Fallout From The India Urea Tender Continues

Insight Focus

  • Lower urea prices across the board bar NOLA/US.
  • Processed phosphate prices are not finding a floor due to lack of demand.
  • Ammonia netbacks in the middle east the lowest seen since March of 2019.

The fallout from the disappointment of the low level of purchasing by India’s government agency IPL continues coupled with limited off-shore demand from key markets Brazil, the US and Europe. The NOLA barge market did see an upturn in prices this week to a range of USD 300-332 short ton up from USD 290-315 short ton the week before – all supplied from built up inventories. Brazil is being served by competing volumes from Nigeria and Algeria at prices reported as low as USD 310 CFR. The European market has come to a standstill for the spring season. Producers in the Middle East are trying to find outlets outside of the main market and there was a report SABIC, the Saudi Arabian producers, may have sold a 30,000 MT cargo of prilled and granular urea to the Philippines with a netback set around USD 320 FOB. Otherwise, Middle East producers’ netback to the India tender is estimated at around the USD 305-310 FOB range.

Export of urea from Vietnam for 2022 is reported at 612,400 MT vs 446,800 the year before. Imports slowed to 115,400 MT down from 328,900 MT the year before. Pakistan’s import through November showed 307,000 MT in 2022 up from zero imports in 2021. Most of this urea originated in China on government to government arrangement.

The imminent outlook for the urea market is that of too much product chasing few markets thus there is a continued pressure on prices.

Similar to the urea market, processed phosphate prices are facing declines across the board. Lower raw materials cost of ammonia and sulphur coupled with limited demand in key markets are putting pressure on prices. India’s buying of DAP saw prices edge towards the 614-620 CFR level with buyers now looking for even lower prices closer to USD 600 CFR. Brazil’s Q1 2023 import lineup shows DAP and MAP volumes up 70% compared to the same time last year at 1.25 million MT thus new fresh buying has been limited. MAP price in Brazil is now said to be around the USD 635-640 CFR range down another USD 20 PMT from last week. Chinese DAP is now heading south of USD 600 FOB for export with the export premium compared to the domestic market in China of just USD 40 MT versus USD 500 this time last year!

Vietnam’s import of DAP in 2022 reached 517,100 MT versus 509,500 MT the year before. Exports reached 128,100 MT down from 207,500 MT in 2021.

The imminent outlook for the processed phosphate market is bearish.

The international potash market is held in suspense by the long anticipated contract negotiations in India and China, with the latter showing no interest due to massive imports of MOP from both Russia and Belarus said to be up towards 450,000 MT per month.

The SE Asia standard MOP price, which is a guide to what the India contract price may be settled at, fell another USD 5 MT this week to a range of USD 450-470 CFR. This is a decline of an average of USD 70 MT since January 2023 and a massive USD 478 MT or 51% drop from the peak in June of 2022.

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