Fertilizer International 500 Jan-Feb 2021
31 January 2021
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: The market started 2021 in a bullish mood, similar to where it left off last year. Market sentiment is being shaped by factors such as China’s continued absence from the export market, the prospect of European and Turkish price, and US grain prices rises boosting US spring hopes.
Most attention has been on markets west of Suez. US Barge prices have risen over $20/st since Christmas, for example, supported by a grain price rally. Last minute seasonal buying in Brazil also saw granular prices there climb to over $290/t cfr in early January. Suppliers, in general, have benefitted from the firmer sentiment. Egypt has been forward selling into European markets in the range $290-300/t f.o.b., with other sellers also adjusting their price targets higher.
East of Suez, meanwhile, price rises have been prompted by supply cuts rather than rising demand. Indonesia has sold in the range $276-278/t f.o.b., a sharp jump on previous business, benefitting from the lack of Chinese exports and reduced Malaysian supply.
Phosphates: The market, both east and west of Suez, began 2021 with price jumps of up to $50/t. In Pakistan, a buyer bought a vessel of Chinese DAP at $425/t cfr, significantly up on the mid-$370s/t cfr price range of early December. Chinese export prices also rose, amid sales to Bangladesh and the fulfilment of Southeast Asian tenders.
Importers in northwest Europe are now paying in the mid-$330s/t fca for DAP, up almost $20/t on December. Brazilian buyers are purchasing MAP from Morocco’s OCP at $420-430/t cfr, up from $405410/t cfr pre-Christmas levels. US DAP barge prices, in contrast, having first rallied and then stabilised, ultimately slid by $4-5/st in mid-January.
Availability remains generally tight, with most global output already allocated throughout the first-quarter. Low stock levels in India and Pakistan, plus out-of-season buying in Brazil, are exacerbating this global supply/demand imbalance.
NPKs: NPK and NPS prices mostly held level in early January on thin trading. However, market participants do expect strong gains when liquidity returns, given the leap in raw material prices since December.
Ukraine has been a notable source of demand. In December, 12,000 tonnes split across four Bulgarian cargoes (20-200+13S) were sold for January delivery to the Ukraine in the range $305-320/t f.o.b. Varna. Additional Ukrainian demand for up to 30,000-40,000 tonnes of this grade is also possible for February-March delivery, one market participant said, although no deal has been closed.
The focus of Greek and Turkish producers on domestic markets has limited export capacity. A tender by Turkey’s Pankobirlik to buy over 40,000 tonnes of NPKs and 21,000 tonnes of nitrogen products closed on 15th January. This follows its November tender for almost 47,000 tonnes (12-3212) awarded to a local producer at the end of last year.
Russian producers are set to load around 80,000 tonnes of NPKs in January for shipment to Thailand. Some crop sowing and fertilizer applications have already begun in north Thailand, ahead of the start of the country’s main application season in May.
Sulphur: A number of contracts have been concluded for shipment during the first-quarter. Sulphur is being supplied to Morocco in the range $78-94/t cfr, an increase of $1415/t on 2020’s fourth-quarter. Tampa liquid sulphur sales have also been concluded recently at $96/t Tampa Bay, a jump of $27/t on the previous quarter. Middle East prices trended upwards in January. The market overall has been affected by demand outstripping supply.
OUTLOOK
Urea: Current firm demand west of Suez should carry the market over until the start of Australian and Thai purchasing later in the first-quarter. European and US buying is also ramping up. While Europe’s buyers are playing catch-up after low autumn activity, the surge in US prices in late December is now making Nola an attractive spot market for urea.
Indian urea sales have fallen below expectations since August. Although the country is unlikely to tender again before late March/April, this will add support when it finally arrives. Reduced Chinese production and exports, plus production issues in some other countries, have mitigated this loss of demand.
Phosphates: The current upwards price momentum is set to continue throughout the first-quarter. With stock levels in India and Pakistan falling to recent lows, resurgent DAP import demand in both countries is likely to tighten the market further. Elsewhere, continuing market firmness in the US has seen traders there scrambling to source product.
NPKs: The lack of loadings at Jorf Lasfar due to recent poor weather and the continuing climb of raw material prices have been the main factors shaping the market. Looking ahead, supply tightness is expected to continue, while European demand is set to ramp-up.
Sulphur: The market is expected to follow its usual pattern of softening prices as we move towards the summer months. But the expected price easing could be amplified in 2021, both by the emergence of new Middle Eastern capacity and the potential for rising refinery rates as quotas are eased.
