U.S. Gulf:
New granular urea trades were reported in the $763-$780/st FOB NOLA range, rebounding from the week-ago $752-$787/st FOB. The lower prices last week were attributed to limited buying. More interest was shown this week.
There were unconfirmed reports that some suppliers might be looking at exporting product out of NOLA, but more details were not immediately available.
New prill barge pricing was reported in the $765-$775/st FOB range, with the product losing its premium over granular.
Eastern Cornbelt:
Urea pricing had reportedly slipped in the wake of a slumping NOLA barge market at the start of December. Even though NOLA urea has since rebounded, sources reported new terminal offers at $810-$825/st FOB Cincinnati, Ohio, and $825-$840/st FOB Illinois River terminals, down from $855-$865/st FOB. There were reports as well of spring urea offers on the table at the $840/st FOB level out of spot Ohio River locations at midweek.
Western Cornbelt:
Urea pricing ranged widely in the Western Cornbelt, thanks to a volatile NOLA barge market since the start of December.
While Iowa sources reported terminal pricing at the $860/st FOB level as the week progressed, the low end of the regional range was reported at $810/st FOB Caruthersville, Mo. The St. Louis, Mo., market was quoted at $810-$820/st FOB at midweek.
Southern Plains:
Urea pricing at Catoosa/Inola, Okla., ranged from $815-$840/st FOB during the week. The market FOB Houston, Texas, reportedly firmed from a low of $810/st up to $855/st FOB as the week progressed.
South Central:
The previous week’s slump in NOLA urea pricing, however brief, was reportedly being felt at upriver terminals in the South Central region.
Urea pricing was reported at $810-$815/st FOB Memphis, Tenn., and most Arkansas River terminals, down from $845-$865/st FOB in late November. The upper end of the regional market was pegged at $820-$825/st FOB Shreveport and Convent, La., and spot river terminals in Kentucky.
Southeast:
While prompt urea pricing remained at the $860/st level FOB Savannah, Ga., sources said the Wilmington, N.C., market had slipped to $820-$825/st FOB for Q1 offers. The last rail-delivered business was reported at the $920/st level in the Carolinas.
India:
Sources all repeated the same line: “A tender will be called soon. Maybe as early as Friday.”
Reportedly, leaders from NFL met with fertilizer ministry officials Thursday to discuss the pending tender. Sources are unified in their views that the tender will be called soon because India needs the urea.
Sources vary in their estimates of how much urea India still needs. The lowest number indicates a deficit of 2 million mt, while others point out that India is 2.9 million mt behind its buying from 2020 at this time.
Expectations are that once the tender is called, offers will be well above $1,000/mt CFR. Sources cite several reasons for a tight market with higher prices, including continued restrictions on urea exports from China, with the exception of 18,000 mt to South Korea; the limitations on Russian exports; and the lack of Indonesia tons until late in the first quarter of 2022. Only strong production in the Arab Gulf is expected to offer any hope to prevent runaway prices.
The rising cost of urea is hitting the Indian treasury hard. Besides having to pay dramatically more for the product, the budget to cover the subsidies offered to urea and other fertilizers is also a problem. According to media reports in India, government and financial consulting firms claim that subsidies for the 2021/22 fiscal year will exceed the budgeted amount by 62 percent. The new estimated cost for all subsidies is reported to hit US$17.2 billion.
Industry sources in India said the rising cost of urea is the single largest contributor to the explosion in subsidy payments. Not only is the imported urea now at record levels, but natural gas prices have risen by at least 50 percent this year, causing domestic producers to demand more support from the government.
The Indian government inaugurated the revamped Gorakhpur plant. The facility was adapted to take natural gas instead of coal, and urea production operations were upgraded. According to media reports, a steady supply of natural gas will begin flowing to the plant in early 2022. For now, the plant, which is rated at 1.2 million mt/y, will conduct test runs to work out the kinks.
Middle East:
Production in the Arab Gulf is being used to cover existing commitments, including the most recent IPL urea tender from India. Sources said there is no spot material available through the end of the month. Prices remained steady in the $950s/mt FOB, which was based on the IPL tender results.
