Nitrogen
Urea prices keep moving lower, with the next Indian tender likely soon
The next Indian urea tender is expected to be announced in the coming week. The Indians have not held a urea tender since mid-January but Indian domestic urea stocks remain high. The Indians are therefore in a comfortable position and this tender can be viewed as them testing prices. There is an Indian general election later this year and with the agricultural voter segment being especially important in India, the Indian government is keen to ensure ample availability of product. Delivery of urea under the tender will likely be by end-May, which means that the Chinese are unlikely to be major participants in the tender – they are unlikely to have the export permits in place in time. Indications are that a tender price of $350/t CFR India or lower is possible – this would equate to a Middle East price of around $330-335/t – a good $30-40/t lower than this week’s price.
The US market remained the only exception to the global trend of declining prices. Given that the American demand is for prompt tons for March, the end of the US price rally cannot be far away and the general reduction in global prices will probably be reflected in US prices from April.
The Brazilian market remains very quiet, with traders pushing hard with discounted urea – this saw the Brazilian price drop $25/t to around $360/t CFR. Even this hefty price cut wasn’t enough to tempt buyers into significant volumes.
Iranian urea was sold at $320/t, which is a good $40/t below Arab Gulf product – Iran usually trades at $20-30/t below AG, therefore the Iranians are selling a little below the market price. There is apparently a lot of Iranian stock available at present, which further supports weaker prices in the coming few weeks.
Ammonium sulphate prices fell another $5/t or so this week, in line with the overall nitrogen price trend. This brings the price of Chinese amsul below $150/t FOB China for granular material, or around $200/t CFR Durban. There has been moderate buying from Central America and South East Asia but overall demand is well below current supply levels and further reductions in amsul prices seem probable.
Ammonium nitrate markets are behaving in line with competing nitrogen products – that is to say prices are under pressure and demand is scarce. With the European season reaching its end, AN/CAN sellers are keen to chase any business but poor planting conditions appear to be a bigger obstacle than price at this point.
Likewise ammonia saw minimal market activity this week. There are suggestions that the East Asian market price maying be rising but it is moving from a low base and remains well below the price of ammonia in Europe and North America, so it has scope to move up without really triggering other regional prices.
Phosphates
Chinese exports getting closer – phosphate buyers are hoping this will push prices down
As anticipated, the US DAP price boom has run its course and that market is settling down. Elsewhere prices remain unchanged and DAP values in most regions hover around the $600/t level. Not change is expected for the remainder of March and market players are looking to the start of April for some price movement. 1 April will usher in the new Indian fertilizer year, which will operate under increased phosphate (and potash) subsidies. Buyers are hoping that Indian buying brings liquidity to the market and causes some movement to phosphates prices.
The first Chinese phosphate exports for this year started this week. At this stage, still very small volumes and nothing significant enough to move global prices.
The MAP market remains broadly in balance, with limited product availability being counter-balanced by weak demand. The Brazilian market is quiet and the Saudi price remains unchanged again this week. Brazilian imports year to date are well below imports for the same period in 2023, which points to Brazil/s domestic inventory levels starting to decline meaningfully. This is turn suggests that Brazilian buying will need to ramp up towards the end of Q2 to ensure adequate supplies for the spring planting.
Potash
Another Potash price increase for Brazil while other markets stay flat
Brazil led Potash prices up again this week – rising by $5/t. Exactly how strong this rebound in Brazil is is unclear as prices are not moving at all in the other major regions. Some of the Russian potash producers who are regular sellers to Brazil are indicating that they are sold out for April, which may be supporting this up-tick in prices. Overall, there is way more potash supply than demand, minimizing the threat of a rapid surge in prices.
Potash traders are watching Europe as late season demand is expected. Currently application conditions in the region are poor due to very wet weather but an increase in potash buying is anticipated. Prices in Europe are unchanged but buyers believe that prices will be reduced once buying kicks in. European prices are among the highest around the world, which indicates some scope for lower values.
In South East Asia buying has slowed down as importers push for lower prices. Ramadan has begin which will bring lower activity from Malaysia and Indonesia. Overall the outlook for potash prices is stable to slightly down.
General Market Outlook
Crude Oil and Grain prices rise this week
Brent Crude oil rose strongly this week after the International Energy Administration changed its outlook from oil being in surplus to now indicating a deficit for 2024. This news lifted crude oil up to $85/bbl. The European TTF gas price remains around $8.5/MMBtu. The US natural gas price remain low as storage levels are high and LNG demand is low, keeping prices below $1.8/MMBtu.
The resurgence in grain prices continues this week. Both international and local prices registered gains as yield outlooks both at home and abroad were downgraded. White maize reached over R5,200/t this week as traders move to cover positions and the spread between white and yellow maize is now around R1,000/t. The premium for white maize should remove it from the animal feed basket – local grain traders are keen to take long positions on white maize rather than risk running short and being forced to consider imports.
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