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Fertilizer International 520 May-Jun 2024

31 May 2024

Market Insight

Market Insight

Historical price trends $/tonne

PRICE TRENDS

Urea: Prices continued their global decline in mid-April, including at New Orleans. The notable exception was Brazil where prices firmed due to buyer interest in the market for May and beyond.

Elsewhere, prices took another turn for the worse. A cargo for May loading out of Oman was reported at $280/t f.o.b., while Egypt also drifted downwards with tonnes sold at $300-305/t f.o.b. Europe, meanwhile, was largely quiet with only Italy showing any real interest, and prices there slipping back to $320/t cfr. This was still higher than values in Turkey, where a sale was reported at $305/t cfr.

Unfounded rumours created another wave of uncertainty about Chinese urea exports. These wrongly suggested that export inspection certificates had been pulled because of escalating domestic prices.

Ammonia: There were hints in mid-April that the previously stable-to-soft outlook for ammonia prices East of Suez could firm, with signs of upwards pressure on some benchmarks due to supply issues. Full details of reported sales into the Far East at $375-400/t cfr are, however, still awaited. Domestic Chinese prices, meanwhile, declined once again.

Bullish Asian sentiment is supported by the impending shutdown at Ma’aden’s 1.1 million t/a capacity MWSPC ammonia unit. This is likely to tighten the market further, with mixed reports about whether the curtailment will extend beyond the planned one-month period.

West of Suez, firming natural-gas prices in NW Europe reached $10/ MMBtu in mid-April, equating to regional ammonia production costs in the low-$400s/t. This remains below the cost of imported ammonia, however, with a spot sale into the region reported at $490/t cfr.

“The second quarter India phosphoric acid contract settled at $948/t cfr, down just $20/t on the first quarter price. This settlement could counteract some of the bearish sentiment that has gripped the phosphates market east of Suez, as many participants were expecting a lower price.”

Phosphates: DAP prices east of Suez extended their declines in mid-April. MAP prices in Brazil held firm – contrary to price deterioration elsewhere – helped by dwindling MAP stocks following low first quarter imports.

Market sentiment is largely bearish due to increased DAP export availability from China. The country’s exports quota has reportedly been set at 5.6 million tonnes of DAP/MAP for May-September. This is significantly up on China’s first quarter exports of just 240,000 tonnes DAP/MAP shown in preliminary customs statistics.

The second quarter India phosphoric acid contract settled at $948/t cfr (100% P2 O5 ), down just $20/t on the first quarter price. This settlement could counteract some of the bearish sentiment that has gripped the market east of Suez, as many participants were expecting a lower price.

Market price summary $/tonne – mid-April 2024

Potash: Downward price pressure affected potash markets across the globe in mid-April, as slow demand in many regions persisted longer than expected. While potash spot prices advanced in Brazil and China, they slid in southeast Asia and northwest Europe.

In southeast Asia, standard MOP spot prices were assessed at $280-315/t cfr, while Brazilian potash prices remained at $305-315/t cfr amid slowing demand. US potash continue to decline but remains at a premium, despite the $35/st fall in the average US Midwest price since the start of the year.

Many potash market participants are worried about the impact of tensions between Israel and Iran. 2023 MOP exports from the Middle East totalled 11 percent of global trade, highlighting the region’s importance for the market.

Sulphur: Sulphur spot prices were trending stable to higher in mid-April amid limited spot market activity. The Middle East spot price was up at $85-90/t f.o.b. with some recent sales entering the $90s/t f.o.b. range. The Middle East price has gained 30 percent since mid-February this year.

While activity in key market China remains subdued, with cfr prices unchanged for eight weeks, appetite from Indonesia, Brazil and southern Africa has added some price support. Continuing good availability, including high stocks at Chinese ports, is expected to limit the upwards price momentum.

OUTLOOK

Urea: Prices are now expected to have peaked with demand proving less robust than previously anticipated. Consequently, the market remains largely pessimistic about the price trajectory in coming weeks, amid confusion over exports from China and concerns over the Iran’s attack on Israel. In the Middle East, prices are forecast to bottom out in June at $290300/t f.o.b., before buying returns and tender activity in India picks up. The US and Latin America have been the most bullish regions for urea in recent weeks. Prices at New Orleans are expected to average $365/st in April before dropping to $300/st f.o.b. in June.

Ammonia: prices look set to trend downwards with the April uptick at Tampa likely to be the last show of price support until the back end of the third quarter. Delays commissioning new assets and unscheduled plant curtailments could, however, add a degree of tightness to an otherwise lengthy market. In the Middle East, spot averages of $280290/t f.o.b. are unlikely to improve in the near-term. In Europe, as elsewhere, the cfr benchmark should bottom out mid-year. This regional market could lengthen further if Uralchem’s Black Sea transshipment terminal at Taman starts to export in June.

Phosphates: DAP/MAP prices are forecast to drift gradually lower over the next six months due to higher exports from China, with some key global benchmarks dipping below $500/t by the end of the third quarter The extent of Chinese DAP/ MAP export availability will be key in determining short-term market direction, although some markets like Brazil may remain immune for now. Buying interest for DAP/MAP has dropped seasonally in the US and Europe but should pick up in Brazil soon.

“Potash prices are expected to trend downwards in coming months. MOP demand is weak across the globe, while key markets have ample supply. CRU has also revised its 2024 Russian and Belarusian export projections upwards.”

Potash: Prices are expected to trend downwards in coming months. MOP demand is weak across the globe, while key markets have ample supply. CRU has also revised its 2024 Russian and Belarusian export projections upwards. This supply growth could dampen any price increases that arise from improved demand. The India contract is expected to be settled at $290/t cfr in April, down $29/t from the current contract; China is expected to settle at the same price of $290/t cfr in May.

Sulphur: While future months are likely to see firmer sulphur prices, on the back of good affordability and improving demand, availability will cap price appreciation. Rises in downstream phosphate production are expected to spur this price recovery. However, the recent growth in sulphur production, together with stock drawdown and high Chinese inventory levels, is expected to limit upwards price potential in the short term.

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