U.S. Gulf: Granular prompt barges edged off a bit last week, and were called $180-$184/st FOB for prompt trades. Prills continued to be called $200-$205/st FOB.
Urea imports were down 65 percent in July, to 197,158 st from the year-ago 565,007 st, which may explain a late summer price spike that has since subsided. Tonnage drops were seen from China, Russia, Algeria, Egypt, and Canada.
Eastern Cornbelt: The granular urea market was quoted at $215-$225/st FOB in the Eastern Cornbelt, down slightly from last report, with the low reported at Cincinnati and the upper end out of inland locations.
Western Cornbelt: Granular urea pricing was steady at $215-$225/st FOB out of most terminals in the Western Cornbelt.
California: The granular urea market was pegged at $300-$310/st FOB port terminals in California, with the top end of the range reflecting a drop of $10/st from last report.
Pacific Northwest: The granular urea market was quoted at $265/st FOB port terminals in the Pacific Northwest, with delivered tons pegged in the $280-$290/st range in the region.
Western Canada: Granular urea was quoted at $380-$390/mt DEL in the region, up slightly from last report.
India: The industry is still waiting to see what Indian buyers will do. The best guess by sources puts the next tender call in the last half of this month, with an edge given to the last week of September.
Sources said when the tender comes, the buying agent will be pushing for softer prices than the current $194-$196/mt CFR. The primary suppliers are expected to push back, especially the Chinese. Sources said Chinese producers are holding firm to their pricing ideas of the mid-$190s/mt FOB. At the same time, Iranian producers are beginning to argue that with the lifting of most sanctions against their country, they should no longer be expected to sell their product at a discount.
The big question the tender call will answer is how many tons India still needs for the rest of the year. If reports are accurate that the country has a current stockpile of 1.8 million mt, sources said the rest of the tenders this year will be for limited quantities. One trader said the upcoming tender could be asking for as few as 300,000 mt. In addition, the tender may call for offers of delivery to specific ports, as IPL did last month.
China: Sources said producers may find themselves either selling product for much less than they want, or being shut out of the expected Indian tender.
The next Indian tender is expected later this month. When it comes, said sources, the buyer will be looking for lower prices than the Chinese producers currently seem willing to accept. Recent tenders have gone to Iranian producers that have been willing to shave a few dollars off the price to secure large contracts. The only exception so far this year has been the most recent tender, when prices recovered by about $16/mt to their current level.
Throughout the most recent series of Indian tenders, Chinese producers held firm to their pricing ideas, and as a result, often did not receive any awards.
Sources report that reserves at the portside warehouses are now at 1 million tons, with more arriving every day. Industry watchers will be keeping an eye on how these tons are handled when the next Indian tender comes up. If the producers hold firm on pricing, sources said they will again be shut out, especially if Iran is anxious to sell.
The producers seem to be holding off for the domestic season, which begins next month. Sources said reports indicate the upcoming domestic season will be strong enough to support the current price range in the mid-$190s/mt FOB. Some producers are even said to be holding out for $197-$198/mt FOB.
One trader noted that the main thing helping hold up prices at this time is the reduced output by urea manufacturers. Reportedly the urea industry is operating at about 52 percent of rated capacities.
The country’s newer plants might be willing to accept a lower netback in an Indian tender, only because their operating costs are lower. The older plants, however, have already gone below their break-even point. The older facilities keep operating because they have to earn some money to pay employee wages and utility and input costs.
Indonesia: Producers appear ready to budge on pricing. Sources reported that two granular cargoes of 30,000 mt and 50,000 mt were sold to Ameropa for Australia at $200/mt FOB.
Sources said the price reflects an old contract price rather than the spot price of $210/mt FOB that producers say they are holding to. One trader noted, however, that in an ever-softening market and with additional tons available from Indonesia, producers may soon have to look at lowering their pricing ideas for spot tonnage.
Middle East: The Arab Gulf price is holding even. Arab producers continue to fill long-term contracts at prices reportedly below $190/mt FOB. The contract-related shipments, however, are expected to slow down. There is no longer demand from the U.S. because material shipped now would arrive too late for river barges.
The Arab producers also face competition in Europe from North African producers and the few Pacific buyers from Iran and Indonesia. Sources did report, however, that Thai buyers remain faithful to the Arab buyers – mostly Sabic. One trader said that loyalty will only remain as long as the price remains favorable to the Thais.
Iran is expected to be the main player in the upcoming Indian tender. Sources said Chinese producers have indicated they are not willing to lower their prices to meet pricing expectations in India. At the same time, India is expected to tender for limited quantities for specific ports. Industry sources estimate that a tender of 300,000 mt could easily be handled exclusively by Iran.
Egypt seems to be able to hold its price steady at $197/mt FOB. Sources said the producers are benefiting from some short sales for European buyers. These sales are expected to end by the middle of this month, leaving Egypt looking for buyers.
Black Sea: The price out of Yuzhnyy showed a rare step up this week. Sources reported sales at $192/mt FOB, with corresponding sales out of the Baltics at $190/mt FOB.
The $5/mt bump came with more reports that CIS producers are ready to keep extending their maintenance turnarounds for as long as possible.