Fertilizer International 514 May-Jun 2023
31 May 2023
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Scarcity continued to drive urea prices higher in some markets at the end of April. The US market remains short on urea and prices spiked to reflect this. Nola barges for April were trading as high as $450/st f.o.b. ($490/t cfr), 55 percent up on this year’s low point. Southeast Asia remains short on urea too, amid planned and unplanned turnarounds, with one cargo trading at around $345/t f.o.b.
Key market drivers: Although the price rally in the US continues, global markets are likely to cool when demand slows in May. The slow pick-up in spot export trade in China should put a ceiling on urea prices.
Ammonia: Prices dropped once again across several regions towards the end of April. The $55/t drop in the latest monthly Tampa contract price was indicative of an ammonia market that continues to work towards its floor. Yara agreed the Tampa ammonia price with Mosaic at $380/t cfr for May, representing a Caribbean netback of around $330-335/t f.o.b. Firmer demand from northwest Europe, meanwhile, could potentially create some stability.
Key market drivers: Fresh sales are firming northwest European demand, with an unconfirmed sale into France reported above $400/t cfr. There are curtailments in Trinidad with at least one plant being forced offline because of gas supply issues. A plant taken offline by Algerian producer Sorfert for maintenance in late April is not expected to come back online until mid-May. Ammonia storage tanks at Zhanjiang, China, are at full capacity, delaying cargoes and dampening buying interest.
Phosphates: Prices fell in major markets east and west of Suez. DAP levels in India slipped to $540-548/t cfr, with the reported sale of 30,000 tonnes of Russian DAP at the high end of this range. Two end-of-April DAP sales from a major Chinese producer for May loading were in the high $540s/t cfr and around $550/t cfr, respectively.
Elsewhere, market activity was more muted. European DAP levels slipped to $650-690/t fca Benelux. West of Suez, MAP softened to $565-580/t cfr Brazil. MAP/DAP Argentina, meanwhile, fell to $595-600/t cfr, with more trader activity emerging. In the US, MAP barge prices crumbled to $499/st f.o.b. Nola for May, down from $600/st f.o.b. in a week, while DAP also softened slightly to $646/st f.o.b. Nola.
Key market drivers: Coromandel has settled second-quarter phosphoric acid prices with Nutrien at $970/t P2 O5 cfr India, down from $1,050/t P2 O5 cfr in the first-quarter. The Tampa ammonia contract price was announced at $380/t cfr for May, a $55/t fall from April.
Potash: The global potash market remains slow. Granular MOP prices have continued to drift lower in Brazil, Europe and Southeast Asia, with buyers hesitant to commit to large volumes in anticipation of further price falls.
In the US, trade in the domestic market is continuing but has slowed. Prices there have also stabilised after ticking up in recent weeks. SOP prices in Europe and Asia, meanwhile, have dropped further amid weak demand and softening MOP prices. This sluggishness is likely to remain until mid-May.
Key market drivers: SQM restarted MOP production at the end of April, earlier than planned. In China, suppliers have been re-exporting standard MOP from bonded warehouses to southeast Asia due to weak domestic demand. This also confirms that China has ample supplies and is therefore unlikely to be in a hurry to sign a new MOP contract.
NPKs: Demand has remained limited across the globe and, consequently, NPK prices have continued their soft trend, led by Asian markets. A fresh sale of Russian NPK (10-26-26) to India, for example, saw a minor fall in NPK cfr prices there. In Southeast Asia, meanwhile, NPK cfr prices for 15-15-15 and 16-16-16 grades also nudged downwards.
The Kenya Tea Development Agency (KTDA) issued a tender for the supply of 12,000 tonnes of compound NPK (26-55) from local sources. This is separate to KTDA’s outstanding request for 92,000 tonnes of the same grade. Elsewhere, market activity has been severely limited, as buyers remain cautious of purchasing larger quantities while prices look set to fall further.
Key market drivers: Ammonia prices continue to drop. The Tampa contract price dropped to $435/t cfr for April, a $155/t fall from the March settlement and its lowest price since February 2021. The price then fell again by another $55/t in May to $380/t.
Sulphur: Prices softened again at the end of April. Middle East sulphur tonnes were down on previous sales, concluding in the low-$100s/t cfr for May loading. Sulphur offers dropped to the low-to-mid $110s/t cfr India and China. Buyer bids dropped even lower, from the range $100-110/t cfr China to less than $100/t cfr.
Key market drivers: The low-priced sulphur sale to Indian fertilizer producer Coromandel (below $110/t cfr India) for May shipment from the Middle East.
OUTLOOK
Urea: The effects of increased supply from China, and the anticipated return of urea plants from turnaround in southeast and central Asia, are likely to be amplified by slow import demand in the northern hemisphere.
Ammonia: While further downward price corrections are possible, stabilising demand suggests the market floor is in sight. A series of outages and plant maintenance stoppages in the Americas and north Africa should also improve the market balance in May and June.
Phosphates: Prices will continue to drop, becoming pressured east of Suez as Indian importers continue to build DAP inventories. While affordability in Brazil is solid, buyers are still remaining on the sidelines. US barge prices are also set to move lower as spring demand subsides.
Potash: Prices are likely to erode further in coming weeks as sluggish market activity persists. More potash demand is nevertheless expected to emerge in Brazil and the US later in the second-quarter. In Europe, K+S is expected to publish its new season MOP prices in May. These are expected to be significantly down on current levels and, if accepted by the market, could prompt a pick-up in potash sales.
NPKs: Almost all key indicators point to a further softening of the NPK market in coming weeks. A demand surge strong enough to prevent this is unlikely to emerge in the short term. NPK buyers across the globe are awaiting price guidance before committing to purchases. This could be partly provided by the long-awaited contract settlements for standard MOP.
Sulphur: The sulphur market is quiet with downstream demand from the fertilizer industry remaining low. Low pricing is now making sulphur supply unworkable from inland locations with high freight costs, such as Turkmenistan and Russia. This is expected to lead to a reduction in sulphur export volumes from the FSU region. Lower price levels are, however, expected to spark some buying interest for late-May/early June loading, with sulphur buyers awaiting an optimal moment to buy tonnes.
