Price trends

Market Insight courtesy of Argus Media

NITROGEN

East Asian delivered ammonia prices fell for the first time since December 2020, falling $10/t on the week, in line with steadily improving global supply. But few spot cargoes are being agreed on a fixed-price basis with counterparties leaning towards formula-priced agreements until the production outlook has firmed up, particularly from Saudi Arabia. Ma’aden’s MPC plant remains offline but there are suggestions it could start in the last week of August, with a vessel nominated to load from Ras al Khair on 24-28 August. An Indonesian spot sale is confirmed for Luwuk-loading, indicating improving availability from the region. Ma’aden redirected the Egyptian tonnes it bought in early-July at $690/t c.fr to China in mid-August. The cargo had been waiting at RAK as floating storage for around 25 days. It is yet to be seen whether or not this change in sentiment in the east will be replicated in the west, with high feedstock costs in Europe likely to steer sentiment into 4Q.

Recent market developments include improving Indonesian supply, Ma’aden’s MPC plant still offline and feedstock costs. Most key demand hubs have covered themselves in September and improving supply may add downward pressure to October pricing. But seasonal demand and high feedstock costs in the west are likely to limit any potential price deterioration.

Urea prices generally fell around mid-August, with demand thin, freight high and the market generally lacking fervour. In China, some short-selling of prills for September loading occurred at prices below $430/t f.o.b. Trade from Algeria, though, was similar to last business at around $449/t f.o.b. Brazil also bucked the trend, with prices rising on steady demand and reaching $480/t c.fr in mid August.

Delay to India’s much-anticipated purchase tender and the sense of a fragile market encouraged producers from Egypt to the Middle East to remain largely on the sidelines. Recent market drivers include freight – ocean shipping costs escalated again in mid-August and are likely to continue challenging f.o.b. prices. Indian tenders – or lack thereof – remain a key pillar of support, while natural gas price in Europe reached almost $16/million Btu in mid-August, up another 5% from the previous week.

Clarity on f.o.b. prices will likely follow India’s next tender, leading to a fresh wave of buying interest from other regions. Although the recent Indian tender absorbed 1.2 million t of urea, over 700,000 tonnes is due to ship from China, indicating that Chinese urea will continue to provide export market liquidity, despite concerns that Beijing’s interventions to restrain cargos would limit availability in the second half of 2021.