US Gulf:
The urea barge market edged up to $300-$307/st FOB NOLA for limited July business, above last week’s $288-$298/st FOB range, with the low confirmed for transactions concluded on July 18. Offers at the $310/st FOB level or higher reportedly failed to generate any new business during the week.
Eastern Cornbelt:
Urea remained at $365-$375/st FOB in the Eastern Cornbelt, with the low confirmed at Cincinnati, Ohio, and the high out of inland warehouses. Most Illinois River terminals were unchanged at the $370/st FOB level for July-August tons.
Western Cornbelt:
Urea in the Western Cornbelt remained at $345-$365/st FOB, with the low reported at St. Louis, Mo.
Southern Plains:
Urea slipped to $350-$365/st FOB for prompt tons in the Southern Plains, depending on location, down from the prior $355-$375/st FOB range. The Catoosa/Inola, Okla., market was pegged at $355-$365/st FOB at mid-month.
South Central:
Urea dropped to $330-$360/st FOB terminals in the South Central region, with the low confirmed at Convent, La., and the high in Arkansas. Pricing at Memphis, Tenn., was reported at $355-$360/st FOB during the week.
Southeast:
Urea pricing in the Southeast remained at $370-$380/st FOB port terminals in mid-July.
India:
About 2.7 million mt of urea was offered in the July 8 Indian Potash Ltd. (IPL) tender. It now looks as though IPL will buy just 433,800 mt, about 16% of the tonnage offered.
IPL initially counterbid only for deliveries to West Coast ports at the Liven price of $350.50/mt CFR, and the buyer was forced to extend the deadline for traders to respond. Only Continental eventually came back with an offer of 30,000 mt, adding to Liven’s 50,000 mt offer for West Coast delivery.
The lack of seller interest to send product to the West Coast prompted IPL to issue counterbids to companies for East Coast deliveries at the OQ Trading price of $365/mt FOB, a price at which more companies were able to find backing. In the end, four more companies joined OQ Trading to supply 353,800 mt for East Coast delivery.
| Offering Company | West Coast $350.50/mt CFR | ||
| Liven – L1 | 50,000 | ||
| Continental | 30,000 | ||
| Total WCI | 80,000 | ||
| Offering Company | East Coast $365/mt CFR | ||
| OQ Trading – L1 | 100,000 | ||
| Ameropa | 131,300 | ||
| Koch | 47,500 | ||
| ETG/Agricommodity | 45,000 | ||
| Continental | 30,000 | ||
| Total ECI | 353,800 | ||
| Total Awards | 433,800 |
Given the limited number of tons purchased, sources said another tender is expected. The new tender is likely to be called approximately one week ahead of the current tender’s Sept. 25 shipping deadline.
The lack of enthusiasm for backing West Coast sales resulted from the winning bid’s low netback to the Arab Gulf. Sources estimated the netback in the $330s/mt FOB, a price well below what producers were willing to accept.
The netback from the East Coast price was pegged in the low-$340s/mt FOB, however. While that price did not reflect an increase, as producers had hoped, neither did it amount to a decline.
While the tonnage booked was not large by traditional tender standards, sources said India is not in dire need of urea. The country showed near-record reserves of about 11 million mt at the beginning of July. At the same time, domestic production was reported at healthy levels and the government had stepped up its promotion of liquid nano urea, leading government officials to determine there was no need to pay a higher price for large quantities of urea.
Trade Data Monitor put January-May urea imports at 1.9 million mt, a roughly 20% decline from the 2.4 million mt received through the first five months of 2023. Oman topped the supplier list with 657,000 mt, while Russia added 590,000 mt. The tonnage from Oman includes not only material secured in previous tenders, but also cargoes secured under the long-term contract with OMIFCO to supply 1 million mt to India.
May imports were reported at 410,000 mt, down slightly from the 439,000 mt received one year earlier.
Pakistan:
Sources said the Trading Corp. of Pakistan (TCP) tender for 150,000 mt to close on July 29 has been fully funded. The government has reportedly set aside enough hard currency to cover the deal. Some international traders have raised concerns that Pakistan did not have enough foreign reserves to cover prior tenders, forcing the country to engage in government-to-government deals for its imported urea.
Some traders expect to see limited participation in the tender. At the same time, players predicted higher offer levels than what IPL just paid in India.
Arab Gulf producers are expected to hold their prices firm, sources said. If netbacks stay in the $340s/mt FOB, the basic freight to ports in Pakistan translates to a price of $365/mt CFR. Additional costs related to the unloading of the product and potential port delays could move the price into the $390s/mt CFR, sources noted. One trader speculated that $400/mt CFR could set the low end of offers in the tender.
TCP was reportedly forced to call the public tender after talks with urea-producing countries for a government-to-government arrangement broke down. However, talks have now resumed, sources said, leaving the possibility that the tender could be scrapped in favor of a government-to-government deal.
Additionally, the government is nearly ready to authorize the import of an additional 150,000 mt once the current purchasing process has concluded, sources reported.
