Fertilizer International 513 Mar-Apr 2023
31 March 2023
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Prices fell in most global markets in early March as suppliers chased limited demand. Although India’s purchase tender has yet to formally conclude, IPL looks set to book 1.15 million tonnes of urea at $330-334.8/t cfr, with traders mainly sourcing from Russian and Middle Eastern producers.
Prices in both the US and Brazil fell to around $320-325/t cfr following the India tender. European prices, meanwhile, stabilised on steady retail demand for spring applications, helping support Egypt and Black Sea prices at $390-403/t f.o.b. These relatively high European price levels pulled supply from outside the region, particularly from the Middle East and Nigeria.
Key market drivers: In an overall softening market, there is a premium for prompt tonnes in Europe, with importers buying smaller than usual tonnages at the last minute. While domestic European urea production has increased – tracking falling natural gas prices – price levels are again on the margins of profitability.
Ammonia: Prices slumped to 22-month lows in several regions in early March, with spot sales both east and west of Suez in the low-$500s/t cfr. Global supply continues to heavily outweigh demand due to weak downstream demand and high stock levels in key consuming countries. Middle East prices have been in freefall, dropping by more $300/t since the year’s start, and are not expected to stabilise without further production curtailments in competing regions.
Seasonal US, European and Indian demand – which usually drives sentiment at this time of year – remains uncertain. Spot demand is largely absent from the market at current prices due to high stock levels.
Key market drivers: Turnarounds at Chinese ammonia plants in March have led to some supply shortages and a rise in domestic prices. Trafigura has sold 10,000 tonnes to a buyer in Samsum, Turkey at $520/t cfr for April delivery. Trammo has also sold 2-3 cargoes to Turkish buyers in recent weeks at reported prices in the low $500s/t cfr. A trader has reported a sale of 5,000-7,000 tonnes into Taiwan at around $550/t.
Phosphates: Prices have dropped both east and west of Suez amid weak demand. Chinese DAP prices have fallen to $610615/t f.o.b., with some buyers pushing for lower levels. There was no fresh Indian business in early March, although RCF is due to close a DAP buy tender mid-month. West of Suez, US supplier Mosaic sold 6,000 tonnes of DAP at $635/t f.o.b., down from offers of $650/t earlier in March. In Brazil, MAP (11-52) fell to $645650/t cfr with demand still soft.
Key market drivers: Indian DAP inventories rose further in February, increasing by 311,000 tonnes. This follows a rise of 444,000 tonnes in January and takes levels at the start of March to as high as 2.8 million tonnes. The March import line-up of around 670,000 tonnes will add further to stocks. Although Chinese export policy remains unclear, with the domestic season concluded, most observers expect restrictions to be eased, allowing further export rises in April-May.
Potash: The Indian contract price was a dominant topic at the Argus Asia conference in Dubai, 7-9 March. There was market disappointment – particularly among suppliers – that a contract has yet to be agreed. Expectations for the next contract price have dipped in recent weeks: market participants now expect a settlement around $420-450/t cfr including 180 days’ credit. Reports suggest, however, that India is now after a price, including credit, of around $400/t cfr. Sentiment remains generally bearish with buyers awaiting news of the settlement and more clarity on pricing before returning to the market.
Key market drivers: Pupuk Indonesia, having postponed its auction round in early March, is expected to resume its tender to buy as much as 250,000 tonnes of standard MOP in the second half of March. MOP inventory levels at Chinese ports fell further in early March to 2.07 million tonnes, having dropped by 230,000 tonnes in a fortnight.
NPKs: Bearish sentiment persisted in early March, as key market participants gathered in Dubai for the Argus Asia conference, 7-9 March. Buyers have remained on the periphery, being unwilling to buy complex fertilizers in large quantities while prices for other products continue to fall. Despite the general market softness, NPK and NPS prices have remained largely stable, although falls are expected when fresh business eventually emerges.
Key market drivers: Fertilizer importer RCF has issued a tender closing on 14th March to purchase 50,000 tonnes each of 20-20-0+13S and 10-26-26 for delivery to India’s east coast. The minimum offer quantity is 25,000 tonnes. Major MOP supply contracts – which should provide the potash market with some stability – have yet to be settled. The global phosphates market grew softer in early March with weak demand heaping downwards pressure on prices.
Sulphur: New sales to Indonesia priced at $160s/t cfr emerged at the Argus Asia conference in Dubai, 7-9 March. A spot sales tender issued to the market by major supplier Adnoc is expected to provide market direction ahead of second-quarter contract negotiations. A sale to Indian fertilizer producer PPL in the low-$160s/t cfr is scheduled for March-April delivery to India’s east coast. Chinese buyers remained largely sceptical about top end offers in early March and consequently kept on the sidelines.
Key market drivers: Several spot cargoes sold to the Indonesian market in early March in the $163-167/t cfr range. Chinese buyers, in contrast, were not prepared to countenance Indonesian price levels, having sufficient stocks to wait and see before booking further spot tonnes. West of Suez, buying at current price offers lacks immediacy, given that demand from fertilizer production remains relatively low during a period of sluggish sales.
OUTLOOK
Urea: During the recent Argus Asia conference in Dubai, sentiment was generally bearish on the nitrogen price outlook for the second half of the year – largely because of the structural oversupply in the urea market. A downwards price correction to rebalance the market, by forcing some production curtailments, now seems likely given the combination of high availability and muted demand.
Ammonia: Fundamentals suggests some further price deterioration is possible, as buyers wait out of the market until solid signs of price stability emerge.
Phosphates: Prices are likely to continue their slide, despite the pick-up in Brazilian imports expected in the next month or so. Indian buyers are also comfortable and will force prices lower. Price levels will drop particularly sharply if Chinese exports pick up.
Potash: The absence of a new Indian contract price, by suppressing demand, will act to push down prices. More market activity will result once the new price is agreed, which should help provide some price stability.
NPKs: Suppliers and buyers of complex fertilizers need other markets to find steadiness before expecting NPK prices to stabilise. Until then, further price decreases and buyer hesitation look set to continue.
Sulphur: The latest round of spot business at $163-167/t cfr Indonesia on several shipments from the Middle East have supported sulphur pricing. However, with Indonesia thoroughly covered, some downward price pressure is now expected, with weakish downstream sales for fertilizer producers affecting raw material demand.
