Fertilizer International 515 Jul-Aug 2023
31 July 2023
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: There was a general price upswing for both urea and ammonium nitrate in mid-June, while ammonium sulphate and urea ammonium nitrate (UAN) prices remained weak. Urea prices were pushed up in most regions as traders sought to secure cargoes across the globe – resulting in granular urea deals from the Baltic ($260-280/t f.o.b.), Egypt ($312-335/t f.o.b.), Middle East ($253-280/t f.o.b.) and China ($308-310/t f.o.b.). Import markets, in contrast, were less active and price direction was correspondingly mixed. Prilled and granular urea prices fell to $300-315/t cfr southeast Asia, for example, while Brazil trade stalled when offers moved above $290/t cfr.
Key market drivers: Nervousness about the impact of rising northern hemisphere energy prices in the autumn prompted buyers in several countries to seek urea prices for August-September loading. Seasonal demand, in the form of widespread last minute purchases, continued to drive trading activity in late June and helped support prices, particularly in North Africa and China.
Ammonia: Spot activity was limited in late June due to two factors. Firstly, participants were assessing how the resumption of EU ammonia imports duties would hit supplies from affected countries. Secondly, the impact of falling domestic ammonia prices in China on the east Asian supply/demand balance was also being watched. In the background, NW Europe’s ammonia producers faced tough decisions on the economics of producing vs importing due to continuing European natural gas market volatility.
Key market drivers: Although European gas prices eased in late June – with TTF month-ahead prices falling from their mid-June spike – the ammonia output of NW European plants may still be curtailed if import prices remain $100/t below regional production costs. In a spot sale from Malaysia, Petronas is reported to have sold 3,000-4,000 tonnes of ammonia at $325-335/t f.o.b. for prompt delivery to Vietnam. Indian fertilizer producer Fact has also issued a tender to buy 7,500 tonnes of ammonia for 11-17th August delivery at Cochin.
Phosphates: There was a burst of sales in major markets west of Suez as June ended. This saw DAP firming at Nola and MAP spot sales emerging in Brazil. In the US, DAP barges climbed to $435-455/st f.o.b. Nola, up from $435-440/st f.o.b. in mid-June. In Brazil, Russian MAP was trading at $430/t cfr for both end-June and July loading, down from $430-440/t cfr in mid-June. East of Suez, DAP cfr India slipped to $453-455/t cfr, down from $469-470/t cfr. China DAP f.o.b. prices were stable on a lack of sales and limited offers.
Key market drivers: China’s May DAP exports more than tripled year-on-year to 516,200 tonnes, driven by higher shipments to India and Thailand.
Potash: ICL has become the second producer to sign an MOP contract with China at $307/t cfr. This follows Canpotex’s settlement with India at the same price earlier in June. Under the contract, ICL will supply 800,000 tonnes of standard-grade MOP to its Chinese customers in 2023 with the option to supply an additional 350,000 tonnes this year. In the west, Brazil is preparing for the upcoming safra season, with the purchase of around 250,000 tonnes of granular MOP at $330-340/t cfr for June-August shipment. Low trading activity elsewhere has pushed down MOP prices in Europe and southeast Asia.
Key market drivers: Indian imports ground to a halt in late June. Importer Fact cancelled a 30,000 tonne MOP order as it awaited the outcome of the new contract settlement. A corn and soybean price rally is supporting MOP demand for the US summer fill programme. US corn and soybean futures have risen by 18 percent in the past month. This rally has been driven by risks to the US harvest from a lack of rain and crop conditions.
NPKs: The market has continued to soften, most noticeably in Asia, with suppliers accepting the lower price levels necessary to generate sales. Prices of key NPK grades dropped further in China and also edged down in Southeast Asia. India was, once again, the main theatre for large-scale business. Importer RCF bought 35,000 tonnes of 15-15-15 from a trader at $343.50/t cfr (duty unpaid). Although European NPK trade has been picking up, this has mainly been in truckloads with buyers limiting themselves to hand-to-mouth volumes on the expectation of further price decreases.
Key market drivers: Indian fertilizer importer and producer Fact has downsized its 35,000-45,000 tonne tender request for 15-15-15 to a fixed 35,000 tonne volume and postponed the tender’s closing date to 27th June. Overall, India is continuing to restock NPs and NPKs with significant yearon-year import and production increases in May. EU import duties on ammonia and urea again came into effect on 17th June after a six-month suspension.
Sulphur: Prices softened further in key trading regions in late June amid low demand and ongoing contract negotiations. Bids in a range of $62-68/t f.o.b., for example, were reported for the most recent Qatar 35,000 tonne spot sales tender for July lifting. Initial Middle East contract negotiations with traders for supply from the UAE in the third-quarter are said to have been concluded at $65/t f.o.b., a drop of $52/t on the high end in the second-quarter.
Key market drivers: Lower bids in the low-to-mid $60s/t f.o.b. in the Middle East against the latest sulphur spot tender. In China, offers fell below $85/t cfr to south China and below $90/t cfr river. First contracts with traders for third quarter sulphur supply from the UAE emerging at $65/t fob.
OUTLOOK
Urea: Although farm-level demand is set to fall to its weakest point annually over the next few weeks, bouts of short-covering and the risk of rising energy prices could reverse this trend. On the supply side, several production plants are due to return from planned shutdowns and unplanned outages.
Ammonia: Supply in southeast Asia looks tight for the coming weeks. Further declines in Chinese domestic prices could, however, alter the region’s supply/ demand balance in August. While prices in Europe look stable currently, further gas price spikes pose a potential upside risk.
Phosphates: Improving crop affordability ratios are stoking demand in the US and Brazil. The Nola benchmark is set to maintain its premium due to lower inventory levels. The discount on MAP cfr Brazil, relative to major markets in the east, should reduce as the import season takes off. Brazil’s imports remain at record levels and warehouses are well-stocked. Looking ahead, there is an expectation that the India DAP cfr price will slip below the Brazil MAP cfr level, given Indian inventory levels and DAP imports above four million tonnes so far.
Potash: More demand for the safra season should emerge in Brazil in the coming weeks, helping to stabilise prices. Elsewhere, market players are still searching for a price floor in some regions, although some price stability is emerging in southeast Asia.
NPKs: Prices are set to slide further, as suppliers try to convince buyers to take significant volumes instead of purchasing smaller lots back-to-back.
Sulphur: Spot market price expectations have eroded further, with initial third-quarter supply contracts at lower levels and increasing oversupply globally. DAP and MAP producers are also failing to lend market support, as these major fertilizer market buyers of sulphur are producing at low operating rates. This is leaving sulphur tonnes available, particularly west of Suez.
