US Gulf:
NOLA urea strengthened during the week, with delayed load dates and low water restrictions fueling reports of tightening prompt supply. New business was confirmed at the $405-$435/st FOB level for September loading, up from last week’s $390-$408/st FOB range, with the low reported early in the trading week.
“The market remains tight on supply, and pre-river close buyers are having to pay up to secure product,” said one contact.
First-half October business was reported in the $385-$392/st FOB range, while sources reported a “significant drop” for November-December barges, down to a reported $375-$377/st FOB.
Eastern Cornbelt:
Urea prices slipped to $450-$470/st FOB in the Eastern Cornbelt, down from last week’s $465-$480/st FOB range, with the low confirmed in Illinois and the upper end at Cincinnati, Ohio.
Western Cornbelt:
Urea remained at $450-$470/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo. The Caruthersville, Mo., market was pegged at the $470/st FOB level during the week.
Southern Plains:
The urea market was quoted at $475-$485/st FOB in the Southern Plains, with both the high and low reported at Catoosa/Inola, Okla., during the week. Houston, Texas, urea pricing was also reported at $475/st FOB at midweek.
South Central:
The urea market was pegged at $450-$475/st FOB terminals in the South Central region, with the low confirmed at Convent, La., and the high at Little Rock, Ark., and Memphis, Tenn.
Southeast:
Urea firmed to $460-$465/st FOB port terminals for very limited tons, with the low reported at Brunswick, Ga., and the high confirmed at Wilmington, N.C., for October shipment. Most other locations in the Southeast were out of product in mid-September. The latest offers in the Northeast were reported at $470/st FOB Fairless Hills, Pa., for September-October tons.
India:
The lowest prices offered in the Rashtriya Chemicals and Fertilizers Ltd. (RCF) tender sent shockwaves through the market. Agri Commodities offered 26,000 mt into each coast, at $405/mt CFR for East Coast delivery and $400.50/mt CFR for a West Coast port.
The next lowest prices were $434/mt CFR for the East Coast and $420.50/mt CFR for the West Coast. The wide gap between the L1 and L2 prices led sources to predict that RCF would not be able to reach its goal of buying 1.2-1.5 million mt.
| Offering Company | Quantity ECI (mt) | US$/mt CFR | ||
| Agri Commodities | 26,000 | 405.00 | ||
| Aditya Birla | 200,000 | 434.00 | ||
| Samsung | 165,000 | 442.50 | ||
| Compagnie Indo Francaise de Commerce/Continental | 45,000 | 444.50 | ||
| Ameropa | 316,950 | 444.77 | ||
| Coastal/Fertiglobe | 135,000 | 445.00 | ||
| Fertcom | 45,000 | 445.00 | ||
| MacroSource | 45,000 | 445.00 | ||
| Dreymoor | 129,000 | 449.00 | ||
| Koch | 93,200 | 456.50 | ||
| Aries | 100,000 | 459.19 | ||
| EuroChem Trading | 85,000 | 460.00 | ||
| Midgulf | 150,000 | 463.00 | ||
| Sun International | 90,000 | 474.90 | ||
| Offering Company | Quantity WCI (mt) | US$/mt CFR | ||
| Agri Commodities | 26,000 | 400.50 | ||
| Aditya Birla | 300,000 | 420.50 | ||
| Keytrade | 48,000 | 423.75 | ||
| SABIC | 200,000 | 437.00 | ||
| Samsung | 177,000 | 437.30 | ||
| Ameropa | 358,850 | 438.73 | ||
| Dreymoor | 80,000 | 439.00 | ||
| Compagnie Indo Francaise de Commerce/Continental | 45,000 | 439.50 | ||
| Coastal/Fertiglobe | 135,000 | 440.00 | ||
| Fertcom | 45,000 | 440.00 | ||
| OQ Trading | 50,000 | 449.00 | ||
| Koch | 93,200 | 450.00 | ||
| EuroChem Trading | 43,570 | 455.00 | ||
| Midgulf | 150,000 | 456.00 | ||
| Overseas Oil and Gas | 100,000 | 457.00 | ||
| Aries | 100,000 | 459.17 | ||
| MacroSource | 45,000 | 465.00 |
In the end, only seven additional companies matched the prices set by Agri Commodities, for a total of 525,000 mt. Most of the tonnage is expected to come from the Arab Gulf, with one cargo possibly coming from Africa. As Green Markets went to press, RCF had not issued letters of intent to purchase the offered tonnage. Sources said the letters will most likely be issued over the weekend.
| Offering Company | Quantity (mt) | ||
| Fertiglobe | 135,000 | ||
| Overseas Oil & Gas | 100,000 | ||
| Agri Commodities | 52,000 | ||
| SABIC | 50,000 | ||
| Aditya Birla | 50,000 | ||
| Keytrade | 48,000 | ||
| Samsung | 45,000 | ||
| Sun International | 45,000 | ||
| Total | 525,000 |
Ahead of the tender, sources had estimated that India would need to secure 3-3.5 million mt for shipment through December. Such a number would have been possible, said one trader, if RCF could have achieved its goal of buying up to 1.5 million mt in the current tender. However, the small quantity secured could now force India to hold three additional tenders, with a goal of buying 1 million mt in each tender. Sources said it is likely that another tender will be called next week.
The push to buy more urea comes as domestic demand has exceeded expectations. August and September movements to farmers were higher than planners anticipated, sources said.
