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Nitrogen+Syngas 369 Jan-Feb 2021

31 January 2021

Market Outlook

Market Outlook

Historical price trends $/tonne

AMMONIA

  • Ammonia supplies have been curtailed by production shutdowns, including Kaltim and PT PAU in Indonesia, SABIC and Ma’aden in Saudi Arabia, Sorfert in Algeria and Chinese gas-based producers. There have also been gas curtailments in Iran and Trinidad.
  • Low inventories in the US due to a bumper fall application season are likely to lead to stronger than usual buying in anticipation of the spring application season.
  • Yara and Mosaic agreed a price for January of $270/t c.fr Tampa, up $15/t on the $255/t c.fr agreed for December and in line with expectations of a higher settlement.
  • Industrial ammonia demand is also recovering after much Covid-related disruption during 2020.
  • With supply still constrained in some areas, the prospects are for higher ammonia prices during 2021 in the western hemisphere, although prospects are slightly flatter in the eastern hemisphere.

UREA

  • Last year’s record Indian demand seems to have abated, and fresh tenders are not expected before March/April.
  • A fresh outbreak of Covid-19 and resultant lockdown has affected urea plant operations in China’s northeastern Hebei province
  • China is also facing urea production cuts due to gas supplies being cut to plants to allow increased power production during the winter. This is leading to high Chinese domestic prices and a lack of product being offered to the export market.
  • Lack of availability and good prices for grain have led to New Orleans prices jumping at the start of 2021 to $320/ st f.o.b. NOLA ($350/metric tonne), up $65/t in just the first couple of weeks of the new year, to secure cargoes from around the world.
  • At the moment the prospect seems to be for higher prices in the short term, especially once Indian buyers return to the market.

METHANOL

  • Methanol prices have been rising as supply tightens. Gas curtailments have affected production in Iran and China. Other supply outages have occurred at Tomet in Russia and Equinor in Norway. This has coupled with low storage levels due to previous outages to tighten supply in all major markets.
  • Conversely, demand has appeared to be robust in spite of the second wave of coronavirus infections in Europe and North America. Demand was particularly strong in Europe, especially into the formaldehyde sector. In the US, a strong construction sector also helped lift prices for chemical derivatives.
  • Methanex posted its January 2021 US reference price at $1.45/gallon ($482/ metric tonne), a jump of $0.25/gallon ($83/t), the fifth monthly price rise in a row, and the highest posted price for Methanex since November 2018.
  • Continuing supply tightness and strong demand are expected to lead to prices continuing to rise through 1Q 2021.

Latest in Outlook & Reviews

CRU Phosphates+Potash conference focuses on sulphur

CRU’s Phosphates+Potash Expoconference was held in Paris in mid-April, with the Iran crisis uppermost in everyone’s mind. Margins are under pressure, sulphur has become a strategic constraint, and the phosphates investment pipeline is thin. CRU Principal Consultant Humphrey Knight examined the fallout from the closure of the Strait of Hormuz, noting that fertilizers have been hit harder than most bulk commodities. A large share of exportable sulphur and traded urea normally originates in, or passes through, Gulf producers. The effective closure of the strait has squeezed the traded part of these markets, where international prices are set, and pushed benchmarks up sharply. The global phosphate market is structurally tight, and the combination of Chinese export policy and Middle East logistics has pushed the traded segment into a much more fragile state.

Supply crisis worsens

It is two months on from our previous issue, and almost none of the news has been good from sulphur and downstream markets. Only three sulphur cargoes are confirmed to have transited the Strait of Hormuz since the US and Israeli strikes on Iran began, all loaded at Ruwais, with destinations in India, Tanzania and Morocco, carrying a total of 160,000 tonnes. It is believed that a couple of Iranian vessels with a total of 75,000 tonnes may also have left covertly. But in spite of some Middle Eastern sulphur making its way to Saudi Red Sea ports or Duqm on Oman’s Indian Ocean coast, around 700,000 tonnes is still trapped on ships stranded in the Gulf, and coupled with production cuts in the region, it is estimated that over 1.2 million tonnes has so far been removed from the market.