Market Insight

Market Insight

PRICE TRENDS

Urea: December began on a positive note with a flurry of Egyptian urea sales and firmer prices for delivery to Brazil. The increase in values was short lived, however, and piecemeal demand in Europe was insufficient to halt the downward trend. By mid-December, buying interest from Brazil had fizzled out, although sellers breathed a sigh of relief when India’s NFL floated a new import tender on 21st December.

Offers opened by NFL on 6th January revealed that Fertcom was lowest for West Coast India (WCI) at $317/t cfr, while Agri Commodities was lowest for East Coast India (ECI) at $329/t cfr.

Ammonia: The market started the final month of the year with a bearish tone but no clear evidence of lower prices. Tampa set the last firm benchmark with $625/t cfr settled for December, a rollover from November.

By the middle of December, a lack of availability in the Middle East was slowing the downward trend but failed to halt it completely. After an outage at Ma’aden, there was little pressure to sell spot tonnes from the region, although pressure elsewhere resulted in a considerable drop in the price of ammonia in Southeast Asia.

Phosphates: In early January, low stocks and tight supply pushed DAP/MAP prices higher in the US and Pakistan with India at risk of a similar fate. Indian fears over DAP availability appear to be growing. The government signalled its intention to increase the fertilizer subsidy for the remainder of the Rabi season as market participants gathered in New Delhi to attend the annual FAI conference. By mid-December, India finally stepped back into the market to buy DAP, despite ongoing reports of tight supply.

Phosphate fertilizer prices ended 2023 noticeably lower than at the end of 2022, but most benchmarks remained historically high heading into the New Year. Trading in the first week of January was uninspiring with prices mostly flat and relatively little activity outside of a barrage of sales from Saudi Arabian producer Ma’aden.

Potash: MOP prices for delivery to key spot market Brazil came under more pressure than expected through December, slumping to their lowest levels since March 2021. European prices remain relatively firm among seasonally low demand. Bearish sentiment for 2024 remains strong as unfavourable weather has hampered winter crop planting.

Southeast Asian prices remained firm as the market awaited Pupuk Indonesia’s return in the coming weeks.

Potash spot prices look set to soften further in Brazil and Europe in the New Year, as the global potash outlook remains bearish in the absence of fresh India contracts. US potash prices held relatively firm, however, with fill offers expected in January.

NPKs: While some NPK benchmarks have firmed into December, others softened amid reports of a steady supply of Russian product.

India’s 10-26-26 prices were unchanged at $460-470/t cfr. Some domestic producers in India are reported to have increased NPK production at the expense of DAP. This is due to more favourable margins.

Acron was reported to be selling NPK 16-16-16 to Brazil at prices as low as $370-390/t cfr. Morocco’s NPS 12-46-0-7 benchmark increased to $535-540/t f.o.b., a result of slightly higher prices in Brazil. In China, some domestic NPK prices climbed in December with raw-material prices remaining firm, although buying activity has slowed.

Demand for NPKs in Southeast Asia was steady. Indonesia’s total NPK import demand – through various formulations – was indicated at roughly 300,000 t/a by market sources. Most of this was met with 16-16-16 product sourced from Europe.

Sulphur: Price benchmarks across the globe declined further in December amid limited spot demand and ample availability. Sales into China and Brazil indicated netbacks below the official monthly contract prices posted by Middle East producers for December.

While Middle East producers lowered their monthly contract prices for January, spot price assessments were mostly stable in the New Year as activity was limited. The three main sulphur producers in the Middle East offered material in the $7477/t f.o.b. range for January, down from $85-90/t f.o.b. for December, $98-100/t f.o.b. for November.

OUTLOOK

Urea: The outlook for global urea prices is weak. But a one million tonne purchase by India could put a line under recent declines, if buyers in Europe and the US are tempted back into the market. The US is still thought to be a million tonnes short.

In Brazil, a lack of clarity about the size of the planted Safrinha crop, and what demand for urea may be outstanding, is weighing on urea prices. Paper markets indicate modestly firmer prices through the first quarter.

Ammonia: Prices are expected to remain soft moving through January with little in the way of price support from both a supply and demand perspective. Weakened global sentiment was typified by the news that January’s Tampa settlement at $525/t cfr was $100/t down on December, with further first quarter declines anticipated once the Gulf Coast Ammonia (GCA) project comes online.

As Traders returned to their desks after New Year, ammonia prices extended their losses, amid a stable supply outlook and a distinct lack of downstream industrial and fertilizer demand.

Phosphates: Limited availability from some suppliers in the weeks ahead could continue to support DAP/MAP prices, particularly if India’s government increases the nutrient-based subsidy (NBS) for DAP.

Most key global benchmarks are expected to firm through the first quarter before softening. Prices could move lower than expected if demand does not improve or if supply from China is higher than expected. CRU is forecasting ammonia costs to fall even further over the short term. This represents a further possible downside for DAP/MAP prices.

Potash: Potash spot prices are expected to remain stable in the months ahead. Delayed potash demand and improving weather conditions could, however, lead to higher than anticipated global consumption and, consequently, prices could surprise to the upside.

No major impact on potash exports from Israel and Jordan was discernible in early January despite the disruption to shipping in the Red Sea. Delivered prices to China and India could come under upwards pressure from higher freight rates.

The India contract is expected to rollover at $319/t cfr but has yet to be agreed. China’s previous contract expired in December, although buyers are likely to exercise their optional tonnage volumes. The China contract is currently expected to remain at $307/t cfr, with fresh negotiations anticipated in May to mid-July.

NPKs: Early January indications suggest little change in NPK/NPS prices in some key global markets compared with the previous month. Demand for NPKs, while seasonally slow in some regions, is starting to improve in parts of Europe. There are few notable supply constraints and NPK/NPS shipments from Russia are likely to remain steady. Phosphate rawmaterial prices are expected to increase in the first quarter, potentially offering short-term support for some NPK benchmarks, before softening thereafter.

Sulphur: Sulphur prices are expected to increase during the first half of 2024, following recent declines, although good availability will limit upside in the short term. Prices could remain below expected levels, however, should fertilizer production prove weaker than expected. Nonetheless, major sulphur buyer OCP is expected to increase its fertilizer output further over the coming months, as the Moroccan phosphate giant has the potential to achieve good revenues and margins from its ample spare production capacity.