U.S. Gulf: New granular prompt trades moved up last week to $187-$195/st FOB. The higher price was a bit of an outlier, with most sources reporting in the low-to-mid part of the range. While this was a spike in prices compared to the week-ago $181-$187/st FOB, some sources thought the uptick, while predicted based on higher Indian numbers, had lost its steam.
Prills edged up to $205-$207/st FOB, with sellers quoting $210/st FOB for the next trade.
U.S. urea imports were off 56 percent in August, to 239,471 st from the year-ago 541,032 st. They were down 61 percent for July-August, to 436,630 st from 1.11 million st.
U.S. urea exports were up 209 percent in July-August, to 52,898 st from the year-ago 17,105 st.
Eastern Cornbelt: The granular urea market was quoted at $217-$230/st FOB in the Eastern Cornbelt, depending on location. Sources pegged the Cincinnati, Ohio, market at $217-$225/st FOB, while pricing out of Illinois terminals was generally reported in the $225-$230/st FOB range in early October.
Western Cornbelt: Granular urea pricing remained at $215-$225/st FOB in the Western Cornbelt.
Northern Plains: The granular urea market remained at $220/st FOB the Twin Cities. Delivered tons in the Dakotas were quoted in a broad range at $230-$255/st, depending on source and destination, with the FOB Carrington, N.D., market pegged at the $240/st level in early October.
Northeast: Granular urea pricing was pegged at $230-$235/st FOB in the Northeast, with the upper end quoted out of the East Liverpool, Ohio, market.
Eastern Canada: The granular urea market remained at $340-$360/mt FOB in Eastern Canada, depending on location.
India: Sources said India will need to look for November and December tenders to fill out the annual needs for urea. The most recent tender brought in about 900,000 mt, leaving the country short about 1.5 million tons.
Once the last of the MMTC tons are loaded by Nov. 5, sources expect to see another tender called. One trader speculated that the tender may even be called by the end of this month.
The purchases by MMTC helped provide a floor for prices. Arab Gulf producers have now upped their asking price to $200/mt FOB, with some buyers seriously considering the offers. The Indian purchases removed the excess tonnage from producers’ warehouses, said sources. As a result, those same producers can ask more for their product – at least for now.
Sources said, however, that by the time the next Indian tender rolls around, prices will waiver and soften from current asking prices. No one is predicting a major drop in prices, but a downward drift is expected.
So far this year, urea sales are down compared to the same period last year. The decline comes even as the government reports more land dedicated to agriculture. Sources said efforts to encourage farmers toward a more balanced nutrient regime, along with increased use of neem-coated urea, has meant farmers have taken less urea. Neem coating, which allows for a slower nutrient release, is required for all domestically produced urea. Government figures put the year-on-year decline at 8.8 percent.
Efforts to depend less on import tenders for urea are leading companies to consider plans to either build new urea plants in India, refurbish shuttered plants, or build plants in countries with cheaper inputs, such as Iran.
The latest announcement came when RCF, GSDC, and FALAT announced a partnership to build a 1.3 million mt/y plant in Iran. The announcement comes on the heels of RCF saying it will expand an existing plant in Maharashtra using gasified coal as an input.
Pakistan: The Economic Coordination Committee of the national government announced a reduction in the price of imported urea to RS1,200/50 kg bag, or RS24,000/mt (US$229-$230/mt). Bags were previously RS1,310
The price drop came in an effort to clear out surpluses of imported product. The government reported this week that TCP imported about 1.9 million tons in the 2015/16 fiscal year. Government figures also reported that offtake for the first eight months of this year is off 16 percent compared to the same period last year.
Domestic production kicked up this year after the government released more natural gas to the urea factories. Producers had long argued that their capacity was sufficient to meet domestic demand if they were provided the gas. The diversion took place to ensure enough natural gas for residential use during winter months.
In the end, the government estimates that the country will end the year with a surplus of 1 million tons.
Middle East: The Indian MMTC tender helped soak up the reserves in the Arab Gulf. Sources said producers can now honestly say they are sold out for October. The results give producers the opportunity to now call for higher prices.
Sources said traders shopping around the Arab Gulf looking for tons are being told that the bottom price producers will accept is $200/mt FOB. Reportedly, all bids in the $190s/mt FOB were rejected by producers. Sources said at least one cargo out of Oman was picked up at $200/mt FOB this week. Rumors of a second cargo also circulated, giving strength to reports of stronger prices.
While bids from Brazil are reportedly up a bit, as are last-minute bids from Australia, sources said finding a home for product at $200/mt FOB and up will be difficult.
Offering prices are expected to remain up for October and early November shipments. Once the next Indian tender is called, however, producers may once again be willing to sacrifice a few dollars in exchange for large sales.
Iran continues to be a popular location for countries looking to expand dedicated urea production. A consortium of companies from India is looking at building a urea facility in Iran. Likewise, Bangladesh is looking to set up a joint-venture facility in the industrial area near Chabahar port. The Bangladesh inquiry came as the country’s industries minister was visiting Iran.
Egypt was able to move its price up a tick as traders covered more short deals for Europe. Sources reported that $200/mt FOB was concluded as the week wound down.
Indonesia: Kaltim sold a couple of granular cargoes at $200/mt FOB. Sources reported that Ameropa and Gavilon each took at least 30,000 mt. The final destinations for the cargoes was rumored to be Chile or Australia.
The sales confirm previous reports that the Indonesian suppliers had accepted lower prices after holding out for $210/mt FOB and higher.
The sales also confirmed a further blurring of the price difference between prills and granular. Producers had argued only prills would be sold at the $200/mt FOB level, with granular tons going for a few dollars more.
China: All inquiries into China went unanswered this week as the country celebrated its founding. The government provides a week off – known as Golden Week – for major events such as the Lunar New Year and the founding of the country.
Sources said once everyone is back at work next week, the industry will be looking more closely at the urea reserves in the Chinese ports in an effort to secure a deal that might work in the next Indian tender.
Expectations are that Chinese producers will try to follow the slight upward wave in prices and reach for the $200/mt FOB level. However, sources reported that some small cargoes of 5,000-10,000 mt were sold at $193-$195/mt FOB.
Black Sea: The OPZ plant came back online this week after an extended turnaround, leading industry watchers to speculate that prices could once again come off.
The price had moved up on sales to Turkey, with sources reporting deals with netbacks at $190/mt FOB earlier this week. One trader said the price was able to move as it did because of the combination of the support prices received from the Indian tender and the closed OPZ operation.