US Gulf:
NOLA urea barges started the week at $455/st FOB, but the firming trend did not continue. Prices began to erode and were put as low as $416-$420/st FOB by Jan. 5. The previous range was $450-$455/st FOB.
Eastern Cornbelt:
Urea pricing fell to $520-$540/st FOB in the Eastern Cornbelt, down $10/st from last report, with the low confirmed at Cincinnati, Ohio.
Western Cornbelt:
The urea market softened to $510-$530/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo. The last offers FOB Port Neal, Iowa, were reported at the $520/st FOB level in early January. Urea pricing FOB Catoosa/Inola, Okla., was quoted in the $525-$535/st FOB range.
Northern Plains:
Urea prices continued to retreat in the Northern Plains. The latest urea offers were reported at $535/st FOB St. Paul, Minn., and $570/st FOB Carrington, N.D., down $20-$35/st from mid-December. Delivered urea in North Dakota was pegged at the $640/st level for 1Q tons.
Northeast:
Urea pricing in the Northeast was down $30/st from last report, to $560/st FOB Baltimore, Md., East Liverpool, Ohio, and Fairless Hills, Pa., with delivered urea pegged at the $600/st level in central Pennsylvania.
Eastern Canada:
Urea pricing in Eastern Canada was quoted in a broad range at C$945-$1,120/mt FOB in early January, depending on location and supplier, with the low end reflecting a significant drop from the C$1,060-$1,120/mt FOB offers reported one month earlier.
India:
Indian Potash Ltd. (IPL) issued a tender to buy 600,000 mt of urea on a long-term contract basis. The tender calls for 40,000-60,000 mt to be delivered each month, beginning March 2023 and ending February 2024. Only producers are allowed to participate in the tender, with offers due on Jan. 23.
According to the tender announcement, pricing for each cargo will be set at an unspecified percentage discount from the price of the most recent spot tender. If a tender has not been held for six months, the price will be worked out with a percentage discount based on an average of prices listed in industry publications. IPL will hold a meeting with any interested producers to clarify the shipping and pricing procedures on Jan. 12.
The IPL tender is not the one the industry has been waiting for since early December. Sources said a tender for up to 800,000 mt will still need to be called soon to ensure India has enough urea to start the next application season. One trader previously noted that the delay in calling this tender indicated that supplies are sufficient to close out the current season.
If the IPL tender is awarded, it will be the second long-term contract of its type for India. The first was the 1 million-plus mt contract with OMIFCO for tonnage sourced from Oman. Sources said that the contract, along with the two new urea plants coming online, will help ease pressure to import urea. The new plants, once fully operational, will have a combined annual production rate of 2.6 million mt/y. Even with the contracts and stepped-up domestic production, sources said the traditional spot tenders will need to continue to ensure a steady supply of urea.
Subsidies for urea purchases dominate India’s fertilizer subsidies, which in turn dominate the overall subsidy budget for the national government. The Modi government has attempted several times to either reduce the subsidy budget or to promote alternatives to urea to reduce government expenditures. Even now, according to local media reports, the government is planning to reduce the fertilizer subsidy budget by 26% in the 2023/2024 fiscal year.
The government attempted to reduce the subsidy budget for the current fiscal year, only to be forced to not only match the previous year’s budget, but to increase it. The hit to the national treasury was attributed to rising urea prices following the decision by China to limit exports, and then from the reduction of urea available in the market due to Russia’s invasion of Ukraine.
The government revised its rules for natural gas sales to industrial plants as a way to reduce subsidy costs. Under the previous policy, companies were required to buy 80% of their natural gas from long-term contracts. Reports said this led to hoarding of product and some spot shortages. The new policy now requires companies to commit to 40% of their purchases under contracts using a “take or pay” arrangement, and also allows for buyers to walk away from gas-buying tenders if the price rises too high. Media reports said that details will soon be made available.
Pakistan:
Agritech has halted urea production due to limited natural gas availability, according to media reports, after the government reportedly dropped a requirement that the gas be delivered to the plants. Other industries were also affected by the decision.
Middle East:
Sources said talks with Arab Gulf producers are now centering around $460/mt FOB. Specifically, sources said some cargoes are being discussed for Turkey and Europe, although no one has confirmed that any of the deals have been finalized.
If the deals go through as rumored, the price from the region would come off about $20/mt from the last recorded public sale. Traders had been talking about $460/mt FOB for several weeks as a new price from the region. With prices reported softening in all other markets, a price drop in the Arab Gulf would not be surprising.
Sources reported plant closures in Iran because natural gas is being diverted to residential use, making fewer tons available from the sanctioned country. Sources put the price ex-Iran at $450/mt FOB.
Egyptian producers Helwan and AlexFert closed out the week with deals confirming the softer urea market. Confirmed sales by Helwan totaling 20,000 mt to two traders at $495-$500/mt FOB came on the heels of a 6,000 mt AlexFert sale priced at $510/mt FOB.
China:
Bloomberg reported that rising COVID infections occurring among the population have not affected urea production. Plants were said to be operating at 66% of rated capacity in December, against an average of 56%.
Export restrictions on urea are expected to remain in place throughout 2023.
The lack of any new business from China leaves the price at $470-$480/mt FOB. However, sources said that more discussions are focusing on $460/mt FOB and below.
Brazil:
The lack of an Indian tender in December pushed market players into a bearish mood. Prices at the ports were reported at $450-$475/mt CFR, down about $30/mt from the end of December. Sources said this level has not been seen since June 2021. Buyers are continuing to push for lower prices, with more deals reportedly closing at the lower end of the range.
The Rondonopolis price tightened to $630/mt FOB ex-warehouse, as the market seemed to focus on fulfilling old orders instead of making new ones. During the seasonal drop in urea demand, traders can be left with little to do but handle the paperwork for previous deals.
Turkey:
January-November urea imports were reported at 2.3 million mt by Trade Data Monitor, a9% decline from the year-ago 2.5 million mt. Oman supplied more than half of the total with 1.4 million mt, followed by Turkmenistan with 250,000 mt.
November imports stood at 282,000 mt, down 21% from 357,000 mt imported in November 2021. Oman accounted for 68% of imports with 192,000 mt.
Indonesia:
Urea exports for January-November totaled 1.7 million mt, Trade Data Monitor indicated, falling13% from 1.98 million mt reported through the same period of 2021. Australia, with 371,000 mt, and India, with 356,000 mt, were the two top buyers of Indonesian material.
November exports were reported at 92,000 mt, down 47% year-over-year from 174,000 mt. Australia accounted for 36% of exports with 33,000 mt, followed by the Philippines with 23,000 mt, taking 25% of the exports.
Thailand:
Urea imports for January-November were counted at 1.7 million mt by Trade Data Monitor,23% below the 2.2 million mt imported in the year-ago period. Saudi Arabia was the main supplier with 677,000 mt, while Qatar and Malaysia each sent about 390,000 mt.
November imports were reported at 57,000 mt, down by nearly half from 116,000 mt received in November 2021. Qatar sent 48% of the total with 27,000 mt, followed by Malaysia with 26,000 mt.