Nitrogen
Urea prices are expected to continue heading downwards, as various tenders are proving insufficient to tighten the market. Producers in Asia now struggling to place their product, which suggests lower prices are needed.
There was hope from the urea producers that the lowest prices in 14 months would finally stimulate some buying action. And there have been a number of tenders indicated in the coming weeks from India, Pakistan and Ethiopia. European gas prices are now heading back up as winter sets in and the Russians continue their interference on EU gas supplies, which is causing nitrogen producers to consider once again shutting their plants. None of this news has been able to arrest the fall in urea prices as all the major benchmarks saw reduction of around $30/t this week.
The Middle East granular urea price fell more than $30/t and the lowest prices achieved are now approaching the $500/t level. Unfortunately for the Southern African market, this is a bit late for the season, although Cape buyers should be keeping a close eye on developments because their import period is only a month or two away and there may be some relative bargains available.
The only meaningful factor that might give urea prices an upward push is if Europe does indeed idle most of its urea capacity because slow purchasing in November/December means that there will be significant import demand come Q1 ahead of their spring. The southern hemisphere buying is now largely done, so that will play no role in stimulating demand until Q2 next year at the earliest.
Ammonium sulphate prices were largely unchanged this week, ammonium nitrate in Europe fell quite sharply, especially CAN. Amsul prices are expected to keep edging downwards as there is lots of supply available and with nitrogen prices under pressure, sellers will need to be negotiable to keep their product moving. Nitrates may see some support if a lot of European capacity closes again, however AN prices remain excessively high in comparison to other N sources, so prices are probably going to keep falling until spring demand kicks in.
Ammonia prices didn’t do much this week – the Tampa contract price dropped $120/t to $1,030/t which was widely expected. Other benchmark prices were unchanged. As with the other nitrogen products, the ammonia sector seems to be watching the European gas story closely as a widespread closure of EU ammonia capacity could support prices as the Europeans increase imports. Without this demand, ammonia prices would otherwise be falling.
Phosphates
Phosphates markets all reported a widespread absence of buyer demand this week. Prices did not change much but only due to a lack of any deals being concluded.
The Middle East MAP price lost $5/t this week to sit at $625/t – the rand weakening by 2% against the dollar more than offset this and the local import parity cost of MAP rose almost 2%. There was little other meaningful market news around phosphates this week – a lot of complaining in certain markets about the lack of buyer interest. The Chinese domestic price was reported to have risen slightly but this is irrelevant to the global market while the Chinese are not exporting phosphates. Phosphates prices are expected to keep falling for at least the next 6 weeks – the producers are hoping that spring buying from the Northern Hemisphere is sufficient to stabilize prices.
Potash
Potash prices keep trending down in most major markets and South Africa saw a $50/t reduction this week
Brazil saw a $10/t drop in its potash price as the price approaches $500/t. It’s the same old story around the world as far as potash demand goes – there is none and many markets are slowing down as Christmas approaches, so no change to the trend is expected.
The $55/t decline in the South African potash price will be welcomed by those buyers that have gambled and not placed their orders yet. Despite the price drop, the RSA potash price remains $200/t above Brazil, so we are a long way from seeing potash prices stabilize, both at home and internationally.
General Market Outlook
Brent crude prices remained in the $80/bbl band this week, while the Rand lost 50 cents to the Dollar.
Brent crude oil prices bounced around a little this past week, going as low as $83/bbl and briefly rising to almost $87/bbl. By Friday the price has returned to $85/bbl which was broadly in line with the previous week. European TTF gas has continued rising this week to close on $43/MMBtu. This is causing much of the European fertilizer sector to consider idling their plants, especially as fertilizer prices are headed down. The US natural gas markets headed down to the $6/MMBtu level.
Grains and cereal prices were generally slightly down this week. The one exception was soya where the Safex price jumped 5% week on week. We are considering adding a table showing the major grain price changes week on week going forward – we are interested in your feedback and thoughts on this!
Latest Direct Hedge quotes for urea and MAP swaps in USD:
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