Nitrogen
Urea finds new short term price floor after Indian tender
The Indian urea tender closed early this week and yielded prices in line with market expectations, which was around $360-365/t CFR India, equivalent to low $340s from the Middle East. The Indians are busy countering but early indications are that at least 1 million tons has been secured and there is a good chance that more product will be bought. This tender should absorb most of the long inventory positions in the market and bring some price stability or even support for higher prices in the short term. A broad range of producers have accepted Indian counter-offers – Russia, Nigeria, Middle East, Egypt and Malaysia.
The Middle East urea price was down around $10/t at just above $340/t FOB, reflecting the netback price of the Indian tender. It looks like a fair amount of Arabian urea will be committed under the Indian tender, which should reduce the pressure on producers to chase sales. There are unconfirmed rumours of production issues at Qafco in Qatar, which could tighten the market is proved to be true.
Brazil buying remains muted as in-country stock levels are high and record volumes of amsul are already locked in, meaning that demand for additional urea imports is reduced. With the summer season supply window closing rapidly, it appears that Brazilian volumes are unlikely to rise much and will not give much price support for the remainder of the year.
Egypt saw prices much lower at the start of the week with a number of producers offering volumes to the Indian tender. Some buying interest then emerged from around the Mediterranean which helped the Egyptian price rebound from the $330s up towards $360/t FOB by the end of the week.
The big swing player in the urea market seems to the US. Usually at this time of year we would see substantial volumes being traded into the US as part of the inventory build ahead of next spring’s planting. Outside of the routine contract cargoes, the Americans have been quiet in the international market. This is explained in part by crop prices being relatively low and low energy (natural gas) prices in the US supporting domestic nitrogen production. Trade data suggests that US imports are ahead of prior years – leaving the Americans with the option of waiting on the sidelines for the next month or 2 to see if prices fall before committing to further volumes. If the current situation continues where the Americans delay buying and the urea price falls, it is likely that the Americans will need to step up their purchases strongly early in the new year and prices may spike in January/February.
Ammonium sulphate prices were down a few dollars, led by falling prices in Brazil as traders sitting on big positions started to chase sales. The ex-China price of amsul is around $130/t for crystalline grade and $145/t FOB for granular.
Ammonium Nitrate follows the lead of other nitrogen products with prices declining in line with urea and amsul. European nitrate producers are in the unhappy position of being squeezed on production costs as natural gas prices rise ever higher, thanks to the Russian situation, while sales prices for AN and CAN continue to drift downwards. Ample amsul and urea availability means that the European domestic market is saturated and EU nitrate producers are completely uncompetitive on an export basis. There are rising concerns that the EU nitrogen sector may be forced to start closing capacity.
Ammonia prices continue to vary markedly between the Eastern and Western hemispheres. In the West the market is fairly tight and prices remain stable – no doubt aided by the high cost of European production. In the East prices seem to be weaker and may start to fall as supply outweighs demand.
Phosphates
Phosphate prices steady as Ethiopia secures big volumes of DAP from China
The phosphates price seems to be stuck at current levels. Demand is weak because prices are seen as being uneconomically high. But supply is also limited, which means that there is not much scope for prices to fall either. Phosphates prices remain out of line with those of nitrogen and potash, which is a deviation from the long-term trend.
The Ethiopians were able to follow up with further purchases of Chinese DAP – they are looking for up to 1.2 million tons of DAP under tender and have now secured around 600,000t of Chinese product. This transaction helped push the Chinese price up a few dollars and has now removed all the phosphate stock that the Chinese had available for export for the remainder of the year.
A few Asian markets are seeking phosphates but have battled to get much interest via tenders.
The MAP price in Brazil was unchanged once again this week. The Brazilian market has seen an increase in demand for other phosphate products as MAP is seen being too expensive. Imports of SSP and TSP have increased.
In local news, it was announced that Foskor has made a rare export sale of MAP to the US. This indicates how slow local sales have been so far this season and also the high inventory position that Foskor finds itself in. Foskor imported MAP to bolster its stocks ahead of the season and is now exporting MAP.
Potash
Potash sector is quiet with some trade taking place in East and South East Asia
There has been no progress on the threat from Belarus of cutting back on its potash sales. Certainly the potash price has remained stubbornly stuck at the same level just above $300/t.
Some tenders were concluded in Indonesia and Malaysia this week but there was no meaningful change on pricing. Some potash producers have been trying to talk up the price but when it comes to doing new business, there are plenty of suppliers still happy to accept current prices.
The low potash prices for the whole of 2024 are now reflecting in the financial results of many of the potash producers. A number of these players have reported losses as a consequence of the sustained low potash price
There was little trading activity in any of the major markets this week and prices were all unchanged.
General Market Outlook
Weak Rand causes local commodity prices to rise
Brent Crude oil prices declined quite dramatically this week on the back of a stronger dollar, following the Trump victory in US elections. Crude supply is also outweighing demand at present and these two factors have pushed oil prices downwards by almost 5% to $71.5/bbl.
The EU continues to suffer from high natural gas prices as the TTF index approaches $14/MMBtu and has reached a 12month high. US natural gas prices remain stable at $2.7/MMBtu.
Grain prices were a mixed bag this week, with international CME prices for maize, soya and wheat registering some big declines. In the case of wheat the CME value fell by almost 8% this week. This was partly due to the excessive run up in prices last week, following Trump’s victory. Conversely, the rise in prices last week plus the weaker Rand this week saw good gains on Safex prices of around 2.5% for oilseeds and wheat, while white maize rose almost 5% to hit R6,100/t.
The Rand had a very tough week as Dollar strength pushed the Rand well over the R18.20 level, reaching its weakest rate in 3 months.
Latest Direct Hedge quotes for Urea and MAP Swaps in USD:
|
