Nitrogen
Indian Urea tender achieves a low price, weakening urea values around the world
The Indian urea tender prices were finalized as the Indians countered with a price of $339/t CFR west coast India. Around 725,000t of urea was committed by the various participants, out of over 3 million tons originally offered. This volume will be more than adequate for the Indians as they are under little pressure in terms of domestic inventory levels – but this volume is far short of what the overall market needs to balance supply and demand. In other words, the market remains oversupplied and prices are likely to keep heading down.
The US market, which had seen very high urea prices just a month back, dropped nearly $40/t this week as price retreated towards the $350/t CFR mark. Unconfirmed prices as low as $325/t have been mentioned. The bulk of American requirements for early spring demand has been met and the remaining needs will be supplied by local producers, along with the regular contract imports.
The Middle East urea price held steady in the high $320s this week as the Indian tender price was in line with expectations. The challenge for the Middle Eastern producers is finding a home for their tons – the Indian tender will barely make a dent in current inventories and with the US appetite for spot cargoes being close to zero and Europe being covered by Egypt, the Middle East has to look for Southern Hemisphere customers.
The Brazilian urea market remains very quiet as the supply window for the Safrinha season is over and crop economics are not in favour of increased nutrient usage. The Brazilian price was quoted as being $5/t down this week and possibly down by $10/t at $320-325/t CFR. This price levels means only Russian and Iranian urea can feasibly head to Brazil, although Middle East producers will be contemplating the $300/t FOB Middle East needed to make Brazil work for them.
It is clear that urea prices are under huge downward pressure and the impact of China’s return to urea exports has not even been felt yet. The Chinese threat is factored into market sentiment but physical exports are only expected to start from mid-May. With no Indian tender anticipated until mid-year, it appears that late-May and into June will see the urea market heavily oversupplied and prices probably at their lowest for 2024.
The Rand staged a modest recovery this week strengthening 1.2% to R18.71 against the Dollar – helping the import parity cost of urea to below the R7,300/t. Barring a blow-out of the Rand, local urea prices look set to head into the R6,000s in the coming weeks.
Ammonium sulphate prices were flat/steady this week on the back of urea prices following predicted levels. There are a few tenders being held in South East Asia for amsul which should absorb some of the available product but no major movements on price are expected in the short term. Moderate amsul interest is reported from Brazil but at very low numbers ($150/t CFR Brazil), which is probably below current Chinese prices. Amsul prices from China equate to a landed Durban value of below $200/t for both crystalline and granular grades.
Ammonium nitrate continues to struggle with a lack of demand – Brazilian imports have been close to zero, which is unusual for this time of year. CAN prices in Europe were stable but the season has now ended, so sales will be very limited. Producers with stock may well be looking to export and opportunities for CAN cargoes to South Africa will emerge in the next couple of months
The only real news in the Ammonia sector was the $30/t increase in the Tampa CFR contract price in the US – this moved up $30/t to $475/t CFR, which is way higher than most other benchmarks, particularly in the Eastern Hemisphere. The Middle East is selling ammonia at below $300/t FOB and the price in the Far East is around $330/t. Europe and North America must be looking appealing to Middle East producers, despite the hefty cost of freight for that voyage.
Phosphates
DAP prices continue to slide down, while MAP remains stable
The presence of Chinese DAP price in the international market is driving prices rapidly downwards. This week saw the Indian price drop a further $15/t and DAP prices are lower across all benchmark locations. The start of a new fertilizer year in India, with increased fertilizer subsidies, has seen Indian purchasing of phosphates rise substantially in the past week and a lot more buying is expected through the next month. Indian importers are banking on lower prices to come because they are currently losing around $75/t at present prices, despite the higher subsidy. Sellers are likely to take whatever price they can get from the Indians because there is very limited demand from any of the other major markets. India will be holding a number of phosphate tenders in the coming few months, which should test the floor for phosphate prices.
US prices were down by another $15-20/t again this week as the spring trading season is largely over for that market. Similarly, European buying is winding down as adequate phosphate imports have been booked to cover the early part of the planting season.
Limited availability of MAP is keeping its price unchanged, despite DAP prices falling. How long this situation can last is an open question – the wider the price differential grows, the greater the incentive for producers to focus on MAP production over DAP. This situation usually takes a month or two to be resolved – i.e. the production response does take some time. Limited MAP trading into Brazil has been seen this week – not enough to lift prices and crop economics broadly are not justifying present prices.
The Cape season is now in full swing and the first rains are due in the next week or so. Fertilizer imports look to be a bit behind schedule and while Foskor plans to send one and possibly two cargoes to Cape Town and PhosAgro/Purefert usually supplies one cargo, as yet little MAP has arrived for the season. There will have been some carryover stock from last season which will keep the market going but good early rains would put pressure on stocks if there is strong demand.
Potash
Very little activity in Potash markets this week as South African price edges down
Most markets saw Potash prices remain unchanged this week. Producers are complaining that demand is non-existent in all parts of the globe. There are a few upcoming tenders in South East Asia but El Nino has hurt demand in that region and low prices are more likely than high ones.
The minor run on prices in Brazil has ended and buyers are objecting to the current $305-310/t price, suggesting that lower prices may result in the coming weeks. Brazil has 1.2 million tons of potash imports lined up for April, so there is no shortage of product in the country.
The Durban CFR price was assessed at $5/t lower at the top end of the range, which pushed the average price down by $2.5/t. The Durban CFR price is $327.5/t.
General Market Outlook
Iran – Israel showdown elevates crude oil prices
Increased political tensions in the Middle East drove Brent Crude oil rapidly upwards from $87.5/bbl to $90.7/bbl. An escalation between Iran and Israel raised the threat of regional conflict which sent oil prices jumping. Natural gas prices in Europe continue to ease as winter recedes and prices are approaching $8/MMBtu once again. In the US, natural gas prices are still around$1.8/MMBtu.
Local grain prices softened slightly this week as a slightly stronger Rand and some profit taking pushed prices down slightly. That being said, these lower prices are all relative – last week saw the highest prices so far in 2024 for everything other than soya, so grain prices are still looking positive. International cereal values rose this week, with maize up by 2% and wheat gaining 1.6% on the CME. While the current widespread rains are gratefully received by farmers, the reality is that these rains are now too late to make much positive impact on this year’s summer crop.
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