Nitrogen
Middle East Urea price lifts, while most other price benchmarks decline. Nitrogen values are low across the product range
The mood in the global Urea market returned to pessimism over prices after last week’s flurry of purchasing in the US caused some excitement. It is now evident that the American purchasing was prompted by unexpected restrictions in the Mississippi River (the main conduit for imported urea to reach the US corn belt). The river system was being closed in various sections because of flooding concerns and the authorities are planning to close locks to manage water flows, which in turn means barges cannot pass. Traders were keen to access immediately available product to move it to market. Now that all the available urea has been bought, the question remains about whether US urea demand will be so strong once the logistical barriers ease.
Demand in the Northern Hemisphere in general is clearly quietening down and while some buyer interest from the Southern Hemisphere exists, these buyers are reluctant to buy any more than they need for fears of further price decreases.
In a week of limited trade, a trader fixed a urea cargo from the Middle East to Australia at $330/t fob, which lifted the overall Middle East benchmark price. This was an outlier to most trading activity for the week.
Ammonium sulphate prices kept moving down this week, as Chinese producers with large stock positions are actively chasing sales. Amsul is still trading at a premium over urea but this premium has narrowed substantially in recent weeks. Chinese prices for crystalline product are approaching the $120/t fob level, which is a 2 year low. The floor for Chinese prices is $90-100/t fob.
Ammonium nitrate markets were quiet this week as last week’s big drop in Russian AN values was digested. One of the major local players is reported to have booked a CAN cargo for South Africa.
Ammonia prices edged down across all regions this week. Lack of demand in the Far East is pushing ammonia prices down and these price cuts are being felt in the Middle East too, where the price dropped by $20/t to sit at $265/t fob presently. This is a very low value, even by historical standards and some sort of rebound can be expected, particularly if/when urea prices firm.
The jump in the Middle East urea price was slightly softened by small improvements in freight and exchange rates but the local import parity cost of urea rose by almost 7% this week to just above R7,000/t.
Phosphates
US momentum for Phosphates continues this week, contrary to all other markets where prices keep sliding.
The same flooding and river restriction issues that supported American urea prices are also assisting US DAP prices. US DAP prices rose another $20/t this week but most players in that market expect US spring demand to peter out going into May and a sharp downward correction would not be a surprise as the US is now well out of line with most other phosphate markets.
MAP and DAP prices fell around $10/t in most regions as prices sit in the mid to high $500s, compared to the US in the low $700s.Chinese export prices have started falling as their domestic season is ending and local prices are falling, pushing producers to pursue exports more aggressively.
Brazil trading activity is indicating that their purchases of MAP and DAP for the first four months are more than double for the January-April period last year. Unsurprisingly, Brazilian MAP prices were down $10/t this week, that in turn knocked $5/t off the Saudi Arabian MAP fob MAP price.
Moroccan phosphates giant, OCP, is showing April sales of phosphates at approximately 550,000t, which is only 45% of their capacity. March sales and exports of phosphates were 900,000t. This is a clear sign of slowing demand and the Moroccans’ attempt to try to support prices by tightening supply has not had much impact yet. OCP is going to be under huge pressure for the rest of Q2 to maintain sales volumes as their inventory grows.
.
Potash
US Potash prices spike in a rare exception to the ongoing global downturn
Concerns over immediate availability of potash in the US drove potash prices up, in what will surely prove to be an aberration to the current price trend across the world. On the flip side price in Europe moved down quite strongly as the European price moves closer to the world norm. The European price is still €550/t, which is well-above other regions that are in the $430-450/t, suggesting some further room for improvement in Europe.
Potash prices in most regions declined by around $10/t this week, as the recent Indian contract price sets a target that most buyers want to try and match. Brazil was unusually quiet in the potash sector this week and its price was unchanged.
The outlook for potash prices remains bearish with prices expected to keep falling for at least the next month. There is some hope that some stronger demand could emerge from the US and Europe later in May. With the supply-demand balance continuing to point to ample supply. Even if this demand does appear, it might only serve to slow or stabilize prices, rather than raise them.
General Market Outlook
Crude Oil prices reverse as Dollar strength and recession concerns impact demand negatively.
Brent crude oil did a big about-turn this week as it dropped from $87/bbl to $81/bbl over this week. Last week’s reaction to OPEC slashing production forecasts was superseded by raised expectations of the US Fed further increasing interest rates to counter inflation and thus leading the US into a recession. The US Dollar strengthened against other currencies due to likely higher interest rates and this caused oil markets to weaken. Oil analysts expect crude oil prices to rise strongly once the US Fed has finished its interest rate hikes later this year – prices of $95-100/bbl are expected by the end of the year.
European TTF gas price slid down to $13/MMBtu this week as Europe enters spring and fears of gas shortages recede further. US natural gas prices firmed slightly this week to trade at $2.2/MMBtu.
Safex values for grains and oilseeds showed some massive reductions this week. White and yellow maize dropped 5-6% to trade in the mid-R3600/t for April contracts. Sunflowers dropped 3% this week and Soya collapsed by 8%. Soya has declined from over R10,000/t in February to trade at R7,400/t presently.
Latest Direct Hedge quotes for urea and MAP swaps in USD:
|