The paper market for the Arab Gulf remains behind the actual market. Sources said the December price was pegged at $905/mt FOB and January at $835/mt FOB.
The Egyptian government increased the amount of urea reserved for the domestic market from 55 percent of production to 65 percent. Reportedly this increase was only for the month of December.
No new spot deals came out of Egypt this week, leaving the price at $935-$945/mt FOB. Producers are claiming, without objection, that they are sold out for December. The increase in the domestic quota underscored the lack of Egyptian tons for export.
Egyptian producers are still asking $950/mt FOB for January 2022 tons, but with no takers.
Black Sea:
The urea flowing out of the Black Sea is either booked for the Indian IPL tender or under existing contracts. Sources said there is a lack of spot material in the region. Prices remain steady.
China:
Sources said the export restrictions in China are having an impact on the domestic market. Prices reportedly have come off dramatically. One trader noted that discussions of the price for possible urea exports are below the current $960s/mt FOB. However, no deals with traders have been concluded for export.
The only exports approved so far appear to have been the small lots totaling 18,000 mt for South Korea. Those lots were reportedly already at the bonded warehouses just waiting for final document clearances before being shipped when the export ban deadline hit. Talks among the traders involved and the governments of South Korea and China shook the material loose.
South Korea:
The South Korean government signed a government-to-government three-year deal with Indonesia for 120,000 mt of urea each year. The move came as South Korea looked to diversify its supply of urea following the export restrictions imposed on urea by the Chinese government.
Green Markets previously reported that South Korea imported 751,000 mt of urea during January-October this year. Chinese imports were pegged at 607,000 mt, representing 81 percent of the South Korean market, according to Trade Data Monitor.
Yonhap News Service quoted South Korean government sources as saying the country needed a more reliable source of urea for its emissions control program. The urea is used to make a fluid for diesel vehicles to reduce pollution.
The first batch of 10,000 mt under the agreement will be sent as early as next week. This shipment comes on the heels of an agreement with China that released 18,000 mt for export to South Korea earlier this month.
Pakistan:
Local media reported an announcement by the Pakistan government that it is seeking 100,000 mt from China under a government-to-government deal. Reportedly the Chinese ambassador in Pakistan said he would assign an embassy official to work on the Pakistan government’s request.
International traders said Pakistan might have better luck seeking a government-to-government deal with Saudi Arabia. Such deals have been done in the past when the Pakistan foreign reserves were so low it was difficult for it to import the urea it needed.
The need for government-level talks came when TCP tried twice to float a tender for 100,000 mt. In each case, TCP did not receive any viable offers.
Indonesia:
Sources said the government has not yet issued any export permits for the urea producers. Reportedly the government continues to remain concerned that the domestic urea demand gets covered before any large scale exports are allowed.
The deal the government cut with South Korea for a three-year contract of 120,000 mt/y is reportedly outside the usual export protocols established for the selling tenders held by the producers.
Brazil:
Buyers are getting more forceful in their pushback against higher prices. Sources said Brazilian farmers and blenders have enough urea reserves on hand to hold off making any major buying commitments for a while, unlike in India.
At the same time the buyers are bidding lower prices, some of the end users are apparently heeding the advice of farmer associations to seek diversity in fertilizer inputs to protect the health of the soil. As a result, some buyers are looking to other inputs instead of urea.
Prices at the ports have dropped marginally to $830-$890/mt CFR. This movement is seen as a reaction to the uncertainty that exists in the market. Even as buyers are pushing for lower prices, they are also keeping a wary eye on India. When the next Indian tender is called, sources fear prices may rebound.
Rondonopolis has also shown some softening as buyers pull back. Sources now put the inland price at $960-$1,000/mt FOB ex-warehouse.
January-November urea imports were reported at 7.1 million mt, up 11.5 percent from the 6.4 million purchased during the same period in 2020. The main suppliers this year with sales greater than 1 million mt were Qatar, Russia, Oman, and Algeria, according to Trade Data Monitor. Nigeria sent 727,000 mt to Brazil during the January-November period, up dramatically from the 365,000 mt sent during the same period last year.
November imports were reported at 853,000 mt, down about 4 percent from the 887,000 mt imported in November 2020.