Insight Focus
- Bangladeshi phosphate tender result could herald Asian price drop.
- Ammonia market seen falling on greater supply, lack of demand.
- Phosphate market ponders greater Russian supply, sanctions on Belarus
The trajectory of fertilizer prices is likely to be downward over the next 30-60 days, and the only question is: How low, how fast?
China Springs Surprise at Phosphate Auction
There was an unexpected development at June 9’s Bangladeshi tender phosphate tender when 1.2m tonnes of Chinese diammonium phosphate (DAP) was offered. Chinese government export restrictions and processing of export documentation meant not much was expected to be offered. A total of 1.55m tonnes was offered and the total volume purchased should be around 700k tonnes. Prices offered were around USD 1,019.74-1,023/tonne CFRLO (this includes the cost of discharge at the destination port). India is currently buying DAP at around USD 925/tonne CFR but can also offer a much more attractive logistics package with higher discharge rates and larger vessel sizes.
However, the tender results could signal the start of price erosion on processed phosphates East of Suez. Pakistan is looking for lower prices than in previous purchases which are closer to the domestic market. This is hovering around the equivalent of USD 900/tonne. Like their Indian peers, Pakistani importers are losing money on current import prices.
West of Suez the Tampa DAP price was USD 1,010 /tonne, down from USD 1,025/tonne and compared with the 52-week low of USD 861/tonne.
Ammonia Market Seen Correcting Downward
The global ammonia market is expected to move substantially lower over the next 30-60 days, driven by greater availability and lack of demand. OCP of Morocco, which is a regular buyer, has withdrawn from the market, demand in Europe is non-existent as it is in India, and inventories in East Asia are said by sources to be high.
The FOB Middle East price of spot ammonia is around USD 895-900/tonne, with contracts at USD 860-1,020/tonne.
Urea Prices Lower
There is also a bearish undertone to the global urea market. At this week’s tender by Indonesian producer Kaltim the highest bid for granular urea was USD 547/tonne FOB, down from the highest concluded price at the previous tender of USD 688/tonne. Most bids were well below USD 500/tonne.
Producers in the Middle East are holding off in anticipation of a possible Indian tender with July shipments and strong demand from Brazil in Q3. Middle East prices are around USD 545/tonne FOB, down from USD 595/tonne last week and the 52-week high of USD 663/tonne.
In the US, granular urea barges have changed hands at USD 410 and 420 a short ton, FOB New Orleans, in the last 24 hours, less than half the 52-week high of USD 925/st.
Potash Market Mixed
Potash prices are a mixed bag, depending on destination. The spot, CFR Brazil price of granular potassium chloride (MOP) dropped around USD 25 last week to around USD 1,075/tonne. The South East Asia standard MOP price last week was around USD 938/tonne CFR, and the previously reported price was USD 925/tonne. The 52-week low was USD 626 PMT CFR.
The market is trying to work out which is exerting the stronger pressure, sanctions against major producer Belarus or increased Russian supply.
Input Costs Soaring
The cost of raw materials for fertilizer costs has ticked up significant uptick over the past year. Middle East sulphur has leapt to USD 478/tonne from USD 292; phosphate rock prices have surged 68-72% BPL from FOB Morocco has jumped to USD 328/tonne from USD 192; and European gas prices have gone through the roof.
