U.S. Gulf:
NOLA urea barge prices shot up, with sources attributing the uptick to the new announcements of plant closures in Europe. Trades started the week as low as $560/st, but late Aug. 25 prices were put as high as $695. This compared to the week-ago $542-$578/st FOB range.
Eastern Cornbelt:
With NOLA urea prices climbing rapidly in response to soaring natural gas costs and more nitrogen production outages in Europe, urea terminal prices in the Eastern Cornbelt ramped up as well. Sources said prices FOB Cincinnati, Ohio, moved from $615/st FOB early in the week to $685/st FOB by Aug. 24, with reports of $695-$725/st FOB offers on the table there by late on Aug. 25.
In the Michigan market, urea prices climbed to as high as $760/st FOB as the week progressed. “I am getting reports from some that nitrogen pricing is being put on hold currently due to the gas situation,” said one regional source.
Western Cornbelt:
Urea pricing moved up quickly in the Western Cornbelt during the week, fueled by surging NOLA barge prices. While prices began the week at $610/st FOB St. Louis, Mo., offers there reportedly reached $710-$720/st FOB by Aug. 25. A similar spread was reported at urea terminals in the Iowa market, while pricing at Catoosa/Inola, Okla., reportedly climbed to the $715-$725/st FOB level on Thursday.
Northern Plains:
Urea prices were ramping up in the Northern Plains during the week, fueled by the rapidly firming NOLA barge market. Delivered pricing in the Northern Plains was reported at $645-$670/st at midweek, up $10-$20/st from the prior week. The Carrington, N.D., market was pegged at the $630/st FOB level early in the week, but offers were reportedly pulled on Aug. 24. Levels at St. Paul, Minn., had reportedly jumped to the $700-$725/st FOB level by Aug. 25.
In the Pacific Northwest, the urea price FOB Rivergate, Ore., jumped to $750/st FOB as the week progressed, up significantly from the prior week’s $655/st FOB level.
Northeast:
Firming prices were reported for urea in the Northeast. The market was pegged at $645-$655/st FOB at midweek, with the low confirmed at Fairless Hills, Pa., for August-September tons, and the high at East Liverpool, Ohio. Sources weren’t sure if those prices were still on the table by Aug. 25, however, with one Pennsylvania source quoting a new offer of $690/st DEL on that date.
Urea pricing FOB Baltimore, Md., was pegged in the $645-$660/st FOB range during the week. In the South Central market, new pricing FOB Convent, La., was quoted at the $670/st level, up a full $70/st from last report.
Eastern Canada:
The urea market in Eastern Canada was reported in a broad range at C$1,070-$1,150/mt FOB in late August, depending on location and supplier.
India:
A urea tender is expected to be called any day, but sources said the Indians waited just a little too long. The upsurge in urea prices this week is expected to carry over into the tender, giving the Indian buyers more headaches over pricing.
Ironically, the biggest threat to securing the tonnage needed is if an outlier comes in with prices similar to the last tender. Sources said estimates and quotes of prices from the major urea producers have shown an increase. However, the soft prices in the Chinese domestic market make an export price in the $470s/mt FOB possible. This is against current estimates of prices in the $520s/mt FOB.
If an offer comes in based on the $470/mt FOB price, chances are no other trader will be able to match the price, leaving the Indian buyer with only the low priced tonnage available for purchase. This has happened in the past, causing the buying houses to call another tender within days instead of weeks.
India still needs 1-1.5 million mt of urea to finish this season. Offers priced too low will limit the amount of urea available to traders. Offers priced too high could limit how many tons the Indian government is willing to buy. Offers in the $530-$540s/mt CFR so far are seen as possible. However, the rising prices in the global market may force a more dramatic increase.
Unconfirmed reports of $700/mt FOB sales from the Arab Gulf would represent a major leap in prices. As of Aug. 26, no confirmation of the Arab Gulf deal could be found.
The Indian government continues to promote its goal of urea self-sufficiency within four years. The government has promoted and subsidized the building of new urea plants and the restoration and conversion of older plants. Unfortunately for the current treasury, all the plants are based on natural gas.
The older plants are being converted to gas, while the newer ones employ the latest gas-related technology. The estimated openings of several plants come at a time when natural gas prices are hitting record levels and supplies into India are limited.
China:
Sources said expectations for an export price have risen from the existing $470s/mt to the $520s/mt FOB. However, no deals have been done at the higher level. Sources said given the upward movement in the global urea markets, the higher price could be reflected in the offers when India calls its urea tender.
