Fertilizer International 516 Sept-Oct 2023
30 September 2023
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: While prices mostly fell in mid-August, the main development was the massive purchase of Chinese urea by Indian Potash Limited. IPL confirmed that, out of a total tender settlement of 1.759 million tonnes, one million tonnes will be met by Chinese exporters. This far exceeded expectations and added to the already bearish sentiment of most market players.
Market activity, otherwise, was generally slow, as many importers and traders awaited the settlement of the Indian urea tender before committing to new deals. Low demand prompted urea price falls in most markets – by $15/t in the US, $30/t in Brazil, $20/t in Europe and $20/t in southeast Asia.
Key market drivers: Chinese urea exports, by committing around one million tonnes to India’s urea tender, surpassed expectations by around 80 percent. With production margins currently high in most regions, the market is expected to soften if Chinese exports continue at this pace. Market fundamentals remain weak – with neither grain nor energy markets providing much support in the short-term.
Ammonia: A rise in buying inquiries is supporting slightly firmer prices. Producers, meanwhile, are said to be sold out across most key supply regions. Trade has stalled due to limited spot f.o.b. availability with only one sale confirmed from Bangladesh to India during mid-August. Indian buyers are looking for prompt cargoes, yet most Middle East producers have nothing to offer. Although the supply outlook could improve in coming weeks, suppliers are in no rush to sell until a clearer picture of September demand emerges.
Key market drivers: Supply remains limited following the raft of production outages seen in recent months. European plants are weighing up production rates for the months ahead, with weak ammonia demand and high production costs creating a difficult decision for the region’s producers.
Phosphates: Indian and Pakistan importers returned to the DAP market in mid-August, bolstering their line-ups ahead of the winter Rabi season. India purchased 150,000 tonnes of DAP in the low/mid $550s/t cfr, all sourced from Morocco via traders, up from $540/t cfr in early August. RCF also purchased a MAP 10-50 cargo and phosphate rock under its 10th August tender. Prices into Pakistan ranged between $565-580/t cfr, with at least two Moroccan cargoes and an Australian vessel concluded. Chinese DAP producers have raised offers, lifting mid-August’s range to $550-560/t f.o.b. Saudi Arabia’s Ma’aden concluded 40,000 tonnes of DAP for the US in the low $600s/t cfr for August.
West of Suez, MAP prices firmed to $530/t cfr Brazil. The US remains the premium destination market globally, with DAP barges at $530-545/st f.o.b. Nola. MAP barges also remain elevated at $635/st f.o.b. Mosaic, meanwhile, is offering Tampa DAP at $550/t f.o.b.
Key market drivers: The Ethiopian Agricultural Businesses Corporation (EABC) is seeking just under 1.36 million tonnes of NPS/NPSB in its annual fertilizer tender which closes on 22nd August. OCP will probably secure the full volume, as it has done in each of the four previous years.
Potash: Overall market sentiment is firm, largely due to tight granular MOP supply. In the US, granular MOP prices (f.o.b. Nola) rose amid strong demand for product through to October. Although Brazilian granular MOP prices also rose again in mid-August, demand has slowed compared with previous weeks as soybean requirements have largely been fulfilled. In Europe, granular MOP prices increased slightly with buyers looking to secure volumes amid concerns over shortages and price rises. In southeast Asia, standard MOP prices have started to creep upwards.
Key market drivers: Australian Potash has pulled out of the Lake Wells SOP project, having failed to find an investor, adding to the country’s recent string of failed SOP projects. In Indonesia, BPC has been awarded three cargoes – around 75,000 tonnes – at $306/t cfr under Pupuk’s standard MOP buying tender.
NPKs: The market has remained generally firm. Some NPK prices moved upwards in mid-August, thanks to ongoing downtime in some regions, while others remained flat. In major news from the Horn of Africa, the Ethiopian Agricultural Businesses Corporation (EABC) is seeking just under 1.36 million tonnes of NPS/NPSB in its annual fertilizer tender, as well as 980,000 tonnes of urea. OCP will probably secure the full volume, as it has done in each of the four previous years.
In India, NPK tenders have yet to garner offers, despite market firming and expectations of higher prices to come. Although one trading firm has offered RCF Indonesian 20-20-0+13S, the price has yet to be revealed.
Key market drivers: Russian exports of nitrogen-containing complex fertilizers rose by 96,000 tonnes year-on-year to total 440,000 tonnes in July. Exports were mainly boosted by shipments to India although deliveries to EU states also climbed significantly. Globally, phosphate market prices continued to rise in mid-August, across products and locations.
Sulphur: Demand and prices have risen in recent weeks, with a combination of phosphate fertilizer prices and demand lifting producer operating rates. Demand has been led by China’s building of stock levels to 2.45 million tonnes. This stock level is nudging the record three million tonnes reached last year, even with increasing domestic production contributing to inventory.
Much of August demand is committed, with tonnes lifting during the month similarly sold, while the September price level is not yet clear. This has led to a lack of spot offers from Middle East offtakers.
Key market drivers: Two factors are at play. Firstly, offers above previously concluded business in the $120s-130s/t cfr range. Secondly, a lack of liquidity while the market remains in wait-and-see mode for the Middle East spot tender for September lifting.
OUTLOOK
Urea: The market is trending back towards surplus as normal supply from Nigeria and southeast Asia resumes and exports from
China build. Demand is looking unexceptional, with both traders and importers appearing generally bearish.
Ammonia: While there is some short-term firming of sentiment, the market remains in a very cautious state. Neither buy- or sell-side players want to instigate a price spike which could cause further demand destruction.
Phosphates: Prices for cargoes loading in September and October are firm. India, Pakistan and Bangladesh all still need to add to their import line-ups for October-November arrival. Importers, by paying up now, are starting to ease some of this pressure.
Potash: Suppliers are comfortable going into the fourth quarter and granular prices will continue to be supported by healthy demand from the US and Brazil.
NPKs: Firmness in raw materials markets and increasing demand for complex fertilizers are set to keep NPK prices on a rising trend. NP and NPK prices could, however, eventually come under pressure as urea enters its weak demand period, this placing downward pressure on nitrogen prices in general.
Sulphur: Prices are expected to continue to firm while support from rising demand and prices in the phosphate fertilizer markets is sustained. Nonetheless, sulphur prices are expected to soften eventually due to growing sulphur stock levels in China and the end of the fertilizer production season in the northern hemisphere, with good availability likely to erode prices once again.