Black Sea:
Prilled urea prices dipped to $305-$310/mt FOB in the Black Sea following word that IPL would take just 434,000 mt in its tender.
Mediterranean:
News that some Egyptian urea production has resumed eased any buyers’ concerns around availability in the Mediterranean. Demand has also slowed in France, with expectations that the current stable prices may soon ease.
No further inquiries were heard in Italy and Spain, leaving the granular urea market in the Mediterranean unchanged at $385-$400/mt CFR.
Southeast Asia:
No further spot granular urea business was reported this week in Southeast Asia, resulting in an unchanged price of $350-$366/mt FOB. Product availability is expected to improve, with Malaysia’s Bintulu back up and running after it tripped at the end of June.
Indonesia:
There are growing expectations that Pupuk will soon call another urea tender. Sources described the most likely selling scenario as a combination of small prilled urea lots offered at the same time as larger lots of granular product. The tender call could come as soon as the end of July.
Pupuk is reportedly sitting on excess granular urea. The holding company was only able to sell 30,000 mt in its last tender, as no other buyers were willing to match the $366/mt FOB threshold set by the Philippines’ Universal Harvester.
The $366/mt FOB tender price also put the product out of contention for inclusion in the IPL/Indian tender. Australian buyers are expected to return to the market by the end of the month, however, providing an additional incentive for Pupuk to begin offering material to the export market.
January-May urea exports firmed 26% year-over-year, according to Trade Data Monitor, to616,000 mt from 489,000 mt. Australia and the Philippines took 320,000 mt and 86,000 mt, respectively. May exports of 205,000 mt were off slightly from the 213,000 mt shipped in May 2023.
South Korea:
First-half 2024 imports were reflective of the country’s efforts to step away from Chinese producers as South Korea’s main suppliers of urea. Even though China has restricted urea exports so far this year, some small lots – shipped mostly in containers – were allowed to be sold internationally. It was these smaller lots that South Korea often looked to, especially to procure the urea needed for its anti-pollution requirements.
Urea imports totaled 426,000 mt in January-June, Trade Data Monitor reported,a 7% increase from the year-ago 399,000 mt. Qatar’s 115,000 mt, 95,000 mt from Vietnam, and 60,000 mt from Indonesia combined for 63% of South Korea’s imports through the first half of the year.
June imports of 41,000 mt were up from the 31,000 mt received in the prior June. Second-quarter imports were counted at 163,000 mt, up by 23% from the 132,000 mt received in April-June 2023.
Middle East:
While Arab Gulf producers would have preferred a higher price from the IPL/India tender, by accepting the netback from sales to India’s East Coast, the Middle East price remained steady instead of dropping.
Egyptian urea production has once again been impacted by issues with natural gas supply. The summer’s excessive heat has continued to strain the country’s power grid, forcing the government to once again divert gas from industrial use to power generation. Many urea producers have again been forced to shut down because of the diversion.
Sources described the shortages as regional in nature. While some plants are closed, others such as MOPCO and AlexFert remain in operation. MOPCO is running two of its three production lines at 80% of rated capacity, sources said, while AlexFert was also said to be running at 80%.
Many of the plants reported to close this week had recently reached production at or near 80% following a return to operation. Egyptian urea producers and other industrial plants have been forced to reduce operations or shut down entirely by the government’s cycle of restricting and releasing natural gas supplies in effect since late May.
The shuttered plants reportedly produced enough urea prior to the earlier gas cutbacks to cover their contracts through the restriction period. However, their reserves are now depleted, some traders noted, and new closures were forced on them just as the plants were returning to normal output.
Due to the unstable production conditions, none of the producers have been chasing business, sources said, nor have traditional buyers from Europe and eastern Africa been looking for cargoes. European buyers are reportedly comfortable enough that they may not begin looking for August and September material until much later this month.
China:
The export-equivalent price for urea at China, based on the ex-factory price, was put in the low-$340s/mt FOB, sources reported. The theoretical export price is only being discussed as a means to follow price shifts in China and not for any potential future export deal, one trader noted.
The government does not appear to be satisfied with the current status of domestic prices and product reserves. Until the price comes off significantly and reserves grow further, sources said there is little chance that exports will resume from China.
Traders continue to move the rumored date for exports to return. The optimists now claim that some exports might be allowed by mid-September, while pessimists continue to believe the restrictions will remain in place for the rest of the year.
Brazil:
Brazil granular urea prices moved up $5/mt at the top of the range, to $360-$370/mt CFR from last week’s $360-$365/mt CFR, with players reporting an increase in market activity. Strong bidding at $358/mt CFR failed to entice a seller, however. The renewed cutbacks on natural gas supplies in Egypt are expected to limit supply and stabilize prices in the short term.
The Rondonópolis market firmed slightly, with most negotiations reportedly focused on October delivery. Prices settled at $480-$500/mt FOB, with some negotiations for November and December reaching as high as $510/mt FOB.