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Nitrogen+Syngas 389 May-Jun 2024

31 May 2024

Market Outlook

Market Outlook

Historical price trends $/tonne

AMMONIA

  • Prices in the West are unlikely to garner much support moving into the latter stages of Q2. The May Tampa ammonia settlement was settled by Yara and Mosaic at $450/t c.fr, down $25/t on the $475/t c.fr agreed for April. With seasonal domestic demand in the US drawing to a close 2H April, many had anticipated that either a rollover or a slight decline would be agreed.
  • Prices in the Far East appear to have registered some support in recent weeks, the prospect of this tailwind lasting beyond June appears unlikely. Petronas says it would be commencing a 16-day maintenance at its 450,000 t/year Bintulu facility as of 4 May.
  • In Saudi Arabia, Ma’aden said that the planned curtailment at its 1.1 million t/a Wa’ad Al Shamal Phosphate Company (MWSPC) II unit will begin in mid-May. Netbacks on the group’s latest contract shipments remain unchanged at around the $275/t f.o.b. mark, as it continues to receive healthy spot interest from Asia for June deliveries.

UREA

  • The market is bearish with little to report on the demand side and length on the supply side of the equation. It is difficult to see which region will step in to soak up June tonnes. India is sitting on 10 million tonnes of inventory and is not expected back into the market any time soon.
  • Small granular buyers in Southeast Asia are putting out soft bids at $320330/t c.fr which seemingly are too low to attract trader interest following a raft of purchases from Indonesia at $305306/t f.o.b.. Offers in the region have been in the low $330s to $340s/t c.fr.
  • There are no fresh updates on China urea export restriction policy. Considering the current firm domestic prices, the export inspection approval time may be delayed to June-July 2024.

METHANOL

  • Methanol prices have been rising in North America. Commercial production at the Methanex Geismar 3 plant, which will bring an additional 1.8 million t/a of production, has been delayed due to what the company describes as “complications” with the refractory bricks in the autothermal reformer, possibly until Q4 2024. Continuing strong demand in North America has contributed to the price rises, and the news comes after a series of production outages in the US during Q1.
  • Availability was also tight in the Middle East, with supply constrained in Saudi Arabi in March. This had a knock-on effect on major importing regions such as India and China. There have also been plant shutdowns in the Asia-Pacific region, including Malaysia, continuing to tighten availability, and natural gas related production shortages in China and Iran.

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.