Fertilizer International 504 Sept-Oct 2021
30 September 2021
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Prices generally fell in mid-August, moving downwards on thin demand, high freight rates and an overall lack of market fervour. In China, some short selling of prills for September loading occurred at below $430/t f.o.b. Trade from Algeria, though, held up at around $449/t f.o.b., similar to previous business. Brazil also bucked the general trend, with prices there rising on steady demand to reach $480/t cfr in mid-August.
Key market drivers: High freight rates, with ocean shipping costs escalating again, are likely to continue challenging f.o.b. prices. Indian tenders – or the lack thereof – remain a key pillar of support, while natural gas price in Europe reached almost $16/mn Btu in mid-August, up by five percent on the previous week.
Ammonia: East Asian delivered prices fell for the first time since December 2020, falling $10/t on the week as global supply steadily improved. Nevertheless, only a few spot cargoes are being agreed at fixed prices currently. Counterparties are favouring formula-priced agreements instead, until the production outlook has firmed up, particularly from Saudi Arabia. Although Ma’aden’s MPC plant remains offline, there are signs it could restart in the last week of August, with a vessel nominated to load from Ras al Khair on 24-28 August. An Indonesian spot sale confirmed for Luwuk-loading indicates improving availability from southeast Asia.
Key market drivers: Improving Indonesian supply, Ma’aden’s MPC plant remaining offline and high feedstock costs.
Phosphates: The focus has remained on south Asian DAP markets, with further DAP cargoes lined up by both Pakistan and India driving up cfr prices. One trader sold 60,000 tonnes of Russian DAP to an Indian buyer at $648/t cfr – the first Russian cargo to head to India since late last year. In Pakistan, a major importer purchased a vessel of DAP and MAP, with the DAP priced at around $660/t cfr. A second DAP sale to Pakistan from China was reported at $667-668/t cfr.
MAP prices, meanwhile, have continued to soften in the absence of demand. Brazilian MAP fell to $720-730/t cfr and MAP prices in Argentina dropped to $730-740/t cfr.
Key market drivers: Indian DAP stocks falling as a result of low imports, Pakistan still needing DAP for the rabi season, and producers changing destination markets.
Potash: Although MOP continues to be in short supply in most regions, the seasonal drop in demand has relieved some shortterm price pressure. Freight rates are still climbing, partially offsetting MOP f.o.b. price increases. The market remains unsure of the impact of sanctions against Belarus. These have nevertheless caused some buyers, mainly from the US and Europe, to hesitate before ordering from BPC.
Key market drivers: BHP approving the Jansen potash project and China’s review of 2022 commodity export tariffs. These have been at zero for several years but could potentially curb SOP exports if reinstated.
Sulphur: The rapid rise in Chinese domestic prices in mid-August was a key development, as was the accompanying bids for import tonnes. Domestic prices reached Yn1,9501,970/t ex-works by 19 August, equivalent to around $245-250/t cfr. Bids for imported tonnes reached $230/t cfr. Some tonnes traded in the low-mid/$220s/t cfr mid-August before offers firmed to a minimum of $240/t cfr. Chinese buyers are now willing to pay as much as $20-30/t above cfr levels in other markets.
This firming has been reflected by the bidding levels in the Qatari sales tender, with an award for 35,000 tonnes believed to have been made at just above $180/t f.o.b. for September loading.
Key market drivers: Firming price expectations and the Muntajat tender award.
OUTLOOK
Urea: Greater clarity on f.o.b. prices, following India’s next tender, should lead to a fresh wave of buying interest from other regions. Despite the recent Indian tender absorbing 1.2 million tonnes of urea, a further 700,000 tonnes is due to ship from China. This confirms that Chinese urea will continue to provide export market liquidity, despite concerns that intervention by Beijing could limit export availability in the second half of 2021.
Ammonia: With most key demand hubs now sufficiently covered in September, the improving supply situation may add to downward pricing pressures in October. Despite this, seasonal demand and high feedstock costs in the west are likely to limit any potential price deterioration.
Phosphates: Import demand in India and Pakistan will support DAP prices in coming weeks. The Indian DAP maximum retail price (MRP) is expected to rise, given that domestic prices and subsidy rates have been unable to offset rising cfr prices. Both India and Pakistan will need to secure further DAP shipments to avoid shortages during the upcoming rabi season. At the same time, a seasonal lull is set to pressure MAP prices in Brazil and Argentina.
Potash: While price increases have slowed in Brazil and the US, there is still potential for higher prices if supply remains tight. Europe, Africa and southeast Asia prices are still some way behind the US and Brazil. This is likely to limit supply to those regions – if producers can move volumes to regions where netbacks are higher – fuelling expectations of steeper price rises.
Sulphur: With Chinese port congestion beginning to ease by the end of August, pricing is expected to peak in September. The run down in stock levels to below 1.6 million tonnes, and the low levels of domestic product on offer, has triggered an early buying round in preparation for China’s domestic season.
An uplift in prices is expected at the beginning of the fourth-quarter, as fertilizer producers move to replenish stocks. Prices will then most likely soften again, once stock levels increase and Chinese buyers return to hand-to-mouth buying. n
