U.S. Gulf: Granular prompt barges dipped below the $200/st mark last week for the first time since December 2008, a time when fertilizer and other major commodities were in meltdown mode after the financial crisis.
New trades last week were put in the $197-$204/st FOB range, with sources calling prices around $198-$200/st FOB at press time. February trades were called $204-$208/st FOB and March at $208-$210/st FOB.
Prill prices spanned a broad range based on quality. Sources called recent trades in the $220-$239/st FOB range, with quotes now as high as $245-$250/st FOB for the next round of business. However, others said forward sales for late February/March were reported below the $220/st FOB mark.
Eastern Cornbelt: The granular urea market remained at $260-$275/st FOB in the Eastern Cornbelt, with the low reported for prompt tons out of spot river locations and the upper end for spring prepay.
Western Cornbelt: The granular urea market was generally quoted in the $270-$275/st FOB range in the Western Cornbelt last week, with the upper end showing a $10/st decline from last report.
Southern Plains: The granular urea market was reported in a broad range at $250-$265/st FOB Catoosa, Okla., with inventories described as tight and some suppliers “running out” due to river closures and delays of up to 15 days reported for new barges. Sources were more inclined to report prices at the upper end of the range as the week progressed.
South Central: The granular urea market was quoted in a broad range at $250-$275/st FOB terminals in the South Central region, down another $5-$15/st from December levels, with the low at Memphis, Tenn., and the upper end in the Little Rock, Ark., market. Sources pegged the Convent, La., urea market at $255-$260/st FOB.
Southeast: Granular urea pricing had reportedly slipped to $280-$290/st FOB port terminals in the Southeast, down $10-$20/st from last report, with the low quoted at Wilmington, N.C. One source said rail-DEL tons could also be had at sub-$290/st levels on a spot basis last week, down from $300/st rail-DEL in December.
Sources reported minimal fieldwork and limited interest in fertilizer in the region, with spot fertilizer prices continuing to fall. One dealer described his year-end fertilizer business as “quite slow” overall, noting that winter wheat acreage is down and spring prepay bookings were limited to “traditional buyers” only.
China: Producers claim the urea price is getting closer to the break-even point.
While some traders argued that prills and granular were at parity, others said granular is still earning a $10/mt premium. The latest pricing idea out of China put prills at $215/mt FOB and granular either at parity or at $225/mt FOB.
The general view in the international market is that Chinese prices will still fall further. One trader said this may be the third time in his 20 years in the industry that he will see an extended period of sub-$200/mt FOB Chinese product.
Sources said $200/mt FOB has been regarded as the point when producers have to decide if they want to produce at a loss or shut down. Industry watchers are now paying attention to the variable costs to the producers instead of the full cost of turning out urea. Using this method, one trader said the real break-even price is well under $200/mt FOB.
Producers have reportedly told buyers that they will keep turning out product even if the price hits $170/mt FOB. Sources said the statements fit with the growing consensus that the plants will continue to run and take whatever cash deals possible.
Lower crop prices in China are leading sources to anticipate a po