Insight Focus
- India unlikely to tender for Urea in May.
- Brazil off-season further dampens demand.
- Fresh supply in China, Malaysia and Brunei expected in next few weeks.
The outlook for international urea prices for June is grim with the prospect of an India tender in May fading and the off season activity in Brazil putting pressure on prices across the board. The latest CFR price reported for the Brazilian market is at or around the USD 320 PMT CFR mark. Middle East urea producers are holding out for USD 330 PMT FOB but recent deals in west coast Mexico indicate that returns are closer to the USD 315-320 PMT FOB range. Buyers in Thailand and Australia, with both markets entering peak import season between April and September, are holding off temptations at the current price levels expecting much lower levels in June. Pupuk Indonesia held a tender this week resulting in a purchase of 30,000 MT at a reported USD 338.50 FOB with shipment expected to the Philippines.
In addition to the current availability, production units in Brunei and Malaysia are expected to return to production within the next couple of weeks. Then Chinese exports are looming with CIQ approval times significantly reduced. This is good news for those responsible for a possible tender in India although a tender seems still to be some weeks away.
Fertiglobe announced less exports in 2023 versus 2022 with own produced ammonia exports at 236 KT and urea exports at 1.13 million MT. Profits fell on lower prices to USD 135 million from USD 361 million year on year. Third party urea traded product trading fell 40% to 165 KT from 276 KT year on year.
The outlook for the urea price is grim over the next few weeks unless large import markets like India and Brazil come to the fore with major buying neutralizing increased supplies from China.
Processed phosphate prices keep on falling bar some last minute spring buying in the US. Brazil MAP price fell another USD 18 PMT this week to a range of USD 540-550 PMT CFR representing an average drop since the start of 2023 of USD 205 PMT. Brazil’s vessel lineup for MAP through May on MAP is up 69% at 1.61 million MT. Imports of MAP and DAP combined is said to be 2.56 million MT up from 1.74 million MT year on year.
India’s latest confirmed reported DAP import price is said to be USD 529 PMT CFR with buyers seeking lower prices on expected increased exports from China. Chinese DAP is reported to be as low as USD 505 PMT FOmatching a rumoured sale in India at USD 525 PMT CFR.
Bangladesh is expected to announce an import tender for DAP, TSP and MOP next week with the department of Agriculture and Finance having approved a total import of 1.5 million MT for the fertilizer year 2023-2024. Expectation is that the private sector will import around 675 KT of DAP, 275 KT of TSP and around 250 KT of MOP.
The outlook for the processed phosphate industry over the next few months looks bearish.
Similarly the MOP market has not responded well to the India contract settlement at USD 422 CFR. Brazil’s granular MOP price is now well below USD 400 PMT CFR with some saying as low as USD 470 PMT on offer whilst the mainstream price range is assessed between USD 380-400 PMT CFR. Prices are down an average of USD 15 PMT this week and have reached the lowest level in 2 years. Buyers in SE Asia are not showing any interest in buying standard MOP and the Chinese are mute on contract negotiations for 2023 with substantial imports from sanctioned Belarus and increased imports from Laos.
The international ammonia price appears to have stabilized at least temporarily on the back of manufacturing turnarounds in the US, Indonesia and at Yara’s Pilbara in June whilst gas supply issues are hampering production in Trinidad. TTF gas in Europe is around USD 11 MMBTU equivalent giving a production cost of USD 475 CFR excluding carbon tax. Imports are hovering around the USD 410-420 CFR range.
The outlook for the ammonia industry is still fragile.
