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Fertilizer International 522 Sept-Oct 2024

30 September 2024

Market Insight

Market Insight

Historical price trends $/tonne

PRICE TRENDS

Market snapshot, 15th August 2024 Urea: A stand-off between buyers and sellers has left prices fairly flat in recent weeks with little liquidity. India’s latest import tender was, however, finally confirmed for 29th August closing. The tender’s long shipment window allows NFL to secure tonnages through to end-October and took the market by surprise. This is a bearish signal that should increase dramatically the volume offered to NFL. The tender could exclude volumes from China with supply instead focused on the Middle East and Russia.

Other markets were slow to come forward in mid-August. Brazil saw offers pushed to $360-365/t cfr on news from India, but buyers have yet to respond. Europe has been slow to step up with sales still below Egyptian aspirations of $360/t f.o.b. Mopco did achieve $357/t f.o.b for 5,000 tonnes, although this has yet to trigger any rally in sales. NOLA, meanwhile, took a plunge on the news from India with prices suddenly dropping $10/st to $305/st f.o.b. for August.

Ammonia: Benchmarks west of Suez have been supported by limited regional availability at key export hubs. Nutrien sold 25,000 tonnes from Trinidad to multiple buyers in NW Europe in mid-August at $550-555/t cfr, a sizeable premium on the $375/t f.o.b. last achieved by the company in late June. Prices on delivered sales into Europe could therefore move up further, given that last done business with Algeria was at $520/t f.o.b.

East of Suez, all eyes were on India, with tentative suggestions that FACT awarded its latest purchase tender at $415/t cfr. This was taken as a sign of healthy demand from downstream Indian phosphate fertilizer producers ahead of the Kharif growing season. That demand should be mainly satisfied by the Middle East, with Ma’aden once again stepping in to export 175,000 tonnes in September. Demand elsewhere in the region remained subdued in mid-August, with limited spot interest from South Korea, Taiwan and China.

Phosphates: Tight supply remained the overwhelming driver for DAP markets east of Suez in mid-August. In India, fresh deals pushed DAP prices up by $30/t. Activity in most other key global markets, meanwhile, remained sluggish. Two DAP deals to India were concluded at $620/t cfr compared to sales at $590/t cfr in early August. The Indian DAP benchmark has now increased an average of $110/t, or 22 percent, over the past three months.

Demand for DAP/MAP in the Americas is seasonally slow. New Orleans barge prices for MAP remain at a premium due to the persistence of tight supply, though they did soften $5/st in mid-August to $635/st FOB.

Potash: Global spot prices were little changed in mid-August as low demand engulfed the potash market. Brazilian granular potash held at an average of $300/t cfr as demand remained lacklustre. The Southeast Asian potash market saw little movement as suppliers

Market price summary $/tonne – mid-August 2024

and buyers struggle to see eye to eye on the future price outlook. China’s inland prices fell once again, marking their lowest levels since late March at an average of RMB2,390/t fca ($334/t).

Sulphur: The tone across global sulphur markets remained bullish in Mid-August, with many traders expecting further price increases on upcoming business. Fresh spot purchases of sulphur were, however, limited following a wave of activity in Indonesia, Brazil and India earlier in August.

The China market in particular was inactive, having kicked off the current price rally with July’s buying blitz. A sales tender from Kuwait did, however, achieve a reported price in the upper $120s/t f.o.b., suggesting that further increases were likely across benchmarks in coming weeks. For now, the Middle East spot price was assessed up at $115-120/t f.o.b. in mid-August. Its mid-point is now at its highest level since March 2023, having climbed more than 50 percent over the past two months.

OUTLOOK

Urea: While some correction in North African prices may be necessary to entice European buyers back, emerging urea demand is expected to support prices in August/September, while China’s return to the export market is likely to prompt prices falls again in the fourth quarter.

CRU expects some demand to emerge from Europe in the latter part of August and September offering support to Egyptian prices. The August price rebound in China is expected to be short lived. With higher production rates than last year, CRU is anticipating a return to fourth quarter exports from China of up to 1.5 million tonnes.

Ammonia: While ongoing supply issues are expected to provide price support in the very near term, particularly in the West, they should eventually to revert to seasonal patterns. Black Sea capacity additions, pencilled in for early in the fourth quarter, could also place downward pressure on prices.

Benchmarks west of Suez have gained a lot of ground in recent months. The natural-gas curtailments in Trinidad, which first emerged in June to support prices, are unlikely to be resolved before September. CRU expects prices to correct slightly downwards into the fourth quarter, assuming curtailments in Trinidad have ceased.

East of Suez, the supply-demand picture has been more balanced since Saudi producer Ma’aden resumed production at its MWSPC II unit earlier in July. As a result, export prices in the Middle East should not diverge too far from latest average assessments of around $350/t f.o.b.

Phosphates: Global DAP/MAP markets have diverged in recent weeks, with those east of Suez climbing higher and those in the Americas experiencing slight downwards pressure. India’s DAP prices are playing catch up with increases elsewhere, having reached $590/t cfr on 1st August.

Demand from India is rising while supply remains tight. India’s DAP prices are therefore forecast to rise to a monthly average of $613/t cfr by November before stabilising. Brazilian MAP demand, in contrast, has slowed considerably, with a short-term ceiling on prices at $635/t cfr now likely. Demand is expected to pick up again later in the year. With US supply even tighter than it is elsewhere, and fall season demand starting from late September onwards, New Orleans DAP prices are forecast to firm to $563/st f.o.b. for November before softening slightly.

Potash: Most spot prices are anticipated to fall to a low in October before slowly rebounding.

The India 180-day standard contract was assessed at $279-283/t cfr and – despite this settlement – the lower end of this range may be difficult for buyers to achieve. While this provides a floor for the market, most potash spot prices are expected to decline marginally until October before starting to rally.

Sulphur: Prices are expected to increase above current levels initially before declining slightly by the end of the year, as good availability should limit the upside despite improving demand.

Overall, the recent growth in sulphur production, in addition to producer stock drawdown and high China inventories, is expected to limit upwards potential for prices in the short term and keep sulphur prices low relative to phosphates. Nonetheless, good affordability, by continuing to support raw materials purchasing, leaves room for further price increases.

Port inventories in China at 2.6 million tonnes are well above the 2023 and 2022 averages of 2.1 million tonnes and 1.4 million tonnes, respectively. While recent firming in domestic phosphate markets has added support, these high stocks should limit the sulphur price upside.

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