U.S. Gulf: Loaded barges were reported to be trading as high as $265/st FOB, although those for prompt loading within a few weeks out were called lower at $242-$245/st FOB. Price ideas for April were $220-$240/st FOB.
Prills continued to be called $250-$255/st FOB.
Eastern Cornbelt: The granular urea market remained at $295-$305/st FOB for new sales in the Eastern Cornbelt, with the lower numbers out of river locations and the upper end inland.
Western Cornbelt: While there were reports of some locations posting urea as high as $335/st FOB for new business, most sources pegged the regional urea market in the $300-$310/st FOB range for spot sales at mid-month. Product remained in tight supply in the Western Cornbelt.
Southern Plains: Granular urea pricing was moving up in the Southern Plains. Sources pegged the market at $305-$315/st FOB Catoosa, Okla., up $10-$15/st from last report, with inventories described as “limited” at the port.
South Central:The granular urea market was quoted at $280-$295/st FOB in the South Central region, with the low reported at Convent, La., and the upper end in the Arkansas market. Urea pricing FOB Memphis was tagged firmly at the $290/st level for the week.
Southeast: Granular urea pricing had reportedly firmed to $300-$305/st FOB port terminals in the Southeast, up $5-$10/st from last report, with sources reporting “more urea activity and spot purchases” beginning in the region.
China: While some buyers claim the price should be just under $200/mt FOB, a sale early this week for prompt shipment of 20,000 mt came in at $212/mt FOB. The argument now is that prices should be $215-$218/mt FOB.
Producers have been arguing for a couple of weeks now that the lowest price they would accept is $210/mt FOB. At the same time, traders were pointing to deals here and there that were closer to $200/mt FOB.
The bottom line, said one trader, is that the domestic season is currently at its peak. Domestic demand and purchases are driving the export price. Some producers are more willing to move material to an inland distributor rather than an export warehouse. The domestic price is improving for producers, and demand is strong enough that there is little reason to put product on hold in anticipation of a major offshore sale.
Sources said the battle between offshore buyers and the producers is currently at an impasse. Producers see no need to lower their prices, and buyers are willing to raise their bids.
The stalemate is expected to last into April. By then, the domestic season will be in its final stages of demand and India will be preparing for its first tender of the fiscal year. Sources expect India to argue for offers at or below $200/mt FOB, and in exchange they will take large quantities to relieve pressure on built-up product reserves in China.
Additional pressure on Chinese prices is coming from Thailand. Sources said Thai buyers are demanding a price with a China netback of $185/mt FOB. The Thais do not take large quantities, yet they demand low prices. The same offer showed an Arab Gulf equivalent of $195/mt FOB.
Traders said the Thais will continue to pressure suppliers to move closer to their buying ideas without giving up much of their own position.
India: Urea stockpiles are reported at 1.5 million mt. These large reserves are the main reason no tender will be called this month.
Sources reported that MMTC had prepared the paperwork for a late-March tender, but put the idea on hold once the final reports came in about the country’s urea reserves.
In the past, one of the Indian buying houses would call a tender just before the beginning of the fiscal year on April 1. The awarded tonnage would then be delivered after the fiscal year started in order to qualify for subsidies under the new budget.
The budget plan as released by the Indian government so far indicates that the government will not allot more money for subsidies. Because of a weakening rupee, sources said the lack of an increase in funds for urea subsidies actually means less money will be available for the next 12 months. One trader noted that the softer price of urea will help mitigate some of the losses related to currency fluctuation, but not all.
The Indian government is also stepping up its support for more domestic urea plants and off-shore joint ventures with favorable offtake agreements. Last year these efforts led to a slight decrease in demand for imported urea. The government hopes that as its plans go forward more rapidly, India could become self-sufficient in urea in the next 5-10 years.
Black Sea: Sources report that offers from Yuzhnyy are now below $200/mt FOB. One trader reported a deal to Turkey that came in at a $192/mt FOB Yuzhnyy equivalent.
The number of sales to Turkey from different sources – Egypt, the Arab Gulf, and China – has put pressure on the CIS producers to meet or beat the price from the intruders. While most of the volatility in the market came from granular product in the past month, prilled urea prices varied based on the granular sales.
The softer Yuzhnyy price is also reflected in Baltic sales. One trader reported business out of the Baltics at $195-$197/mt FOB.
Middle East: Steady movement to contract buyers has kept the producers just happy enough to avoid having to fight back massive demands for lower prices – at least for spot business. Sources report the spot market at $210-$215/mt FOB and leaning to the lower side.
Contracted business is all over the place. The latest business being discussed is sales to Thailand at $195/mt FOB. The Thais usually ask for a price that is dramatically lower than many others, and usually the Arab producers go along in order to protect their market share.
Reportedly, April remains open. Sources reported that the number of contract tons slated to flow out of the Arab Gulf is expected to slow down as demand for granular product elsewhere in the world wanes. One or two Arab producers might participate in an Indian April tender, if for no other reason than to publically indicate where they think the price should be.
Sri Lanka: The country closes a tender for 42,000 mt on March 24. Previous bids that were rejected came in at $185/mt FOB China equivalent. Sources said higher offers are expected in this tender to better reflect the actual state of the global market.
That said, one trader speculated that at least one outlier will appear in this tender with a super-low price and take the day. Whether that outlier will be able to find backing is another question.
Pakistan: The government appears to be going ahead with plans to allow the private sector to import urea. Up until now, TCP handled the 1.5 million mt/y urea imports to cover the difference between domestic production and demand.
The Finance Division and the Ministry of Petroleum, however, gave the Ministry of National Food Security and Research orders to develop a plan to allow for urea imports by any private sector company.
The urea producers added a criticism of this plan to their regular complaints about imports in general. The producers argue that all they need is for the government to allocate more natural gas to them and they will cover the country’s annual urea needs. They said a recent 15-year agreement with Qatar for natural gas shipments to Pakistan will provide more than enough gas to cover consumer needs as well as allowing for an increase in urea production.
Other complaints include brokers adding their commission and other costs to the urea, thereby requiring higher subsidy payments from the government to maintain the regulated price of urea to the farmers.
The government already allows phosphate imports by non-state owned companies. It argues that if it works for phosphates, it will also work for urea.
International traders said they expect urea producers to fight the plan, but believe they will eventually lose. Reports are circulating that the plan will go forward. It is just a question of how soon it will be implemented.