Please note that there will NOT be a report next week (14 February) due to the Argus conference and travel
Nitrogen
Urea continues its bull-run upwards, as prices rise across all global benchmarks
The big question in the market is how long will the current run in prices last? The majority of factors that have led to the current up-turn are short-term in nature and the primary market fundamentals are broadly unchanged. In other words, the cost structure of the industry (energy/raw material prices) and the overall supply-demand balance are mostly stable. This leaves us with seasonal demand as being the key price-determining factor and that seasonal demand is at a peak right now but will start to subside as we get into March/April. All of this points to a likely down-turn in prices in the coming months and traders are keen to cash in while demand and prices are hot but everyone is nervous about the risk of being caught with an expensive long position if/when the market drops down.
We are in the annual peak demand period where we have the big Northern Hemisphere markets actively stocking up for their spring seasons and there are some winter tons needed in some of the Southern Hemisphere markets, often for winter wheat.
The biggest price adjustment this week was seen in Brazil where the price rose almost $30/t to reach $430/t CFR. Most of this increase was a normalizing because Brazil had fallen well below import parity as low demand and rising prices led importers to pause buying. The absence of cheap sanctioned product meant the Brazilians have been forced to look at higher prices. This being said, Brazilian buying volumes are still very low.
The US market remains strong as demand for urea imports is high and prices both at ports and inland have risen again this week. US imports through December and January were lower than historical norms, supporting the rise in purchasing being seen. Added to this are the concerns of “Trump tariffs” on a number of countries that are significant fertilizer suppliers to the US, which has prompted traders and importers to take positions swiftly and try to minimize the disruptions these tariffs may cause.
The Middle East has seen prices keep heading upwards, following the Indian tender. Demand from Asian and Oceania markets such as Australia is giving the Middle East a lot of negotiating power to push prices up as they can play these enquiries off against North and South American demand.
Urea price offers into Brazil have reflected the recent run up in prices but there has been little buying interest at prices in the $400s. Demand in Brazil is in a seasonal lull and other forms of nitrogen, such as amsul, are being sold as prices have not risen to the same extent as urea has in the past month.
Prices in Egypt moved up as buyers from Europe and around the Mediterranean were active – the Egyptian price has now climbed into the mid--$450s. To add further support to Egyptian pries, there are concerns around production issues there relating to lack of natural gas.
The Indians appear to be licking their wounds after the last two tenders have not yielded the outcomes they had hoped for. Ideally the Indians were looking to secure 1.5 million tons on each of those tenders, yet secured less than 750kt in total, less than 25% of what they sought. At the same time, these tenders were the driving force behind the urea price rising from $350/t in December to the current $420+. Talk is that the Indians will take a break for the next month and probably look at tendering again some time in March – no doubt hoping that the market will have cooled off considerably by then.
Ammonium sulphate prices have started to track urea, particularly as amsul value in nitrogen terms is now cheaper than urea. With the Chinese New Year holidays now being over, trading activity has picked up and granular amsul prices in China rose $10/t. Northern Hemisphere markets are buying amsul but the bigger Southern Hemisphere markets such as Brazil are quiet as they have adequate stocks and demand is low. Buyers that do not have prompt demand to meet are choosing to hold off purchases and wait until Q2 in anticipation of lower prices then.
Ammonium Nitrate prices have also surged thanks to urea dragging nitrogen values up. The relatively tight availability of nitrates in Europe because of low production due to high natural gas prices is also supporting nitrate values.
Ammonia prices were slightly lower this week but the negative sentiment in the ammonia sector is being counter-balanced by the positivity seen in urea and the decline in ammonia prices is being limited by this. Ammonia prices in the middle East and Europe were slightly down this week but overall prices seem to be stabilizing.
Phosphates
The Phosphate market remains stuck with buyer resistance to prices but limited availability of product meaning the price remains high
The general indication in the market is that if MAP and DAP prices were more reasonable, there would be a lot of buying interest. But there is not much competition between phosphate suppliers evidently and prices seem to be stuck at current levels.
