Insight Focus
- The global processed phosphate market has come to a halt with india dap prices showing declines.
- Potash prices remain unchanged with little or no activity either side of suez.
- Ammonia prices are firm on the back of limited spot supplies.
Finally India came out with another urea tender closing on October 20th with shipment on or before December 10th. The long shipment period could pose a problem for suppliers and traders holding positions since October provides no outlet for India and other markets are less active. November may see some improvement; Brazil and Europe are expected to enter the market. India appears to be more relaxed on imports and it is expected that India will need less than 2 million MT of urea by the middle of January 2024. This supported on the back of increased domestic production of urea in India. However, the market expects India to aim for imports of around 1 – 1.5 million MT with supplies from the Baltics to be upwards of 400,000 MT. Current FOB price for prilled urea at between USD 350-360 PMT with freight down to USD 55 PMT making CFR India possible at around USD 405-415 PMT excluding margin and transaction costs.
Current FOB levels in the Middle East are around USD 400 PMT although one November cargo was reported sold from SiUCI in Oman at USD 420 PMT FOB. Pupuk Indonesia awarded 40,000 MT to Ameropa at USD 406 PMT FOB and the cargo is expected to be shipped to Latin America. The outlook for the urea market for the next 30 days is by some viewed bearish due to the long shipment period for the India tender.
The DAP market has been muted this week barring one cargo sold in India sourced from China at USD 594-5 PMT CFR although India is now asking for USD 590 PMT CFR. Chinese DAP FOB is at USD 575-580 PMT FOB.
MAP in Brazil saw a jump of around USD 15-20 PMT CFR to USD 550 PMT CFR on the back of limited supply.
The outlook for the processed phosphate prices is bearish. One reason is the expected decrease in the NBS in India which could be as high as 31% leading to pressure on both potash and phosphate prices. The other reason is that China expected to enter the market in the 4th quarter with up to about 1 million MT of DAP.
Not much to report on the international potash market this week with prices remaining unchanged. Buyers in Brazil are reluctant to commit, having been burned badly over the past 18 months with prices reaching a peak of USD 1,210 PMT CFR in April of 2022 only to fall 74% to as low as USD 320 PMT CFR earlier this year. The current price in Brazil for granular MOP is pegged at USD 350 PMT CFR.
A negative sentiment is also prevailing in SE Asia with the Pupuk Indonesia contract at USD 306 PMT CFR guiding the market. In addition, palm oil prices have slumped and the impact of El Nino creates uncertainties. Total demand for potash in SE Asia is by some expected to drop 7% this year to 5.4 million MT. India’s subsidy cut on potash could also weigh heavily on potash prices in the near term.
The ammonia market remains steady to firm on the back of supply issues both east and west of Suez. A reported Algerian sale of ammonia at USD 620 PMT FOB could mean a CFR price W Europe of USD 665 PMT CFR which is much higher than the current cost of ammonia production in Europe assessed at USD 500 PMT with USD 12 MMBTU gas cost.
In other regions the ammonia market was quiet with producers busy supplying contract cargoes.
The outlook for the ammonia market is positive for the next couple of months with the expectation that prices could come under pressure later in the year with more supplies coming back on stream.
