Insight Focus
- Tariffs on EU fertiliser imports scrapped for 6 months from all origins except Russia and Belarus.
- Announcement of duty-free supply from Middle East and Asia puts pressure on European ammonia prices.
- Urea Imports between August and October 247% higher than previous year.
The most notable item happening at the end of December was the EU’s 6 month suspension of import tariffs for nitrogen (urea at 6.5% and ammonia at 5.5%) to the EU from all origins except those from Russia and Belarus. According to one trader this represents the most changing trade flows of ammonia and urea in a very long time. Long haul destinations like the US, SE Asia and Nigeria will now be able to ship products to Europe. Urea FOB prices fell in Egypt and Algeria which both have benefitted from non-import tariffs to Europe. The trade body Fertilizer Europe has reacted negatively to EU’s abolishing of the tariffs saying that it is at odds with the EU’s policy to reinforce its strategic autonomy saying it is “jeopardizing Europe’s ability to return to normal production levels.” According to trade statistics imports of urea between August and October surged 247% year on year and that imports in August alone were up 300,000 MT year on year.
This move could, however, impose bad news for markets in certain regions. SE Asia producers would be looking for higher returns in Europe vs those offered in the region. Already Petronas is rumoured to be shipping two cargoes of urea to Europe.
End-December FOB prices in the Middle East are around the USD 460-480 FOB levels – same as in SE Asia. Producers are now hoping for another India tender plus increased demand from Europe which could spark FOB prices.
Ammonia prices in Europe have also come under pressure with Middle East producers now able to ship ammonia duty free. End-December prices were in the USD 1,010 – 1,020 CFR duty free and it is expected that prices will fall well below this level. The highest level paid in 2022 was at USD 1,625 and the lowest was in July at USD 965 CFR. In the Far East a sale was reported two weeks ago from China to Taiwan at sub USD 800 CFR.
Potash prices saw a wide range of prices in 2022. Starting the year at an average of USD 795 CFR for granular MOP to Brazil with a high in April of USD 1,180 CFR, prices were end-Dec an average of USD 500-530 CFR Brazil, up around USD 5 PMT from the previous week.
There are some indications that MOP prices could have come to a floor with a possible contract agreed in India during the first couple of months of 2023 at a price indication of between USD 450-500 cfr – down from the end-Dec contract price of USD 595 CFR. If this happens it is very possible China will follow suit.
On the processed phosphate side there was only one light in the tunnel with MAP prices in Brazil moving up USD 10 PMT to USD 630-640 CFR with end-Dec prices reported at USD 645-650 CFR.
Morocco’s overall processed granulation exports January – October dropped 8.5% year on year to 8 million MT. DAP exports rose 37% to 3.4 MMT with volumes to India surging to 1.8 MMT up from 660,501 from the same period last year. MAP exports fell 34% year on year to 2 MMT. Volumes to Brazil dropped 48% to 854,672.
Chinese overall processed granulation exports between January and November reached 7.7 MMT, a 44% drop year on year from 13.9 MMT.
DAP was down 47% at 3.33 MMT. MAP exports reached 1.8 MMT, down 52% year on year. It is expected that export restrictions imposed by the Chinese government could be eased sometime early 2023. If this happens it will have a significant impact on prices for all fertilizers including nitrogen.
