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Nitrogen+Syngas 386 Nov-Dec 2023

30 November 2023

Market Outlook

Market Outlook

Historical price trends $/tonne

AMMONIA

Tampa ammonia contract prices increased dramatically during September, from $395/tonne c.fr. to $575/ tonne c.fr. The main culprit was plant outages and reduced production at several plants in the region. The tight supply situation was exacerbated by a delay to the restart of Ma’aden’s 1.1 million t/a ammonia plant in Saudi Arabia.

Tampa prices firmed further for November, up to $625/t c.fr., but this was running against the grain of prices elsewhere. The restart of Ma’aden led to lower prices in the Middle East. Dutch TTF gas prices have been much lower than for the same period last year, easing pressure on European producers.

Indian ammonia imports year to date have been about 20% higher than their value for last year, but this has been more than matched by a doubling in Chinese exports to 590,000 tonnes to end Q3.

UREA

India’s IPL has been busy in import markets, with 1.1 million tonnes secured for September, mainly from China. China appears to be adequately supplied now and able to export significant volumes in spite of customs inspection rules designed to reduce exports and force producers to preferentially serve domestic markets. In spite of a run-up in prices from around June/July, additional Chinese supply is likely to cap prices at close to Chinese domestic prices. China exported 2.8 million tonnes of urea to end Sept 2023, compared to 1.6 million t/a for the same period last year.

Indian imports are overall slightly up on last year, but uncertainty remains about how much more they will need to buy.

Sluggish demand in Europe has forced producers in Nigeria and Egypt to accept lower prices for cargoes into South America.

METHANOL

The Brent crude oil spot price increased during September to an average of $94/bbl, before falling below $90 per barrel during the first week of October. However, continuing production restrictions by OPEC+ indicate that forecast crude oil prices will rise over the coming months, and therefore likely higher methanol prices in the short term.

Methanex’s new gas supply arrangement with Trinidad will effectively remove almost 200,000 t/a of capacity from the island, though the company is close to completing its 1.8 million t/a Geismar 3 methanol plant in Louisiana, with operations expected to begin before the end of the year.

Most methanol markets saw fairly stable prices during August and September, but prices began to climb again in most major markets in October. The European Q4 contract price rolled over from Q3 at euro 360/tonne.

Latest in Outlook & Reviews

Tariff uncertainties cloud the picture

Nitrogen+Syngas went to press just a few days before Donald Trump’s swearing-in as the next president of the United States. While it is sometimes difficult to sort the truth from the hyperbole in his public pronouncements, nevertheless, if taken at face value, they would seem to indicate that we may be in for a turbulent four years in commodity markets in particular. While he is an avowed military non-interventionist, on the economic policy side he has emerged as a firm believer in the power of tariffs to alter markets in the favour of the US, and has promised 20% tariffs on all goods entering the US, potentially rising to 25% for Canada and Mexico, and 60% for his particular bugbear, China, sparking a scramble for wholesalers to stock up in the last few weeks of the Biden presidency. Trump previously raised tariffs on Chinese goods entering the US to 20% during his first term, and the Biden administration made no attempt to reverse this, and even added some additional ones, for example 20% on Russian and Moroccan phosphate imports.