Sources said the $520-$530/mt FOB price is based on the usual reference to the Indonesian price – currently $547/mt FOB – and estimates of where prices might fall in the next Indian tender. All those calculations cold be tossed aside if a reported $700/mt FOB deal is confirmed out of the Arab Gulf.
The China and Arab Gulf prices have long run in tandem with each other, with only slight variations. That changed after China imposed export restrictions on its urea. Buyers flocked to the Arab Gulf to make up for the tons lost from China. The buildup of domestic reserves in China pushed down the domestic price, and with it, pricing expectations for the limited tonnage allowed out.
The heatwave affecting China is expected to have multiple effects on the domestic urea market. Some plants were forced to close because of the extreme heat, and there are now reports that the heat is affecting crops. Some farmers are reportedly reluctant to invest in buying more fertilizer because of fears their crops may be ruined. So far, the limited production and the hesitancy of buyers appear to be canceling each other out, leaving the market in a status quo situation.
January-July 2022 exports of urea were reported at 875,000 mt by Trade Data Monitor. This amount is 67% down from the 2.7 million mt exported during the same time in 2021. India was the largest buyer for the period at 234,000 mt. Close behind was South Korea, taking 214,000 mt. Pakistan bought 101,000 mt, with all other buyers taking less than 100,000 mt.
July 2022 imports were pegged at 151,000 mt, down 38% from the 242,000 mt exported in July 2021. India took 40% of the exports with 60,000 mt. South Korea took the next largest amount at 45,000 mt, for 30% of exports.
Indonesia:
Sources fully expect to see Kaltim V turning out urea in October. The July explosion did not damage any of the equipment in the plant, only the ammonia reformer operation. As a result, Kaltim V will be taking ammonia from other less efficient producers, including some tons that would have been offered on the spot market.
There are some reserves of prilled and granular urea being shopped around, but with no takers. Sources said without any new deals, the price remains at the $547/mt FOB level set back in June and July.
Middle East:
Increased demand for urea from European buyers lit a fire under pricing, with sources reporting a deal done at $700/mt FOB from the Arab Gulf. However, no one could name a buyer or seller, nor could they identify how many tons were sold.
The sale comes just a week after a sale at $560/mt FOB to an African buyer sparked concerns that the market could continue to fall. Even though sources dismissed the African sale as an aberration – reportedly a trader got stuck and needed to liquidate his holdings – sources said the lurch to $700/mt FOB was more than expected.
The closure of urea and ammonia production in Europe due to high natural gas prices led to quick and high-priced sales out of Egypt for late-September shipment. Not far behind were Arab Gulf producers calling for higher prices, but not being specific – at least not in public.
Reportedly, some traders were beginning talks with producers to acquire tons for the upcoming Indian tender. The rumor of this new deal forced both sides to reassess their positions.
Sources said earlier there were possibilities that the Arab Gulf producers would be willing to accept a limited price rise in exchange for large quantities being sold into India. The tender would be a way to relieve the building reserves of urea.
Now, with European buyers looking to import urea instead of making it themselves, Arab Gulf representatives are crowding European airports to nail down some high-netback deals.
The price out of Egypt moved up steadily during the week. After languishing at $765/mt FOB for a couple of weeks, MOPCO reported a deal for small tonnage at $770/mt FOB. By the end of the week, a larger deal for 15,000 mt was signed at $785/mt FOB.
Sources said the motivations for higher prices out of Egypt are the same as those from the Arab Gulf. Buyers are looking to import because the cost of production is too high.
Black Sea:
Sources said Russia is sending as many tons of urea, phosphates, and MOP to Brazil as possible.
Shortly after Russia invaded Ukraine, the presidents of Russia and Brazil met. At that meeting, Brazilian President Jair Bolsonaro declined to condemn the invasion. In turn, Russian President Vladimir Putin promised Brazil all the fertilizer they would need.
With many other markets closed off to them, the Russian fertilizer producers have been shipping more product to Brazil. Reports from Brazil indicate that some of the urea coming in is priced below market levels, lowering the overall price in the country.
Brazil:
While the rest of the world is watching urea prices rise, the landed price in Brazil was stable at $600-$650/mt CFR. Sources said imports from Russia and Iran appear to have stepped up and are being offered at discounts to urea from other producers.
The bulk of the business, said sources, was done at the lower end of the price range, with only a few small orders at the higher end.
Rondonopolis prices are reported at $760-$790/mt FOB ex-warehouse. With rumors of higher prices coming out of the Arab Gulf, some distributors withdrew their public price lists to better be able to adjust prices if the rumors were true. The confirmed higher prices out of Egypt convinced them that they did the right thing, said sources.