One trader noted that had the lowest price in the RCF tender been offered in the $420s/mt CFR, the buyer could have easily secured its desired 1.5 million mt. Industry sources could not offer any explanation as to why the Agri Commodities offers were priced so low, especially when most in the industry predicted a price floor of $415-$420/mt CFR prior to the close of the tender.
The wide gap between the lowest prices and the next lowest led some traders to encourage India to change its tender rules. Currently the buying house has to use the lowest offer as the basis for negotiations with other offering companies. Sources said India might want to consider creating a policy that would allow the buyer to award to the second-lowest offering firm if the lowest price falls outside of a set range established by the other offers.
Sources expect the next tender to see higher prices. There will be no Chinese tons available for the rest of the year, sources said, and Russian material is also severely limited. Other producers in North Africa and Indonesia are trying to hold firm to price levels that would make their product unavailable to India.
At the same time, some traders shifted to Arab Gulf sources to cover cargoes for the IPL tender, and most if not all of the RCF tender will be covered from the Arab Gulf, leaving limited supply available from the Middle East.
Black Sea:
As the market worked to absorb the impact of the unexpected price set in the RCF/India tender, prilled urea from the Black Sea remained at $340-$360/mt FOB.
Indonesia:
A tender called by PT Pupuk Indonesia Holding Co. on Sept. 18 closed on Sept. 19. The tender offered 6,000-40,000 mt of granular product from Kaltim and 5,000-10,000 mt of prilled, with shipment slated for the first half of October.
Pupuk was disappointed in the results. The company reportedly hoped to achieve $450/mt FOB for its granular product. Aditya Birla had the highest bid at a reported $415/mt FOB for 6,000 mt of granular, while bids for the prilled lots were said to come in below $390/mt FOB.
In the end, Pupuk scrapped the prilled tender, while sources expect the seller to issue an award to Aditya for the granular. Pupuk will then go into private negotiations with other potential buyers using the $415/mt FOB price as the basis for talks.
Sources argued that Pupuk should have considered scrapping the granular tender as well. One trader said the company is now tied to the $415/mt FOB price for future talks. Had the company scrapped the tender and called a new one on the heels of the new Indian tender expected next week, the price could have moved higher.
Middle East:
Material from the Arab Gulf is said to dominate the 525,000 mt expected to be awarded in the RCF tender. Sources put the netback to the Gulf from West Coast India at $380-$385/mt FOB, significantly below the $420/mt FOB discussed by producers just before the tender closed.
Producers will have no reason to accept lower prices when the next Indian tender closes, sources said, as producers are reportedly sold out of spot material through October. The next Indian tender will focus on October and November shipments.
Sources predicted the Arab Gulf will be the main supplier in the next tender. China is expected to limit its fourth-quarter exports to small lots shipped on an infrequent basis. At the same time, Russian product is not readily available, and Southeast Asian urea is being sought by Australia and other buyers.
Sources confirmed a 5,000 mt granular urea sale out of Egypt by Alexfert priced at $430/mt, down from the last business at $455/mt FOB done earlier this month. Most producers are still publicly claiming the price is in the $450s/mt FOB. For now, with European buyers quiet, no one in Egypt is aggressively pushing any new talks.
China:
The estimated netback to China, based on the RCF tender East Coast price, was put at $385-$390/mt FOB. However, sources described the price as more of an academic exercise than based on actual business.
Sources do not expect any Chinese material to be part of the RCF awards, as the Chinese government wants producers to focus on the domestic market. One trader noted that once the remaining 300,000 mt currently located at the ports is loaded and gone, there will be limited quantities made available for export. The government is not expected to allow exports of the size that would qualify for an Indian tender. Smaller lots of just a few thousand tons, to be shipped in containers, will most likely be approved on a case-by-case basis.
The limitations on exports will most likely come from the customs inspectors rather than through an official decree limiting tonnage for sale. The inspectors can claim under their mandate that the tons are needed for the domestic market and may not be cleared for export. This export limitation is expected to continue into January or February 2024.
Urea exports firmed 34% in January-August, according to Trade Data Monitor, to 1.6 million mt from the year-ago 1.2 million mt. August exports were reported at 314,000 mt, down marginally from the 351,000 mt shipped in August 2022.
China sent product to 54 countries in August. The top three buyers, Chile, Myanmar, and South Korea, combined to take 52% of the exports, while the next 10 countries took lots amounting to 1-10% each. The remaining 41 countries took less than 1% apiece.
South Korea:
Urea imports to South Korea fell 36% in January-August, Trade Data Monitor reported, to 460,000 mtfrom last year’s 714,000 mt. August imports stood at 40,000 mt, down from the 104,000 mt received in August 2022.
China was South Korea’s main supplier in August, sending 32,000 mt in lots of 1,000-3,000 mt. China may be able to continue sending small lots such as these in the fourth quarter, while larger cargoes will not be allowed.
Brazil:
Imported urea prices declined to $400-$415/mt CFR Brazil, a 3% decrease from last week’s $415-$425/mt CFR. Offers heard around $420-$430/mt CFR were not believed to transact, while offers for Iranian tonnage were reported at $390/mt CFR.
Rondonopolis urea prices lost momentum during the week, with most suppliers offering in the $535-$545/mt FOB ex-warehouse range, down from $540-$590/mt FOB at last report. Despite the decrease, prices remain above farmer expectations, pressuring margins for the safrinha.
Sources suggested that urea prices need to drop further to spur interest, as falling corn prices, combined with the increase in urea prices in the wake of the Indian tender, continue to drag on barter ratios.