Price Trends

Market Insight courtesy of Argus Media

NITROGEN

In ammonia markets, spot activity has been limited towards the end of June as the market assesses how the resumption of duties on ammonia imports into the EU will impact suppliers from non-exempt countries, and how falling domestic ammonia prices in China could change the supply/demand balance in east Asia. In the background, volatility in west Europe’s natural gas market means northwest European plants continue to face challenging decisions on producing vs importing.

Recent market drivers include an easing in European gas prices. The TTF month-ahead natural gas price has fallen from mid-June’s spike, but ammonia output rates at NW European plants may still be curtailed if import prices remain $100/t below regional production costs. There has also been a spot sale from Malaysia – Petronas has sold 3,000-4,000 tonnes of ammonia for prompt delivery to Vietnam at a reported price of $325-335/t f.o.b. The producer’s 450,000 t/a Bintulu ammonia plant remains offline as of late June owing to technical issues affecting its start-up. Indian fertilizer producer FACT has issued another tender to buy 7,500 tonnes of ammonia for delivery 11-17th August at Cochin. FACT’s 14 June tender was awarded at close to $300/t c.fr.

Finally, there are also signs that China may return to the export market. Falling domestic ammonia prices in China, on the back of new capacity coming online, and lower coal feedstock prices will reduce import demand. China’s return to the export market could be imminent.

Urea prices generally rose in the middle of June, along with ammonium nitrate prices, but ammonium sulphate and UAN markets remained weak. Traders sought to buy urea cargoes across the globe, pushing prices up in most regions, with deals for granular urea from the Baltic at $260-280/t f.o.b., from Egypt at $312-335/t f.o.b., from the Middle East at $253-280/t f.o.b., and from China at $308-310/t f.o.b. But import markets were less active and price direction remained mixed. Prilled and granular urea prices fell to between $300-315/t c.fr in southeast Asia, while Brazil trade stalled after offers moved above $290/t c.fr.

Ammonium sulphate markets remain under pressure from ample supply from plants in northwest Europe and China, and price levels fell in every region despite the firm support from urea.

Recent urea market drivers include energy worries – nervousness about the impact of rising energy prices in the northern hemisphere autumn prompted buyers to seek urea prices for August-September loading. There is also seasonal demand – the widespread policy of leaving purchases to the last minute continued to drive trading activity, and particularly supported prices in North Africa and China, in late June.