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Nitrogen+Syngas 364 Mar-Apr 2020

31 March 2020

Market Outlook

Market Outlook

Historical price trends $/tonne

AMMONIA

  • The impact of coronavirus on both supply and demand continues to provide considerable uncertainty to the market. With much of Hubei province on lockdown, and a corresponding reduction in ammonia demand for DAP production, Chinese imports appear to be down, pushing more ammonia onto the international market and creating generally bearish sentiment.
  • Yara and Mosaic rolled over the Tampa ammonia contract price at $250/tonne c.fr for March, for the third successive month, on the back of lower ammonia demand for MAP/DAP production. However, US agricultural demand is expected to be stronger this year, after ammonia application was halted early last year due to a harsher winter. Up to 96 million acres are expected to be planted to corn in 2020. Nutrien says that it anticipates North American prices will be supported by a surge in demand this spring, and lower offshore imports, and CF Industries also said in a recent results presentation that it expects positive demand for spring ammonia following a poor fall ammonia season.

UREA

  • Fewer exports out of China has supported international prices in the short term. Uncertainty over availability appears to be driving buying activity in many markets.
  • At the same time, increased US demand has also reduced urea availability west of Suez, with fears of a supply shortfall driving up prices at New Orleans considerably and drawing in urea from Algeria, Russia and Egypt, amongst other places.
  • Indian and South American buying is also supporting the urea market, in spite of relatively subdued demand from Europe. There is as yet no sign of any slowdown in buying from key markets such as India due to the unfolding epidemic.
  • However, the imminent arrival of the new Dangote urea complex on the market is likely to have a depressing effect on prices in the longer term.

METHANOL

  • The potential for disruption to Chinese industrial production caused by the coronavirus outbreak has weighed heavily on the methanol market. China imports 10 million t/a of methanol and its demand, especially for olefins production, is a major factor on setting market prices. The extended New Year shutdown has also crimped Chinese demand.
  • Conversely, there have also been worries about the impact of coronavirus on Iran, a major supplier of methanol to China may lead to tighter availability. Iran supply 3.5 million tonnes of methanol to China last year.
  • Falling oil prices due to the Russian-Saudi Arabian oil price war are likely to lead to corresponding falls in methanol prices.

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