U.S. Gulf: Granular urea prices continued to move up last week, though some wondered if there were really any end users buying product or if they were all simply traders. As in previous weeks, traders have found that it is cheaper to buy barges to meet commitments than to import. As the week began, sources reported new spot prompt business taking place at $210/st FOB. However, prices moved up as the week progressed, with Wednesday/Thursday numbers in the $215-$217/st FOB range.
Players say the U.S. market is simply not that attractive to imports and not to expect any extra cargoes. Sabic is reportedly still mulling a decision to divert a cargo into other markets. Other major importers say they already cut their import allotments, and expect to bring in less than last year. Buyers, on the other hand, can point to full domestic production. They also say that while end users may have been interested in filling in the low $200s/st FOB, they are not going to be enticed by higher numbers and a long winter of storage.
Sellers were quoting November forward prices in the $218-$220/st FOB range and December at $222-$224/st FOB.
Eastern Cornbelt: Granular urea was tagged at $250-$260/st FOB in the region, with the low reported FOB Cincinnati, Ohio, and out of spot Illinois River terminals.
Western Cornbelt: Granular urea was steady at $250-$260/st FOB, with the low out of Mississippi River terminals and the upper end to dealers FOB Sioux City, Iowa.
Northern Plains: Granular urea pricing remained at $250-$260/st FOB, with the low at Minneapolis and the upper end FOB Carrington, N.D. Delivered urea in North Dakota was pegged at $255-$265/st last week.
Great Lakes: Granular urea was $260-$270/st FOB, with the low quoted by Wisconsin sources and the upper end in Michigan. Delivered urea was pegged at $255-$265/st in southern Wisconsin, with the low for railed tons and the high for truck-DEL product. In Michigan, rail-delivered urea was quoted at the $265/st mark. On a spring prepay basis, Wisconsin sources quoted urea at $275/st DEL in late October.
Northeast: Granular urea was quoted at $260-$265/st FOB Baltimore and Philadelphia, with reference pricing reported at the $270/st mark FOB Philadelphia. The market FOB E. Liverpool, Ohio, however, was quoted at $250/st for granular and $255/st for prills, which was actually down from last report. Delivered urea in Delaware was tagged at the $285/st mark last week.
Bangladesh: Rumors are circulating that BCIC has issued a recommendation to the caretaker government that all offers in the September tender be awarded. The only problem is that a new government takes over Oct. 28. The first meeting on the awards is slated for Oct. 29. Sources in the area are skeptical that a decision will be reached immediately. What is clear to industry observers, however, is that Bangladesh needs the 300,000 mt of imports that would come from that tender. Sources report the following awards have been recommended:
| Company | Prill Qty (mt) | Granular Qty (mt) |
| Trans Bangla | 25,000 | 25,000 |
| Summit | 50,000 | 50,000 |
| Bulk Trade | 50,000 | 37,500 |
| Liven | 50,000 | 12,500 |
| ConAgra | 12,500 | |
| Poton | 12,500 | |
| Helm | 25,000 |
All material is to be bagged. Most likely, say sources, all the awards will be covered out of China once the green light is given.
Pakistan: Rumors spread quickly that TCP called a tender, and then just as quickly the rumors began hedging on that announcement. What sources in Asia say happened is that TCP apparently got a call from the Ministry of Finance and Agriculture saying it might be time to buy some urea. The company then began calling the usual suppliers – major trading houses and some producers – to say they would most likely be holding a tender soon. They also inquired about the market situation.
When TCP reported back to the ministry that the major players in the industry were now ready for a tender, many in the ministry responsible for handling the paperwork had taken time off for the Eid holiday following the end of Ramadan. Eventually word got out that the tender would close Nov. 6, but as Green Markets went to press last week, the papers for the tender were still not issued.
Sources say TCP is tendering for 50,000 mt, with an option for another 50,000 mt. This tracks with the general expectation of Pakistan’s needs.
If the offered prices are favorable, said sources, then TCP will exercise its option for the second cargo. If, however, prices are too high, one trader said the company could just take one cargo and then hold another tender sometime in December – or scrap the tender completely.
Reports are that shipment for the Nov. 6 tender should be late November or early December. If the buying is pushed back, then shipment could be slated for early January.