The Saudi benchmark MAP price, which is key for the SA price, saw the high end of the range reduce by $10/t, which brought the average price down by $5 to around $615/t FOB. Adding around $22/t of freight to Durban yields a CFR price of just below $640/t.
On the flip side, demand in the US is strong thanks to their winter ‘fill’ and lack of domestic phosphate production is forcing the Americans to import heavily. With limited product to be found anywhere, the American price has been rising. Proposed trade tariffs on Mexico will affect the supply of Mexican phosphates to the US< which is also adding to US prices.
The Indians have agreed a bilateral deal with OCP of Morocco for a reported 1.6 million tons of DAP and 800,000 tons of TSP for supply this calendar year. Suggestions that the Indians are looking at reducing their phosphate subsidy for the new fertilizer year (from April) raises concerns about phosphate affordability for Indian importers. Deals such as the one with Morocco are probably the simplest way for the Indians to access much needed product and to agree pricing that works for both parties.
The market has been subject to additional noise in the form of big tenders such as Ethiopia, who continually tender and then cancel because they do not like the price or the terms of the supplier and then re-tender. This seemingly adds to phosphate demand and is used by producers and traders as a negotiating ploy against other potential buyers. But it’s keeping the market tight and the lack of trading liquidity is really not helping buyers or sellers.
Potash
Potash prices trended upwards this week across all main benchmarks.
All the primary Potash benchmark saw increases of $5-10/t this week. The potash price is now in the $310-340/t range across most locations.
The US market is probably the hottest right now as the combination of healthy seasonal demand and threats of trade tariffs limiting supply is supporting higher prices week on week.
Asian trade has been quiet of late but there is a big potash tender due shortly in Malaysia which will spark up trading interest. With chatter of a subsidy cut for potash in India, discussions around the annual Indian contract price will be delayed until more clarity exists on the potash subsidy. With a higher contract price anticipated, the lower subsidy could threaten the feasibility of potash imports to India.
The Durban CFR benchmark price was lifted significantly this week as the major importers have raised the price by around $15/t to almost $330/t CFR. The basis of the increase is that replacement costs for fresh imports are higher, which is undoubtedly true, but equally they are probably not $15/t higher. So there may be an opportunity for lower cost imports from Belarus or Russia to compete in the Southern and East African markets.
General Market Outlook
Oil prices lower as Trump vows to increase US production.
Brent Crude oil pieces continue to slide lower on the latest Trump news where he pledged to increase US supply. This pushed Brent crude down from $76.6/bbl to trade at $74.7 presently. Oil price volatility should be expected over the coming months as the Trump administration attempts to impose trade tariffs on a variety of countries, some of whom are significant oil buyers or sellers.
The European TTF gas prices are sharply up this week by more than 10%, approaching $16.5/MMBtu. American natural gas prices are also elevated compared to recent levels, trading around $3.4/MMBtu.
The first of the SAGIS (South African Grain Information Service) crop estimates for the 2024/2025 season came out last week. Despite the relatively mediocre rainfall, the areas planted are higher than the prior year – driven by the excellent prices for most of the leading grains and oilseeds. Record high prices for white maize led to the planted area increasing by almost 50,000ha or 3%. It is too early to be speculating on the size of the crop because growing conditions have been mixed.
This news has seen the Safex prices taking a tumble – white and yellow maize have suffered most with prices falling 8 and 4% respectively this week. The other big loser was sunflower, which saw the price drop 3.5% this week – sunflower planting is up almost 5% this season, raising expectations of a glut come harvest time.
Despite South Africa grabbing the headlines from Donald Trump for the wrong reasons, the Rand actually performed reasonably against the Dollar this week strengthening slightly R18.46.
Latest Direct Hedge quotes for Urea and MAP Swaps in USD:
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