Nitrogen
Urea is showing signs of firmer prices as speculation mounts of a new Indian tender
The overall urea market appears to be balanced, i.e. there is nothing substantial that should be causing prices to move in any particular direction. Speculation emerged around an unexpected urea tender to take place during December and this seems to have generated support for prices such that prices rose a few dollars this week.
The primary benchmark moving up was Egypt, where prices surged around $25/t to move into the $370s FOB as traders took long positions. Egypt is not a naturally supplier into the Indian tenders but Europe, which is Egypt’s main market, continues to struggle with high domestic fertilizer production costs because of high natural gas prices and with winter ahead, traders are betting that gas prices will only get higher and European buyers will be forced to turn to imported urea.
The Middle East saw prices moving up as some additional sales were made to Ethiopia. The Middle East is probably the production base that would benefit most from an Indian tender as it would absorb whatever surplus positions might exist. An Indian tender buying up big volumes (approx.. 1 million tons) may also trigger the US to start buying – the Americans have been holding off on much of their winter ‘fill’ buying but should availability from the Middle East become limited due to an Indian tender, then US buying may accelerate. This would push the urea price up, which is what we expect for January – the Indian tender if it materializes this month, may bring this up-swing in prices forward into December.
There were some prices in the $320s being achieved in Brazil but those numbers have now disappeared as the Brazilian price has moved up into the $330s. Expectations are that Brazil will stabilize at this price level because of substantial stocks in port warehouses and the season is close to complete.
Iran continues to set the floor price in the market. They are targeting a price of $295/t FOB, which is close to $50/t lower than the Middle East price. The best bids received by the Iranians this week were in the $280s, which were rejected. We would normally see the Middle East and Iranian prices converge to their usual delta of around $30 – the fact that the gap is much greater than this points to limited demand from buyers of sanctioned urea (e.g. the Brazilians) compared to buyers of non-sanctioned product.
Ammonium sulphate prices continued their upward trajectory this week, although the price increases are quite small. Demand in Europe is reasonably strong as domestic production of amsul is low due to cost pressures. Brazil is relatively quiet on amsul at present but the Asian markets are all buying steadily.
Ammonium Nitrate sales across Europe, particularly Eastern and Central Europe, have been higher this week as regional distributors have started buying to prepare for next spring. Western European producers are all down due to natural gas prices rendering production uneconomic, so it is likely that there will be some additional import demand for AN and CAN into that region as the spring approaches.
Ammonia markets were flat this week with prices unchanged across all major benchmarks. Ammonia has been relatively expensive compared to urea but interestingly prices are expected to head lower just when urea prices are starting to firm. Ammonia prices in the West continue to be supported by the European need for imports because local production remains diminished due to uneconomic production costs.
Phosphates
Some price declines seen although Phosphate markets generally remain illiquid on tight supply
Much of the price action was seen in the US market this week as DAP prices came under downward pressure. No substantial drops are expected though as supply remains limited, with US domestic production running at lower than usual rates, and a moderate lineup of imported cargoes booked.
Phosphate prices out of Jordan and Morocco were lower this week but prices from the other major production centre, Saudi Arabia, were unchanged.
MAP markets remained quiet as they have been for a number of months now. No price adjustments were seen.
Potash
Brazil led Potash markets higher again this week
Potash prices in Brazil climbed closer to the $300/t level and prices for Q1 are already at $315/t CFR. Most of the other major markets were quiet this week, but sentiment is definitely pointing towards potash prices heading higher as and when spot trading activity increases.
Potash prices in the USA have fallen to a three year low as traders chase sales to liquidate positions ahead of any moves by Donald Trump next year to apply a duty on Canadian potash. Purchasing is expected to increase over the coming weeks and especially at the start of 2025 as American distributors fill up their supply chains ahead of spring planting.
Potash sales have picked up locally as the application season is fully underway. Availability of granular potash in particular is getting quite short from Durban but prices so far remain stable in the $310-320/t CFR range.
General Market Outlook
Crude Oil holds steady just above $70/bbl
Brent Crude oil remains at relatively low levels, closing out the week at $71.3/bbl as OPEC+ has been making noises about firstly reviving idled oil capacity and then a decision to delay the restarting of said idled capacity when it became clear that threat of more capacity was pushing oil prices lower.
As cold winter weather sets into Europe, the TTF gas price remains solidly at $15/MMBtu and looks likely to trend higher. The natural gas price in the US eased downwards and closed on $3.0/MMBtu.
The Rand has traded mostly in the low R18s against the Dollar this week before dropping below R18 on Friday.
The CME maize rose 2.5% this week as the market was dominated by traders buying. Locally the high price of maize and the Rand holding steady encourage a lot of selling off of positions, which pushed the Safex moderately downwards, with both white and yellow maize declining around 0.5% on the week.
Latest Direct Hedge quotes for Urea and MAP Swaps in USD:
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