 50,000 mt for the second half of the year. The first semester of 2021 showed imports of 343,000 mt, well below previous years for that time frame. An additional 187,000 mt were imported in July and October of this year, still leaving the country short of its needs. Normally there are no imports in the last semester of the year.
Indonesia:
Sources said they have still not heard of any movement by the government to issue export permits for the first quarter of 2022. The permits must be secured before any Indonesian tons can be considered in the upcoming Indian tenders.
Sources said the government is most likely hesitant to issue the permits because the first quarter of the year is also the main application season in Indonesia.
Thailand:
January-October urea imports were down slightly, according to Trade Data Monitor, to 2.1 million mt from 2.13 million mt during the same period last year.
October imports were also down, to 211,000 mt from 223,000 mt in October 2020. The main suppliers in October this year were Saudi Arabia at 80,000 mt and Malaysia at 70,000 mt.
Brazil:
International traders described the urea market as right around $880/mt CFR. Local traders, however, had a much larger view. Brazilian traders pegged the market at $850-$920/mt CFR, depending on the port of discharge.
Sources reported continued problems getting a timely berthing at Paranagua and Santos. Reportedly, some of the traders waiting for their product have begun to look to alternative – albeit smaller – ports to unload their material and avoid high demurrage costs.
The talk around the ports is reportedly of softer urea prices. At first there was great consternation when Russia said it would limit urea exports. Once the final number came out to be higher than previous exports during the same period, panic was averted.
While the port price moved up slightly, Rondonopolis took a more dramatic leap, settling at $1,000/mt FOB, up from $960/mt last week. Reportedly, buyers are looking to ensure they have enough urea for their blending operations before higher prices work their way through the supply chain.
The barter rate for 1 mt of urea remained steady at 125 bags of corn in Mato Grosso.
Price Updates:
Six prices that appeared as an NA in the issue dated Nov. 26 have been updated. They include:
16-16-16 Black Sea $347-$395/mt
AN Black Sea $715-$716/mt
AN Baltic Sea $707-$708
UAN Black Sea $650-$670/mt
UAN Baltic Sea $593-$643/mt
Urea Baltic Sea $803-$850/mt