US Gulf:
The NOLA urea market softened to $295-$310/st FOB for December-January, below the prior week’s $315-$330/st FOB range. While some questioned the $295/st FOB low, others confirmed that level for a first-half January trade. Most prompt December business fell in the $302-$305/st FOB range for the week, while the $305-$310/st FOB high was reported for full January.
US Imports:
October urea imports totaled 448,979 st, up 127.0% from 197,829 st in October 2022. July-October imports were 958,301 st, rising 24.4% from the year-ago 770,545 st. July-October imports from Russia were 311,136 st, while Qatar sent 163,692 st. Saudi Arabia shipped 149,651 st, ahead of 140,201 st from Algeria.
US Exports:
Urea exports softened 35.6% in October, to 55,404 st from 86,084 st in October 2022. July-October exports dropped 55.6%, to 311,235 st from the year-ago 701,483 st. Exports to Canada totaled 137,697 st in July-October, followed by 76,960 st to Chile and 72,764 st to Mexico.
Eastern Cornbelt:
The urea market dropped to a broad $355-$390/st FOB range in the Eastern Cornbelt on reports of softer NOLA barge values, down from $380-$400/st FOB last week, with the low confirmed at Peru, Ill. The Cincinnati, Ohio, market was pegged at $370-$385/st FOB during the week. Michigan urea prices were quoted at $390-$400/st FOB terminals and $420/st DEL.
Western Cornbelt:
Urea prices remained at $370-$390/st FOB in the Western Cornbelt, with the St. Louis, Mo., market unchanged at the $370-$380/st FOB level.
Southern Plains:
Urea slipped to $360-$385/st FOB regional terminals in the Southern Plains, down from last week’s $375-$390/st FOB range, with the low reported at Catoosa/Inola, Okla., for prompt tons and the high for forward offers.
South Central:
Urea prices were under pressure in the South Central region as NOLA barge values fell after the prior week’s upward spike. Urea terminal pricing in the region ranged broadly at $370-$420/st FOB, depending on location, down from $380-$450/st FOB in late November.
Southeast:
Urea at port terminals in the Southeast was down to $375-$385/st FOB for the latest offers, well below November’s $420-$425/st FOB range.
Black Sea:
The price for prilled urea out of the Black Sea ran counter to global trends, moving up $5-$10/mt to $290-$295/mt FOB.
India:
The current urea inventory in India stands around 7.3 million mt, sources noted, a level that traders believe is more than enough to carry the country through January 2024. The comfort that urea distributors feel in India has led international traders to expect the next tender call in mid- or late-January.
Traders are certain there will be a new tender by late January, as urea sales have been strong. Demand has been larger than expected in some areas, said sources, and the unforeseen buying surge will require the government to ensure a plentiful supply of urea.
As 2024 is an election year, one trader said the government will be under even more pressure to guarantee there are no shortages of urea, either real or perceived.
Indonesia:
Pupuk closed another quick tender this week for 30,000 mt of granular urea. MacroSource reportedly had the winning bid at $321.50/mt FOB for 20,000 mt of product, below last week’s $342/mt FOB. Other offers in the tender ranged from $308-$318/mt FOB, sources said.
Sources said this tender and the tonnage from last week will be sent to Mexico. The delays in transiting the Panama Canal have prompted West Coast Latin American buyers to look more favorably at sourcing their product from Asian suppliers such as Indonesia, one trader noted.
Southeast Asia:
Malaysia and Brunei are reportedly ready to join Indonesia in supplying urea to Latin America. Latin American buyers traditionally take their product from Russia or North Africa. As transiting the Panama Canal has become more complicated, West Coast buyers are now looking to Asian suppliers for product.
Sources said 30,000 mt from Petronas/Malaysia will be loaded for Peru later this month, while a second Latin American buyer was reportedly in talks with Petronas for a January cargo.
BFI in Brunei closed a selling tender late this week. While no details were available at press time, traders speculated that the cargo will also go to the West Coast of Latin America.
