U.S. Gulf:
NOLA urea barges took a breather, drifting downward from the week-ago $580-$620/st FOB. Very little trading was reported, with a firm $563/st FOB confirmed late in the week for delivery within the next 30 days. Earlier in the week, $575-$584/st FOB was reported for September.
U.S. Imports:
June urea imports were reported at 436,473 st, a 21.0% increase from the year-ago 360,660 st. July-June volumes were noted at 6.17 million st, up 21.9% from last year’s 5.06 million st.
Imports originating from Qatar stood at 1.20 million st for the July-June fertilizer year. Russia’s 976,717 st total was good for second place, ahead of Oman’s 921,813 st. Saudi Arabia added 899,446 st for the period.
U.S. Exports:
Urea exports for June firmed 547.0% year-over-year, to 75,825 st from 11,719 st. July-June exports were up 20.1%, to 880,144 st from 732,995 st in the prior year.
Eastern Cornbelt:
The urea market was pegged at $610-$630/st FOB in the Eastern Cornbelt, with both the high and low reported at Cincinnati, Ohio, during the week. New offers FOB Ottawa, Ill., were quoted at the $620/st FOB level at midweek.
Western Cornbelt:
The urea market was steady at $610-$640/st FOB in the Western Cornbelt, depending on location, with the low confirmed at St. Louis, Mo.
Southern Plains:
The urea market in the Southern Plains strengthened to $620-$625/st FOB Catoosa/Inola, Okla., and Enid, Okla., with the Houston, Texas, market pegged firmly at the $625/st FOB level at midweek.
South Central:
Urea prices were reported in a broad range at $600-$650/st FOB in the South Central region, with the low confirmed at Convent, La., and the upper end at Memphis, Tenn. Kentucky sources pegged the common price at the $625/st FOB level out of Ohio River terminals at midweek.
Southeast:
Urea prices were quoted at $610-$640/st FOB port terminals in the Southeast, depending on location, up from the previous week’s $600-$620/st FOB range. The common price FOB Wilmington, N.C., was pegged at the $620/st level at midweek. No tons were reportedly available at Savannah, Ga.
India:
The next urea tender is expected during the last week of August. The country remains about 1 million mt short of urea, according to all estimates. Sources said the next tender will likely be like the most recent one, with the buyer looking for no more than 500,000 mt.
Sources said the price levels for the next tender will be determined by traders offering Chinese product. Chinese traders already see a good profit in the difference between the domestic price of $360-$370/mt FOB ex-factory and the $470-$480/mt FOB for exports. This gap could be an incentive for the traders to hold to their pricing rather than overprice their product and miss selling to India.
Sources reported a tightness in the granular market, leading traders to predict that prills will dominate the Indian tender. Part of the tightness is coming from China, where the government is holding back on permission to export granular, but is granting permits for prills.
China:
The domestic market is pegged at $360-$370/mt FOB ex-factory. The export market is still publicly at $470-$480/mt FOB, based on the previous Indian tender. Sources said offers are being made at $490-$500/mt FOB, but only for material being held for the next Indian tender.
The main issue lining up Chinese urea is getting past the export permit procedures. Sources noted that once permission is granted to export a cargo, it must be moved out within 60 days. Reportedly, there is discussion about some urea already cleared at $485-$490/mt FOB, but no confirmations that these deals have closed. Sources said the holders of these tons are looking to move it out quickly in case the Chinese government changes its policy on urea exports.
Chinese traders are looking at building up reserves of prilled urea for offers in the upcoming Indian tender. Granular urea is being held back by customs officials for the domestic reserves. At the same time, they are looking at the price gap between the domestic and export prices. Sources said these traders are expressing a willingness to keep the export price at the $100/mt distance from the domestic price to ensure getting awards in the tender.
The attitude of the Chinese traders is frustrating to the international traders, who are facing higher prices from the Arab Gulf and Egypt. Another tender that closes around $520/mt CFR into India could mean that only product from China will be considered.
Southeast Asia:
Information about the future of the Kaltim V plant is being closely held by the government and company. Sources now do not expect to see the plant running until at least February 2023.
Sources said the company has enough material on hand to cover its export orders. A cargo of Kaltim granular urea held by Keytrade is reportedly on its way to Europe, as urea producers there find it is cheaper to import rather than produce their own due to high natural gas prices.
Between what Kaltim has in its warehouses and what can be made by the other producers, the domestic market is well covered. Once the tons in the warehouses are gone, however, granular product in the area will become tight. Sources said the region may be facing a situation where no granular urea is available for sale.
