U.S. Gulf:
NOLA granular urea prices perked up during the week, firming to $515-$558/st FOB from the week-ago $495-$525/st FOB. The new business occurred before India announced a tender for 500,000 mt of urea versus the expected 1.5 million mt, however, which many saw as putting a damper on the market.
U.S. Imports:
May urea imports totaled 603,981 st, up 2.3% from the year-ago 590,160 st. July-May totals were reported at 5.74 million st, up 22.0% increase from the year-ago 4.70 million st.
July-May imports from Qatar stood at 1.09 million st. Russia’s 186,516 st total for May moved that country into second place with 903,448 st, ahead of Oman’s 866,523 st. Saudi Arabia added 832,757 st through the period.
The U.S. Census Bureau released corrected import data for Qatar, reducing April imports originating from Qatar to 109,128 st, down from 600,207 st reported previously.
U.S. Exports:
May urea exports moved 318.3% higher year-over-year, to 160,879 st from 38,460 st. July-May totals were up 11.5%, to 804,319 st from 721,277 st.
Eastern Cornbelt:
A firming NOLA barge market pushed urea terminal prices up roughly $15-$20/st from last week, to $565-$590/st FOB in the Eastern Cornbelt, depending on location. Sources quoted the Cincinnati, Ohio, market at $565/st FOB early in the week before firming to $575-$580/st FOB as the week progressed.
Western Cornbelt:
Urea prices were up roughly $20/st, to $555-$580/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo., and the high in Iowa.
Northern Plains:
Fueled by a firming NOLA market, urea pricing moved up to $610-$680/st in the Dakotas, depending on location and supplier, up from the last reported range of $545-$610/st. Sources confirmed the bulk of new offers in the $630-$690/st DEL range in North Dakota, with the Carrington, N.D., market pegged at the $640/st FOB level.
The St. Paul, Minn., urea market was quoted at $565-$575/st FOB for the last offers, but sources said most of the tons there had been cleaned up by mid-July. In the Pacific Northwest, urea prices firmed $30/st on June 13, moving to $625/st FOB Rivergate, Ore.
Northeast:
The Northeast urea market was up slightly at $600-$630/st FOB Baltimore, Md., and other regional terminals, with the East Liverpool, Ohio, market pegged at the $615/st FOB level at midweek.
Eastern Canada:
The urea market in Eastern Canada was reported in a broad range at C$1,180-$1,300/mt FOB during the week, depending on location and supplier, down considerably from the last C$1,240-$1,465/mt FOB offers confirmed in June.
India:
IPL called a urea tender to close on July 20 with a shipping deadline of Aug. 31. The Indian company also said it would be buying only 500,000 mt in this tender.
For more than a month, sources have been saying that the next Indian tender would need to secure at least 1.5 million mt to allow the country to keep up with demand. Two follow-up tenders would also have to pull in similar amounts to ensure that the country closes out the application season without any shortages and has enough urea in reserve to start the next season.
The move to buy only 500,000 mt is expected to have a dampening effect on global prices. Sources noted that Arab Gulf and Indonesian producers have been holding back on spot deals to ensure plenty of material for a tender designed to take more than 1 million mt.
International traders said the surplus of product left over from the tender could push down prices. In general, sources all agreed that prices offered in the tender will be lower than the $716-$721/mt CFR achieved in the last tender. A lot of discussion focused on $650/mt CFR, with others arguing for even lower prices.
Traders also said the most likely scenario will have another urea tender for 500,000 mt called soon after the IPL awards are made and letters of intent to buy are accepted. Prices could still be lower than the current price, but not below the price from the July 20 tender. By the third 500,000 mt tender that many anticipate, prices are expected to have most likely rebounded to at least current levels.
Sources said they expect to see mostly Arab Gulf and Indonesian urea offered in the latest tender. One trader said maybe one cargo from China might be involved, but he would not bet on it.
The Indian government has been talking with Russia about securing its fertilizers needs. The most commonly heard vehicle for the trade would be either barters of grain for fertilizer or payment through a rupee-ruble exchange program. This latter plan is already in place for smaller deals. Reportedly, it is being ramped up to handle oil and natural gas purchases as well.
Sources said any deal for urea outside the current tender process bumps up against Indian law and regulations. Purchases of DAP and MOP can be handled in a multitude of ways that can allow the importers to avoid U.S. and E.U. sanctions. Agricultural urea, however, must be imported only through public tenders, according to Indian regulations.