South Korea:
Buyers in search of small lots of urea opened talks with multiple traders. One trader reported working with a buyer to secure 6,000 mt to be shipped in a container. In the end, the trader lost out when the buyer was able to secure the tons from a Chinese trader.
The scramble for small lots came after China announced restrictions on urea exports. South Korea needs a steady supply of urea for its pollution control infrastructure. Soon after the Chinese government issued its edict on urea exports, South Korean media reported that Seoul opened talks with Beijing to arrange for a government-to-government deal to provide at least 1 million mt of urea over a 12-month period.
International traders said the transaction is likely to go through. If concluded, the deal will ensure delivery of more urea than South Korea has imported in past years. January-October urea imports were counted at 594,000 mt, Trade Data Monitor reported. Imports totaled 879,000 mt in 2020, followed by 877,000 mt in 2021, and 836,000 mt in 2022.
China:
South Korea has reportedly entered into diplomatic talks with China to ensure a steady supply of urea for the next 12 months. Traders expect to see a deal struck, giving South Korea the urea it needs for its pollution control infrastructure and agricultural needs.
The current South Korean demand is for delivery of urea in small 3,000-6,000 mt lots, within the cargo sizes mandated under China’s new export limits. The only large-quantity shipments permitted after the export restrictions were put into place were the tons associated with awards from the Indian tender. Now that the tender shipping deadline has passed, only new, smaller deals are being allowed.
The new export limitations are designed to build up domestic reserves and force the local price down. In addition to fewer tons going offshore, sources noted that urea plants are operating at 80-85% of rated capacity, and reserves are said to be building quickly. The combination is expected to result in winter reserves reaching record levels, said one trader.
Middle East:
Talks for spot business are now centered in the low-$320s/mt FOB, sources said. While some small deals appear to have been completed, traders described the deals as mostly rumors rather than confirmed sales.
Even with few sales confirmed, the fact that buyers and sellers are talking about $320-$325/mt FOB for potential deals places the current market at that level, sources said. One trader noted that producers only appeared to become more comfortable with pricing in the $320s/mt FOB after market watchers noted estimated netbacks from sales into the US at $310-$315/mt FOB.
Freight costs have moved up, sources said, causing players to recalculate netbacks. The key issues driving the increases appear to be vessels out of position for return trips, as well as increased insurance costs due to stepped-up security threats to vessels. Increasing costs for fuel and crews are also in play, said one trader, but these impacts are not as great as the other two factors.
Deals for granular urea from Egypt were reported below $340/mt FOB for small lots of 3,000-6,000 mt. At the same time, a larger cargo of 20,000 mt was reported in the low-$340s/mt FOB. When asked, producers will argue for $350/mt FOB, but ultimately admit that the latest prices have fallen below that level.
Prices are expected to rebound as more cargoes are booked for January and February. Sources said European demand for small lots should move the price up in incremental steps during the first quarter of 2024.
Iranian material is expected to be in short supply through the near-term. Natural gas is reportedly being diverted away from urea plants in favor of residential use, which sources described as a seasonal shift in gas allocation. As a result, production is expected to be reduced to 80-85% of rated capacity.
Brazil:
Brazil urea prices pulled back to $340-$345/mt CFR, falling from last week’s $350-$355/mt CFR. Sources reported limited interest for imports, as many players have taken long positions in anticipation of safrinha demand.
Prices firmed slightly at Rondonópolis, however, to $470-$495/mt FOB ex-warehouse from $460-$495/mt FOB last week. Some suppliers continue to push for prices above $500/mt FOB, but with no trades confirmed.
The inland market’s second consecutive week of price increases, in addition to dry weather and high temperatures, have added to uncertainty surrounding the winter corn season. Purchases slowed during the week, reinforcing a belief that farmers will delay corn planting decisions to the last minute in the hope that urea prices will fall.
For now, the market’s future direction remains uncertain, and players continue to weigh the upside risks of India’s return to the market in early 2024.