Fertilizer International 502 May-June 2021
31 May 2021
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Firmer Chinese urea prices provided the market with some welcome reassurance as April ended. Asking prices moved back up towards $340/t f.o.b. for May, with reduced production, stronger domestic demand, and anticipation of a large Indian tender, all contributing to the rise. Over the same period, small North African sales in the low-$330s/t f.o.b. were followed by larger tonnages sold at $340-344/t f.o.b. for May. Around 300,000 tonnes of urea was sold from this region in mid-April.
Support will come next from India, with a delayed tender – held for May/early-June shipment – likely in early May. Reduced production in India is raising the country’s import requirements. Consequently, sources expect MMTC to seek more than one million tonnes of urea in the tender.
Key market drivers: firmer Chinese prices, the forthcoming Indian tender and market fundamentals.
Ammonia: Improving production across all key supply regions and market fundamentals suggest the end of the price rally may be in sight. Steady demand from East Asia continues to drive price gains east of Suez. But capacity brought back online by Saudi Arabian producers Sabic and Ma’aden in April should bring the region back to near normal capacity. The lack of spot availability before June is, however, keeping near term price sentiment firm.
In Ukraine, a Pivdenny cargo was loaded for South Korea in April, a result of the recent supply crunch in the Middle East. With improving supply, the movement of Trinidadian cargoes east to South Korea now looks possible, with prices providing a potential arbitrage opportunity for June-delivered cargoes.
Key market drivers: May cargo purchases by Taiwan and Saudi Arabia restarting two plants.
Phosphates: The market focus has remained on India. After months of lacklustre activity, Indian importers, in a flurry of sales in the $560-562/t cfr range, secured around 300,000 tonnes of Chinese DAP shipments in the latter part of April. Further cargoes are under discussion with the latest Indian business slightly higher at mid$560s/t cfr. Latin American activity in the late April was muted. The further softening in Brazilian MAP prices to $600-610/t cfr reflected the lack of demand.
Key market drivers: the $200/t rise in the second-quarter phosphoric acid price, rising Indian DAP stocks, further delays to the Bangladesh tender due to the lockdown.
Potash: Demand remains strong despite seasonal lulls. Producers reported tight supply with Canpotex fully committed into September. The Brazil and Southeast Asia MOP cfr prices both moved upwards in the latter part of April. This brings Southeast Asian pricing into line with the new Indian contract price, while the Brazilian price reached levels not seen since January 2019.
Key market drivers: steady China MOP prices and APC concluding a contract with India.
NPKs: Most of the large NPK producers have limited availability for May. Phosagro looks set to ship a total of 120,000 tonnes to India in May, having previously sold another panamax into the subcontinent for end-May/June loading. This latest cargo (60,000 tonnes of 10-26-26) was sold at $458/t cfr duty unpaid, the same level as its previous sale to India. Acron is also sold out for May, while OCP is still busy shipping its remaining NPS commitments to Ethiopia.
Limited near-term availability is helping to support prices, even pushing these up in certain regions. The Baltic/Black Sea f.o.b. price for 15-15-15, for example, has risen by $15/t on higher target prices and the lack of supply. But most prices are holding steady amid limited trade activity. Many market participants are taking a waitand-see approach, following various raw material price movements, making it difficult to predict the direction for NPK prices.
Key market drivers: Delhi entering lockdown and the sharp rise in the Indian phosphoric acid price.
Sulphur: The market in the latter part of April was characterised by limited spot sales and stable spot pricing. Ramadan, China’s absence from the market, and question marks over quarterly contract negotiations in the Indian market, combined to create to a subdued market.
Steep first-quarter spot market price increases have complicated second-quarter supply contract negotiations. Price disagreements have held up talks in Europe, while in North Africa the lack of clarity between contract and spot sales has also made agreement difficult. Additionally, problems over second-quarter Russian sulphur supply, linked to logistics delays, have created further uncertainty around the contracts. Currently, it is likely that no April or early May Russian exports will emerge. The late May and June export situation also remains unclear.
Key market drivers: the lack of clear direction and firming freights.
OUTLOOK
Urea: Deferred demand may see some price increases, after prices found their floor in May. Renewed pressure on f.o.b. levels still looks possible for June-July, despite strong fundamentals.
Ammonia: The market west of Suez may have plateaued. Seasonal fertilizer demand is winding down in the US and Europe, alongside a potential slowdown in industrial demand in northwest Europe.
A growing list of spot cargo offers, from Egypt to Mexico, means the Tampa contract price is not expected to post any further gains in May. Early-June ammonia cargoes are being offered at firmer levels, but the market could start to see some easing in mid-to-late June.
Phosphates: India remains the focus as demand from other destination markets – including the US, Latin America and Europe – has slowed. Collectively, India, Pakistan and Bangladesh now offer important outlets for producers. Demand from all three countries should be sufficient to keep prices stable.
Potash: Tight supply, strong demand and positive crop fundamentals in major potash-buying regions will continue to push prices up. While US prices should remain at current levels, Brazil, Southeast Asia and Africa will continue to experience MOP price increases.
NPKs: The downside for NPK prices is limited in the near-term. The sharp rise in the Indian phosphoric acid price is expected to filter through to other regions. This will raise production costs of those ‘ammophosphate’ producers that have to purchase their acid. It may also signal a near term increase in phosphate prices. MOP prices are also trending upwards, while urea prices have also started to firm again.
Sulphur: The price rally of the first-quarter has given way to stable prices at slightly below peak levels. This relative stability is expected to be maintained by the continuing tight supply situation, despite some fall off in demand since the rally. Chinese import buying is expected to support the market in May.
