Fertilizer International 521 Jul-Aug 2024
31 July 2024
Market Insight
Market Insight
Market as of 20th June 2024
PRICE TRENDS
Urea: Prices remain stable while the market awaits clear price direction on whether to hold current f.o.b. levels or to push higher. There is a definite sense of market softness – mostly triggered by Egypt’s return to production (see page 12) – with buyers generally sitting on the sidelines. With about 200,000 tonnes of exports to be fulfilled from earlier sales, Egyptian producers may not re-enter the export market until July.
Prices fell in Brazil with further declines anticipated. Some suppliers reported a slide in the market to $360/t cfr amid very limited liquidity. There are fears of further price falls ahead as considerable volumes are arriving in Brazil and many tonnes are said to be unsold.
In Argentina, granular prices escalated with the latest sales agreed at $390-395/t cfr – as importers looked to secure tonnes for July arrival.
Ammonia: The ammonia market looks mixed, with prices in Europe and Asia rising while those in the Middle East have declined. In northwest Europe, both CF and Grupa Azoty are said to be looking for July tonnes. These enquiries should test how tight (or not) this market is going forward. Algeria has traded in the $400405/t f.o.b. range suggesting slightly higher cfr values in Europe of $450-460/t.
The Middle East still awaits the return of one of Ma’aden’s ammonia units from turnaround. But a price reduction in the region suggests the supply position is easing from recent tightness: PIC sold a parcel to the Far East at $330/t f.o.b. following recent sales as high as $360/t f.o.b.
While some expect a rollover in the $400/t f.o.b. Tampa price for July, more bearish observers are pointing to the weaker US domestic market – and in particular the aggressive fill programme announced by Koch on 20th June.
Phosphates: DAP/MAP prices climbed in many key global markets as suppliers capitalised on bullish sentiment. Producers continue to report limited availability, although some could be holding back product intentionally in the hope of pushing prices even higher.
The standout price rises have been in Brazil, driven by low stocks and tight supply. MAP jumped an average of $25/t to $615/t cfr. Sales for August loading have even been reported as high as $620/t cfr – a price not been seen in Brazil since late March 2023. These high prices are likely to eat into Brazilian MAP demand soon.
Greater export discipline by Chinese producers has been one of the reasons limiting availability. China’s January-May DAP/MAP exports were down 30 percent year-on-year at 1.64 million tonnes. Consequently, Chinese producers have achieved DAP sales to Southeast Asia as high as around $550/t f.o.b., with the China DAP benchmark rebounding by around $40/t over the past three weeks.
European DAP prices, already at historically high levels and without much downside in recent months, also increased this week.
Potash: Price falls have been seen in Southeast Asia and the US, but remain flat elsewhere. Overall, potash spot price benchmarks are mostly stable, although the US market saw significant price declines in anticipation of summer fill. Potash summer fill programmes have begun to roll out in the US with Nutrien announcing a reference price of $335/st f.o.b. (Midwest terminal). Standard Southeast Asia potash prices also fell $10/t in a week to $280-290/t cfr. India’s potash import contract negotiations, meanwhile, continue to drag on.
In Brazil, some producers are reporting sales at $320/t cfr. Potash fundamentals are not supportive of significant price rises, in our view, despite other fertilizers such as MAP reaching higher price levels in Brazil.
Northwest European potash prices are unchanged, while China’s domestic potash prices remain flat currently at RMB2,4002620/t fca ($317-361/t), having previously shown a steady price increase of 20 percent since hitting a floor of RMB2,050/t fca in late March 2024.
Sulphur: Prices are stable-to-lower currently as the market awaits direction.
In China, buyers resisted higher offers leaving the cfr range for domestic port spot prices unchanged for the fourth week at $100-105/t cfr – with the midpoint ($102.50/t cfr) at its lowest level since February. The current price is now 80 percent lower than in mid-June 2022, but still up 21 percent from mid-July 2023.
Latest sulphur business to Indonesia was at a lower price than previous business, with the published range down to $100-105/t cfr from $103-108/t. Elsewhere, a US Gulf sale of mid-$60s/t f.o.b. was reported due to the long market in that locale, although this has yet to be confirmed.
OUTLOOK
Urea: In the Middle East, urea is forecast at $340/t f.o.b. for July, before slipping lower to $320/t f.o.b. in August, and then rallying in September with good demand anticipated in the northern hemisphere.
China is not expected to return to the export market in July. Higher exports are expected from August onwards as producers look to clear inventory build-up. July is forecast at $340/t f.o.b., sliding to $320/t as volumes build, before recovering in September when global demand improves.
Baltic and Black Sea prices are expected to follow the path led by China and the Middle East in pursuit of exports to India.
Ammonia: Price support in the East is set to be sustained in the immediate term with supply constraints in both the Middle East and Southeast Asia unlikely to ease this side of July. A recent sale at $360/t f.o.b from the former is seen as indicative of the more bullish sentiment shaping this regional market.
In the west, ammonia is forecast to trend downwards, although not as much as previously anticipated. The $400/t cfr June Tampa agreement, $50/t down on May, is seen as indicative of a more bearish regional market. The Tampa settlement is, however, still set to decline further through the third-quarter before recovering as the year ends.
Phosphates: Global DAP/MAP prices could continue to increase in coming weeks, though high prices could soon start to impact demand in markets such as Brazil. As always, much will depend on Chinese export volumes.
Demand is expected to increase in both Brazil and India, absorbing some Chinese DAP/MAP exports. Consequently, DAP/MAP price increases in Brazil, India, and the US are expected over much of the next six months, with MAP prices touching a monthly average of $600/t cfr in Brazil in September-October.
Potash: Prices are expected to stay stable to slightly soft as the market awaits the Indian potash contract. In Brazil, producers continue to push for higher levels, although the upside remains limited.
Prices are therefore forecast to decline slightly in most global markets over the next six months, as ample supply pushes prices lower. Standard prices are expected to fall below $285/t cfr, while granular potash prices should hold just above $300/t cfr. The highly anticipated potash contracts are expected to be settled at $285/t cfr and below.
Sulphur: Global spot prices are likely to undergo little change over the coming weeks. Sulphur affordability remains good, with current downstream price increases improving this further. Overall, global demand remains lacklustre, while sulphur availability from most origins is ample. Looking further ahead, sulphur prices are likely to climb in the fourth-quarter, recovering from recent declines and rising further, although good availability will limit the upside.
