Nitrogen
Urea from Iran and Russia is putting downward pressure on prices, as buying interest remains quiet. The ammonia price took a big step down this week as the US Tampa contract price dropped almost 40%.
Markets that are happy to trade with Russia and Iran are enjoying competitive offers for urea, as Brazil and US urea prices continue to drift downwards. The Middle Eastern urea producers are busy fulfilling their tender commitments to India but are facing much lower netback values for any new business as most major price benchmarks are well below the $690/t fob value that the Indian tender price represents. US nitrogen demand continues to be hampered by wet weather conditions for planting and some of the northern states are starting to switch from maize to soya, which will further hurt nitrogen demand.
It looks like the usual Q2 seasonal lull for urea demand is set to continue for at least another month, unless some unexpected demand emerges.
The ammonium nitrate and ammonium sulphate markets were also quiet this week, with prices broadly going sideways and the market sentiment pointing towards prices continuing to trend downwards. The main annual industry conference, IFA, is taking place next week, so there is hope that some signs of market direction will emerge from discussions taking place there.
Ammonia saw some large downward price corrections this week as the US Tampa contract price dropped $425/t to $1,000/t CFR and the Middle East ammonia price benchmark dropped around $100/t too. This will be welcome relief for the local South African fertilizer producers that consume ammonia to produce MAP, CAN and NPKs. An ammonia import cargo was booked from Algeria sailing to South Africa, which may be a first from this origin.
Phosphates
The market sentiment for phosphates prices continues to be quite negative/downward but players are waiting to see whether India’s attempt to force prices down towards the $900/t mark is successful. Demand destruction remains a common theme as buyers reduce their purchasing volumes.
Most MAP/DAP prices around the world continue to float in the $1000-1100/t range. There is a lot of noise around prices in various regional markets – with the Chinese domestic price a good $300/t or more below international prices but the Chinese government is maintaining strict restrictions on any export sales. Brazil is being offered discounted Russian phosphates, while the Moroccans continue to demand a big premium for their phosphates.
The phosphoric acid quarterly contract price remains unresolved and it looks unlikely that a price consensus for this quarter will be reached, considering there is only one month left. The Moroccans are standing by their position of $2000/t while Indian officials are announcing that they will not pay anything above the Q1 price of $1530/t. Interestingly, some of the smaller phos acid exporters to India like Jordan have rolled over the Q1 price and have been selling to India at that level.
It appears that Foskor has agreed to another large phos acid export to Bangladesh during the past week or so, which has angered a number of the local liquid fertilizer producers who are concerned about getting adequate phos acid supplies ahead of the liquid season. Foskor is reported to be running fairly well otherwise, although MAP availability remains incredibly limited in the South African market.
Potash
A very quiet week for potash as prices rolled over and no price changes are expected any time soon.
Potash market players are apparently waiting for next week’s IFA conference to thrash out potash prices. Emerging trade data from Brazil points to over 500,000t of Russian product destined for that market, which represents almost half of Brazil’s May requirement. This is a larger volume than most market analysts anticipated being possible out of Russia. Russia historically has supplied 10-15% of Brazil’s potash imports at this time of year.
This may all point to downwards price pressure, until more potash supply emerges, prices are not likely to change.
Asian markets have been struggling to source their full needs and trade data for the year to date is indicating that Asian buying is 15-20% lower than the same period in 2021. Not only is this a sizable reduction to potash consumption but is a major concern for crop yields and thus food security.
General Market Outlook
Brent crude oil price remains very strong this week, as some recovery in the Rand gives relief on local commodity prices.
Crude oil had a very bullish week with the price rising steadily from $111/bbl to touch above $117/bbl by Thursday. In early trading this morning prices appeared to drop a little but oil prices remain very elevated. On the natural gas front, the US Henry Hub price leapt from $8/MMBtu to go above $9.5/MMBtu as June options expired on Thursday and some players had to scramble to get cover. European gas prices dropped to $26/MMBtu earlier in the week before moving up to $28/MMBtu currently.
Maize prices declined on the international front over the past week, and the stronger rand exacerbated the drop in Safex prices for both white and yellow maize of over 4%. Local soya and sunflower prices bucked the maize trend, overcoming weaker CME prices and the stronger rand to gain around 2% over the week.
The rand strengthened against the dollar for the second week running, gaining just under 1%.
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