Reportedly, the government is moving to make the necessary changes that would allow for government-to-government urea deals to take place outside the usual tender process. However, implementing those changes could still take months.
The Indian government requires all urea imported for farm use to be coated with neem. This coating helps delay absorption into the soil and makes the urea unusable for industrial buyers. The steps were taken to ensure that the highly subsidized urea for farmers was not being diverted to industrial buyers, who must pay the market rate for their urea.
Local media reported that some companies have worked out a way to remove the neem coating and divert subsidized urea to industrial use. According to the government, about 1 million mt/y has been diverted to industrial use, costing the government about $750 million in subsidies.
The Department of Fertilizer created a “Fertilizer Flying Squad” to conduct surprise inspections of urea handling facilities to end the black marketing of subsidized urea. The squad is also investigating reports of urea smuggling to Nepal.
Groundbreaking occurred for the first nano urea plant by IFFCO. The product is expected to replace standard urea, which could lead to an end to urea imports by 2025. The new plant is expected to be turning out nano urea in the second half of 2023.
Indian media reported that a storm at an RCFL bagging facility damaged 50,000 bags of urea, or about 2,250 mt. The bags were prepped and ready for loading on a train for delivery to local distributors.
China:
Availability of urea for export is a question international traders cannot answer. Sources said the official line from Beijing is that the severe restrictions on urea exports will remain in place through April 2023. At the same time, however, there are reports that some cargoes are being exported.
With an Indian tender closing soon, sources would normally begin calculating how many tons will be offered from China, Russia, the Arab Gulf, and Indonesia. This time, however, few think Chinese material will be offered.
Sources said talk of an export price of $550/mt FOB would not be out of line, given the estimated domestic price and the price out of the Arab Gulf. However, there is no evidence of new prices paid by traders or end users, leaving the last public price of $685-$690/mt FOB still in place. Once awards are issued in the IPL tender, sources said market watchers can calculate new estimated netbacks for Chinese urea.
Indonesia:
No new deals have moved the urea price from the $547/mt FOB mark from late last month. Sources said Kaltim is gearing up for a tender next week. The most likely timing will allow for the material sold to be included in the Indian tender. That would mean August shipments.
Middle East:
Opportunities to check prices this week were limited due to a quiet global market and the EID holiday. Sources said some small spot deals were done at $580/mt FOB, but without confirmation of buyer or seller.The price, however, fits with rumors of the price out of China and the $547/mt FOB out of Indonesia.
Ethiopia:
Imports of urea for the first half of 2022 were reported at 345,000 mt by Trade Data Monitor. This is marginally up from the 343,000 mt imported during the same period of 2021.Second-quarter imports were reported at 345,000 mt, up from the 155,000 mt imported during April -June 2021.
June 2022 imports totaled 194,000 mt, dramatically up from the 43,000 mt imported in June 2021. Egyptian urea dominated the market with 150,000 mt for 77% of the imports. The United Arab Emirates came in second with 44,000 mt for the remaining 23% of imports.
Brazil:
Urea prices slipped to $610-$630/mt CFR, down from the prior week’s $650-$680/mt CFR range. Sources reported rumors of Russian material being offered at the $600/mt CFR level, but without confirmation. International sources said the low price could be seen as an incentive to bypass the U.S. and E.U. sanctions against Russia.
Whatever the price, Brazilian sources said demand for urea is down. Reportedly, farmers are waiting for better crop prices before stepping up to make any major purchases.
The lack of interest in buying urea is also being felt inRondonópolis. Sources said prices drifted lower to $730-$780/mt FOB ex-warehouse.
Black Sea:
Sources report the estimated price for urea out of the Black Sea has moved up to $520-$545/mt FOB. The lack of transparency in the deals done with Russia makes confirming the price difficult. The upper end of the price range represents where prices could be based on prices from the Arab Gulf. The lower end fits with reports that some countries are trying to work out deals below the existing market price.
One trader noted that if Russia is able to offer tons into the upcoming IPL/India tender, prices could crash. Sources said, however, that traders and financial houses remain wary of handling any Russian material for the open market. The U.S. has made it clear that urea is not on the sanctioned lists issued by it and the E.U. The American government has assured bankers and insurance companies they will not face penalties if they finance urea sales.