Atlas in the Philippines is already feeling the impact of limited granular urea in the area. The buyer had to scrap a 6,000 mt granular urea tender because no one made an offer. Usually there are sufficient offers to make the process competitive and to offer a glimpse at where pricing might be headed.
Sri Lanka is beginning to distribute urea to its farmers after the first shipment of 44,000 mt under an Indian line of credit arrived from Oman. A second cargo of 25,000 mt is expected soon.
The island nation was desperate for urea after its former president banned the import of all fertilizers except organic fertilizer. The result was a national average drop of 30% in paddy rice output, and in some areas as much as a 50% drop. The loss in agricultural output hit the country’s economy, leading it to exhaust its foreign reserves. The loan from India was designed to help the cash-strapped country begin to recover.
The decision to ban all but organic fertilizers was evident in the urea import numbers. According to Trade Data Monitor, Sri Lanka imported 491,000 mt of urea in 2018, 378,000 mt in 2019, and 540,000 mt in 2020. The import ban, which became effective May 2021, dropped the imports to 162,000 mt.
So far this year Sri Lanka has imported 70,000 mt, compared to 159,000 mt for the same period in 2021. The total amount of urea imported from June 2021 through June 2022 was 38,000 mt.
Middle East:
Sources reported deals done at $620/mt FOB. The move fits with demand from Europe as producers there see importing urea as a better option than making it.
While Arab Gulf producers look to Europe for strong netbacks, their efforts to push prices higher keep facing pushback from Asian buyers. While demand is steady, sources said buyers are unwilling to pay much more for the product.
Producers are keeping a close eye on the Chinese price. If the Chinese traders allow for prices close to those offered in the last Indian tender, the Arab Gulf producers may forego supporting any business into India.
Prices have stalled in Egypt. After a dramatic run-up beginning in late July, sources reported that prices have topped off at $765/mt FOB and stopped. Efforts to move the price with rumors of $775/mt FOB and $780/mt FOB early in the week were squashed as buyers and traders around the world pushed back hard.
The Libyan Fertilizer Company announced that it has restarted its #2 urea and ammonia plant after a two-month shutdown. The plant is expected to turn out 80% of its 1,400 mt/d rated output. The #1 plant is expected back online later this month.
Ethiopia:
Urea imports for January-July 2022 were reported at 406,000 mt by Trade Data Monitor. This represents a 6% drop compared to the 431,000 mt imported during the same period of 2021.
July 2022 imports were reported at 61,000 mt, down about 31% from the 88,000 mt imported during July 2021. The main suppliers were Egypt with 50,000 mt for 82% of the import market, and the United Arab Emirates with 10,000 mt for the remaining 18% of the market.
Brazil:
Urea prices shifted to $660-$680/mt CFR with more talk than trade taking place. Reports of small lots being sold at $640/mt CFR remained elusive to nail down. Some buyers were arguing not only for the $640/mt CFR, but also for $10/mt less because of a growing backlog of urea waiting to be unloaded from arriving vessels.
Sources said prices in the upper-$600s/mt CFR are not sustainable. They point to the rumored willingness of Chinese traders to hold the line on pricing into the Indian tenders as an argument that prices need to come off for Brazil as well.
Rondonopolis is reported at $800-$815/mt FOB ex-warehouse, reflecting a tightening of the market price. Sources said slow demand is encouraging buyers to keep pushing for greater reductions in the price.
Imports for January-July 2022 were reported at 3.8 million mt by Trade Data Monitor. This is down about 9% from the 4.1 million mt imported during the same period in 2021.
Oman supplied 814,000 mt in the first seven months of the year. Rounding off the top five suppliers were Nigeria with 736,000 mt, Qatar with 677,000 mt, Russia with 625,000 mt, and Algeria with 365,000 mt.
July 2022 imports were reported at 671,000 mt, up about 5% from the 637,000 mt received during July 2021. Russia accounted for 21% of the imports in July with 137,000 mt. Nigeria supplied 19.6% of the imports with 131,000 mt, and Qatar sent 113,000 mt for 17% of imports.
Black Sea:
The range for the estimated price of prilled urea out of the Black Sea has widened to $555-$610/mt FOB. Sources said the deal to move Ukrainian wheat out of the region safely has not yet rolled over to fertilizers. While some Russian urea has come out of ports in the Eastern portion of the Black Sea, sources said so far nothing is coming out of the recently opened Ukrainian ports.