Fertilizer International 505 Nov-Dec 2021
30 November 2021
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Several traders have struggled to export urea from China. This means the market is currently unable to count on Chinese exports to help meet the supply deficit. The fact that little urea will flow from Chinese ports, at least in the short-term, provided further price support to the broader urea market from mid-October onwards. While trading remained relatively thin, urea prices did notably rise in both Egypt ($845/t f.o.b) and Oman ($760/t f.o.b.).
Key market drivers: China export restrictions – with at least three export cargoes facing difficulties; demand destruction – no region is proving immune to the imbalance between fertilizer prices and grain prices; Europe natural gas prices – prices in Europe remain at elevated levels, although fertilizer prices have caught up enough to incentivise EU output in the short-term.
Ammonia: The latest round of import demand from Europe translated into steep price increases across several markets at the end of October. Supply remains reduced from the Black Sea, north Africa and Trinidad. A Middle East spot cargo sold into the European market at the end October lifted regional f.o.b. prices $65/t higher.
Most European production remains offline or operating at reduced rates. Feedstock costs did show signs of easing towards the end of October, with TTF month-ahead gas prices dropping to just below $25/mn Btu. This translates to an ammonia production cost of around $915/t, only $10/t above the last deal into the region.
In the east the steep rise in Middle East f.o.b. pricing is expected to push the market higher in the weeks ahead.
Key market drivers: Fertiglobe selling a 15,000 tonne spot cargo to Poland’s Grupa Azoty at $905/t cfr for November delivery; Sabic selling a 14,000 tonne spot cargo to Yara at $715/t f.o.b. for November loading; the $160/t spike in the Tampa contract price when Yara settled with Mosaic at $825/t cfr for November shipment – this price being the second highest settlement on record.
Phosphates: Brazil was the main focus of activity towards the end of October. Importers purchased over 100,000 tonnes of Russian MAP at $800/t cfr and above. Argus assessed Brazilian MAP at $750760/t cfr in mid-October, rising to $780800/t cfr the week after.
Market liquidity was thin elsewhere. US barge prices slipped amid a lack of trade. There was no new business in India in late October either. Market participants there continue to wait for the final fourth-quarter phosphoric acid settlements with OCP. DAP offers for both India and neighbouring Pakistan were reported at $750/t cfr – although no trade was confirmed at these levels.
Key market drivers: Emerging Chinese phosphate export restrictions after authorities began customs inspections in late October – it is increasingly apparent that fresh shipments will be subject to delays of up to 20 days; Indian import deadline – importers there still need significant DAP imports for the current season, with the government urging importers to line up over 1.3 million tonnes for November to meet domestic shortfalls; Australian import ramp-up – several Chinese cargoes are scheduled to load following the reported purchase of a Moroccan MAP shipment.
Potash: Prices in major buying regions were steady at the end of October. Most demand was centred around south and southeast Asia. The drop in some freight rates has lifted netbacks for some producers. While supply for MOP is globally tight, high prices might be cooling demand in some regions.
Key market drivers: A yet-to-be-awarded Bangladesh private sector tender for up to 90,000 tonnes of MOP – suppliers have offered 15 lots totalling 325,000 tonnes of Russian, Belarusian and Canadian MOP in the $619-711/t cfr range; Canpotex being fully committed until 2022 – other MOP suppliers have also said they are unlikely to have much unallocated volume in the fourth-quarter.
NPKs: The closing date for Africa’s largest NPK tender (1.2 million tonnes) from Ethiopia’s EABC – which was already delayed by two months – was further extended to the 29th October. Africa’s tender season is now at its peak with another two fertilizer tenders in Ghana and Mali closing at the end of October. Four other West African NPK tenders – covering over 360,000 tonnes of demand – have yet to be awarded. Many of these tenders are expected to conclude at reduced volumes due to the significantly higher price offers submitted.
Key market drivers: Increased demand for high-nitrogen NPKs due to the nitrogen price surge – with some European buyers seeking NPKs with high-nitrogen content as a cheaper alternative to buying straight nitrogen products; the absence of Chinese NPK exports from the market – no NP/NPK exports have been shipped out of China since restrictions came into effect on 15th October, with several already sold NPK cargoes stuck in Chinese ports.
Sulphur: Recent cfr sales have been concluded to India (upper $270s/t cfr), Indonesia and South Africa ($290/t cfr). The Middle East spot price, meanwhile, has been lifted to $223-230/t f.o.b. Spot sales at the high end of this range have recently been concluded to southeast Asia, India and Africa. Other markets such as China, North Africa and Brazil have lagged. China is weighing up the impact of the recent fertilizer export controls, while other markets with product booked under contract can afford to wait.
In the west, f.o.b. numbers have also stagnated, with the FSU having little spot product on offer. The Baltic is mostly committed under contract, while the Black Sea, because of competition from other bulk commodities, is experiencing significant delays due to a lack of barges and seagoing vessels.
Key market drivers: Indian prices firming on the back of one new spot sale and Middle East f.o.b. prices firming on the back of new sales there.
OUTLOOK
Urea: The price outlook is firm. High gas prices will squeeze marginal nitrogen supply in Europe and Ukraine leading to urea and nitrate production cuts. This will increase Europe’s call on African urea supplies. India is also in a difficult position and will need to make further tenders. Its domestic urea production has lagged 2020 levels all year, despite the start-up of the new Ramagundam plant. On paper, the country needs five million tonnes of urea in the fourth-quarter of 2021 – yet only 740,000 tonnes was bought under the last RCF tender.
Ammonia: Firmer pricing is expected for November and December with a large proportion of European ammonia production expected to remain offline.
Phosphates: Current DAP price levels in India and Pakistan are unlikely to remain achievable and look set to jump on new business. MAP prices in Brazil are also likely to rise further, with Russian MAP trading higher at $815/t cfr for forward shipments up to January.
Potash: The price momentum seen in Asian markets will continue, with new tenders settled at higher prices. Markets are, however, reporting discomfort over the higher MOP prices. In Europe, some farmers are being forced to choose N at the expense of P and K fertilizers. While markets that are unable to afford higher prices will flatten off, crop prices in southeast Asia will support the region’s upcoming MOP tender season.
NPKs: Demand is likely to outweigh supply in the near-term. More seasonal demand will emerge in Europe and southeast Asia, while enquiries from India and Brazil are expected to continue. Raw material price trends also remain firm.
Sulphur: While DAP pricing keeps firming, so will sulphur. Although there is uncertainty over the effects of Chinese fertilizer export restrictions on domestic sulphur consumption, demand from other markets is supporting pricing. Markets in the west are expected to catch up in the next round of business, as December demand emerges from less frequently seen spot market buyers.
