Insight Focus
Urea prices remain volatile after Middle East conflict disruptions. Phosphate prices continue climbing due to China’s export restrictions, with Jan–May volumes at their lowest since 2002. ICL settled potash contracts with China and India, while Brazil faces affordability concerns; ammonia prices have risen following global supply issues.
Urea Market Tightens Amid Supply Disruptions
The international urea market is supply-driven, much like the processed phosphate market. Egypt’s gas supplies are said to be coming onstream on June 27, with urea plants operating at reduced capacities of 50–60%. Plants have now been down for 14 days since the conflict started on June 13. Iran’s urea production is still halted as well, but it is expected to resume on June 28.
Annual net production capacity in Iran is 8.7 million tonnes, with monthly production at 725,000 tonnes and peak exports around 500,000 tonnes. Iranian Lordegan is said to announce an export tender with bids due midday on June 29, and the cargo is most likely coming from inventory.
On the trading side, SIUCI of Oman is reported to have sold two cargoes for August shipment—one priced at USD 495/tonne FOB and the other at USD 525/tonne FOB. The trader appears to be motivated by the Middle East conflict and the possible closure of the Strait of Hormuz.
In Southeast Asia, tenders saw Pupuk Indonesia secure a large cargo at USD 452.11/tonne FOB, while BFI of Brunei obtained USD 470/tonne for two 6,000-tonne lots scheduled for prompt shipment.
NOLA/US is in the off-season, and prices have tumbled, with the latest CFR equivalent to USD 419–424/tonne. Brazil has yet to enter its prime buying season, but it is drawing closer each week, with the latest reported deal involving Chinese material at USD 425–430/tonne CFR.
Argentina’s urea imports for January–May were 188,000 tonnes, down from 280,000 tonnes for the same period last year. About 67,000 tonnes came from Qatar, 31,000 tonnes from Egypt and 28,000 tonnes from Turkmenistan. May was the busiest month with 106,000 tonnes, including the full 67,000 tonnes from Qatar, plus 25,000 tonnes from Algeria and 8,000 tonnes from Bolivia.
Spain’s imports for January–April were 418,000 tonnes—the largest amount for this period in a decade—up from 333,000 tonnes in January–April 2024. Egypt was the key supplier with 220,000 tonnes, followed by Russia at 48,000 tonnes and the Netherlands at 45,000 tonnes.
The major issue for the urea market is the recently announced India tender for 2 million tonnes, closing July 7, with shipments by August 22. India has not been very successful lately in achieving targeted volumes and was hit hard by the recent Middle East conflict, securing only 229,000 tonnes at USD 399/tonne CFR—well below the 1.5-million-tonne target.
The outlook for the urea market is stable to strong, supported by the upcoming India tender and Brazil soon entering its major buying season. However, there are indications that China may increase export availability by another 2 million tonnes, bringing the total to 4 million tonnes. This could lead to a modest correction but not to pre-war levels.
Phosphate Supply Remains Strained
The processed phosphate market remains constrained, with limited supply driven by export restrictions on DAP/MAP from China. Between January and May this year, China exported 184,000 tonnes—the lowest since 2002. In comparison, exports in the same period in 2023 were 2.36 million tonnes. Current DAP/MAP values in China are now reported at around USD 740–750/tonne FOB. India’s ongoing need to import DAP has driven prices close to, or even above, USD 800/tonne CFR, as offered by OCP.
Prices for DAP in China have climbed from USD 636/tonne CFR in May to the most recent deals at USD 790/tonne CFR.
Brazil’s MAP prices have increased by another USD 5/tonne, reaching USD 755/tonne CFR. Affordability is a growing concern, and buyer resistance may indicate that MAP prices have reached their cap.
Additional DAP demand from Ethiopia has absorbed supply in an already tight market. EABC last week awarded two lots under its June 16 restricted DAP tender, with supply coming from China. The importer has issued a series of DAP tenders over the past several months, shifting away from NPS and soaking up available DAP supply. EABC has historically imported over 1 million tonnes/year of NPS from Morocco. It is understood that the importer has booked more than 1 million tonnes of DAP for arrival this year, in addition to a Q4 2024 cargo of around 55,000 tonnes from China.
Prices are expected to rise further in the coming weeks as demand increases while supply remains exceptionally tight. Affordability concerns persist, but buyers have few alternatives. A reversal in trend appears unlikely until at least Q3, and that will depend on supply improving and buyers becoming more comfortable.
Potash Holds Steady Amid Contract Settlements
Major potash contracts have now been finalised, with the latest from ICL of Israel agreeing to sell 750,000 tonnes to China at USD 346/tonne CIFFO, with an option for an additional 340,000 tonnes. ICL has also agreed with India’s IPL to supply 400,000 tonnes, with an option for another 100,000 tonnes at USD 349/tonne CIFFO. Notably, China is paying a small premium over India—an uncommon occurrence.
Early last week, Arab Potash Company (APC) and IPL agreed to the 2025 potash supply contract as part of their multi-year deal for 2022–2026, although specific volumes for the year were not disclosed. Market sources expect APC to sign a supply contract with China soon. Elsewhere in Southeast Asia, prompt prices remained unchanged as demand was muted and buying activity limited. Standard MOP prices reached USD 345–360/tonne CFR, while granular MOP prices stabilized at USD 370–385/tonne CFR.
In the Americas, prices in Brazil remained unchanged for the seventh consecutive week due to weak demand. Despite higher offers circulating, sources suggest sellers may face pushback from farmers.
Following recent contract settlements, prices are expected to trend upward in the coming weeks. However, concerns are emerging over Brazil’s price outlook, with some believing it may be nearing a ceiling.
Ammonia Market Turns Bullish
The ammonia market has swung significantly into bullish territory over the past week amid supply concerns in the Americas, North Africa and the Middle East. Combined with a notable uptick in demand from concerned buyers on both sides of the Suez, a price rally has emerged. However, it could be short-lived if supply normalises soon.
While supply constraints in Iran and Saudi Arabia were widely reported, fresh capacity curtailments in Algeria, Trinidad, and the US Gulf have created additional challenges for major players in recent days. As a result, the Yara–Mosaic July contract settlement increased by USD 25/tonne, setting a new price at USD 417/tonne CFR.
With Iranian producers now restarting operations after brief shutdowns, Indian buyers will be keeping their fingers crossed that cargoes flow again very soon. Spot demand in Northeast Asia remains in a lull, but the loss of Saudi and Indonesian volume has led suppliers to revise their price targets upwards.
Prices in the West could rise further if gas curtailments in the Caribbean materialise, while values in the East could be supported by an extended turnaround in Saudi Arabia.
