Fertilizer International 517 Nov-Dec 2023
30 November 2023
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Prices in general fell further in late October. Suppliers in most regions were forced to accept lower than expected net-backs due to low import demand and high producer inventories. India was the exception with IPL securing 1.7 million tonnes of urea at $400-404/t cfr under its 20th October tender.
Prices in the other major import markets fell back. Brazil mostly traded at $390-405/t cfr while US prices slipped and Europe was inactive. Most trading activity instead focussed on securing cargoes for India — with firm deals done from the Middle East at $386/t f.o.b., Egypt at $375-380/t f.o.b. and Indonesia at $380/t f.o.b., along with several provisional trades from the Baltic in the $320s/t f.o.b. range.
Key market drivers: Ambiguities around China’s urea exports restrictions —particularly those to India — continue to cause market uncertainty. After difficult conditions in recent months, urea trading remans sporadic due to the low appetite for price risk among both importers and traders.
Ammonia: The $50/t rise in the Tampa contract for November has kept the short term outlook relatively stable. Price ranges have been narrowing across most regions with sellers unable to achieve prices above last business.
Seasonal demand from the fertilizer sector is compensating for below average industrial demand in Asia, Europe and the Americas.
Key market drivers include: Yara and Mosaic’s Tampa monthly contract price settling at $625/t cfr for November, a $50/t increase on the previous month. This nets back to $575-580/t f.o.b. Caribbean. Pupuk Indonesia is looking to issue an early November sales tender with about 25,000 tonnes of ammonia from Bontang and 6,000 tonnes of ammonia from Lhokseumawe.
Phosphates: Market activity remained subdued at the end of October. Short-term supply availability was limited and demand was waning in major markets. The Indian cabinet has now approved a subsidy cut for October-March. Indian importers, meanwhile, bought 95,000 tonnes of Saudi DAP and 30,000 tonnes of Russian product, with prices mostly in the mid $590s/t cfr for November delivery.
European DAP offers remain firm despite limited demand in most major markets. West of Suez, MAP cargoes to Brazil held at $560/t cfr for November loading, while activity in Argentina remained sluggish. In the US, DAP and MAP barge prices were under pressure due to a late October seasonal lull.
Key market drivers: As expected, the Indian government has agreed the DAP nutrient-based subsidy at Rs22,541/t for the rabi season, down by 31 percent from the kharif season rate.
Potash: The Indian government has rubber stamped the proposal to cut MOP subsidies by 85 percent to Rs1,427/t for the rabi season, reducing import margins to around $45/t.
In the Chinese market, ex-warehouse prices rose around $7/t as demand for winter storage ramped up. More plantation potash tenders, meanwhile, emerged in southeast Asia. Sarawak Oil Palm awarded its 13,000-tonne standard MOP tender in the $300-315/t cfr range. West of Suez, buy tender offers for 100,000 tonnes of MOP were in the range $350-375/t cfr. European demand for granular MOP is healthy but less so for standard product.
Key market drivers: ICL says there are no impacts to potash supply currently, despite the worsening Israeli-Hamas conflict, with port logistics at both Eilat and Ashdod normal. The Canadian dockworkers strike that began on 22nd October, affecting the trade route between Montreal and Lake Erie, has not had much of an impact on potash movements so far.
NPKs: Prices for complex fertilizers in three key markets, China, Southeast Asia and Europe, were steady towards the end of October. Prices for 20-20-0+13S deliveries to India did, however, soften slightly to $404407/t cfr. The purchase of another 20-200+13S cargo is expected for November loading. This NPS product is expected to be sourced from Indonesia, where Petrokimia Gresik has sold 30,000 tonnes to a trading firm at $10/t lower than its previous sale.
Key market drivers: China’s NPK imports totalled 962,000 tonnes for January-September 2023, up from the 645,000 tonnes imported in the same period last year, but in line with imports during first nine months of 2021.
Sulphur: Lower Middle East prices together with lower demand from key import markets weighed on market sentiment towards the end of October. Price drops in China, Brazil and Africa mean there is no longer a delivered market where a price of $130/t cfr is achievable.
Middle East supply tenders have attracted bids in the high $90s to low $100s/t f.o.b. range. Demand from China softened as its sulphur inventory reached a two-year high of nearly three million tonnes. This caused port delays as storage capacity has now reached its limits. A trade for 60,000 tonnes from the Middle East was concluded at $120/t cfr south China.
West of Suez, there is some demand in East Africa and Brazil. A delivery of 35,000 tonnes, priced in the low $120s/t cfr Beira, was booked to Mozambique through a buy tender.
Key market drivers: Chinese domestic prices have softened and eroded due to the release of port stocks to buyers. Spot sales tenders from Middle East suppliers have attracted bids in high $90s/t to low $100s/t f.o.b.
OUTLOOK
Urea: Barring any external market shocks, the cautious buying behaviour of importers looks set to continue – a factor which is likely to limit the extent and duration of any price rally. Countering this, strong sales commitments to India and impending improvements in European and Brazilian demand should limit downside risks.
Ammonia: December prices look like heading lower as seasonal fertilizer demand wanes and buyers wind down stocks ahead of the year’s end.
Phosphates: Latent DAP demand in India and Pakistan should support prices in the short term, although buyer interest for cargoes loading in December-January is expected to subside quickly. A correction in finished phosphates prices looks likely, if raw materials prices drop in the east. The US market remains quiet for now and Brazilian importers also have time to spare before making more purchases.
Potash: No real downside to the Indian subsidy cut is expected globally with the change unlikely to affect prices much. Chinese domestic demand, meanwhile, is building for winter storage. Additionally, Brazilian Safrinha demand should arrive at some point and more plantation tenders are also emerging in Asia.
NPKs: A combination of factors should keep the market steady in the short term. These include competition for sales, a stubbornness among buyers to accept higher prices, and the willingness of some suppliers to sell lower than others. Sellers are, however, likely to push for price rises again once demand increases in some key markets, including Europe, helped by the limited availability expected in coming weeks.
Sulphur: A softer DAP trend, linked to lower operating rates in China and declining demand, is contributing to falling sulphur prices. However, west of Suez, healthy November bookings for Moroccan and Brazilian markets are expected to provide market support and limit any downside. A softening in freights assessments should also support supplier f.o.b. prices.