The call for the tender surprised some in the industry. Reportedly, the ports are working as hard as they can to keep up with current vessels. Also, said one trader, the urea reserves in the country are in pretty good shape. Karachi inventories are high, and there is little reason to try to push more material into the warehouses at this time. Still, he said, a December arrival would be just about the right time, as some of the urea should begin to wind its way to the interior markets.
Black Sea: More than one trading house breathed a sigh of relief when the Ukrainian government lowered the KIP to $203/mt FOB late Oct. 19. Reportedly, one – and possibly two – vessels were lined up and denied loading rights because the cargoes slated for the ships were booked below the then KIP minimum of $211/mt FOB.
Sources say it was just bureaucratic inertia that caused the delay, and that no malice or manipulation was apparent.
The price out of Yuzhnyy has softened in such a way that no matter what producers say, no one is willing to talk about material for more than $213/mt FOB – and even that level is being discussed only for immediate top-off tons.
The port will be humming with urea export activity for the next four to six weeks, based on the MMTC/India tender. After that, say observers, producers will be hard pressed to find homes for their output.
With the KIP at $203/mt FOB, sources say buyers are pushing for that price level on position-taking purchases. Sources say that nothing had been done at that level by late last week, but that it would not be surprising to see something like it happen soon.
Once the Indian cargoes are loaded and gone, sources say there are precious few other major buyers around.
With more buyers willing to take granular or prills, the Yuzhnyy material has to compete against a global glut of granular. At the same time, occasional buyers interested only in prills, such as Vietnam, are beginning to produce more urea on their own.
Middle East: Sources report prills and granular are again at parity. Based on the last Indian business and reports from the area, sources say prills and granular are now going for $225-$228/mt FOB. While producers agree the two versions of urea are at parity, their pricing ideas are about $15/mt higher.
According to sources, however, no one is willing to pay more than the Indians at this time.
The sales to India, along with a few other deals here and there, have filled the order books for Middle East producers and put them in a comfortable state of mind this quarter. Any calls asking for November tons will be first dismissed as not possible. Subsequent discussions, however, could reveal that some November tons could be had, but at a higher price – hence the $240/mt FOB the producers are claiming as their due.
Indonesia: Reports are circulating in Asia that Kaltim is asking the government for permission to export granular urea. The company is pointing to its bulging warehouses and the possibility of shutting down its granular facility if exports are not allowed.
Even in the face of politically unpopular layoffs, the appropriate government ministries have expressed concern about exporting material amid reports there may be a urea shortage once the spring application season arrives.
Indonesian farmers are partial to prilled urea, and at first blush there should be no reason why granular material shouldn’t be exported. Sources say, however, that Kaltim and PIM have been blending granular with prills for local consumption and have not received any complaints.
Government officials say Kaltim should wait until the application season begins so that an accurate accounting of how much urea is needed can be calculated. Kaltim, reportedly backed by PIM, argues it could easily make up any shortcoming in granular between now and the February/March demand for urea.
Should Kaltim win its argument with the government, it would be sending tons into an already bloated international granular market. Still, said one source, any international sale would be helpful to the company. Most likely, if Kaltim is allowed to export, PIM will claim it wants to send its granular offshore as well.
All told, the two companies could provide 75-100,000 mt for export.
South Korea: Namhae issued a tender for 75,000 mt of granular urea, to be spread out over six months. The tender closed late last week.
The material purchased in this tender will be in addition to the usual 35,000 mt Namhae buys each month under long-term contracts.
Sources say that tender will not even create a small bump in the international market. Namhae wants granular urea, and there is plenty to be had from China to Libya.
Whether this will be all Namhae needs is the big question.
At present, sources say the tender, the long-term purchases, and domestic production will keep the industrial giant happy. If, however, there is a greater need for urea, another tender could be called.
The main event that could spark additional needs is a resumption of fertilizer aid to North Korea. Sources report that following the nuclear test by North Korea, the Seoul government suspended all humanitarian aid programs to the North, including much-needed fertilizer.
Last year South Korea directly supplied about 600,000 mt of urea and NPK – mostly NPK – in charitable aid. These tons are in addition to the shipments received through European Community aid programs and assistance from other international bodies.
In the past, South Korea has not been shy about using the fertilizer shipments to wrest a concession from the North. Visits for divided families and a resumption of treaty talks have all been held hostage to the fertilizer shipments. The current Seoul government has indicated it will continue to withhold fertilizer aid until North Korea returns to the SixParty talks.