Insight Focus
- India buys less than 600,000 mt vs anticipated 800,000 mt sought.
- Processed phosphate prices heading south with ample supply and low demand.
- Sharp increase in month ahead gas prices in Europe.
The RCF India Urea tender did not go to plan for RCF since the committed volume from producers and traders alike came in at sub 600,000 MT versus the intended purchase of 800,000 MT with the distinct possibility of buying even more if prices came in low enough. Prices did come in low enough at USD 284.90 CFR East Coast India and USD 279.70 CFR West Coast India but at levels too low for the overwhelming 19 entities offering a total of 2.519 Million MT. Returns to the Middle East of close to USD 260 PMT FOB are only possible for producers and with returns to Russian (Baltics) suppliers coming in at around the USD 235 PMT FOB mark. It is now expected that all the tonnage for the India tender will be supplied from the Middle East and Russia with maybe one cargo from China. It was widely expected that China would feature heavily in this tender but unexpected increases in the domestic market price prohibited Chinese interest. However, it is expected that Chinese urea will come into the international market once the domestic season is over in the next month or so.
Brazilian buyers are also holding off with the most recent price offers in the ranges between USD 270-275 PMT CFR with bids coming in at around the USD 265 PMT CFR mark.
Egyptian producers took advantage of the sudden increase in the gas price in Europe with the highest sale at USD 304 PMT FOB with traders stepping in covering shorts in Europe. The one month ahead TTF gas price in Europe had come down as low as USD 7 MMBTU a few weeks ago only this week trading at above USD 14 MMBTU.
Australian imports of urea in the first four months of 2023 ended at 809,000 MT, up 69,000 from 2022 but down from the 900,000 MT imported in the same period in 2021. Major suppliers to the Australian market were producers in the UAE, Qatar, Malaysia and Saudi Arabia with Brunei making a smaller entry.
In summary, the outlook for the urea industry is that of length with product becoming available in China, and increased supplies from SE Asian producers in Malaysia and Brunei once they get their factories up and running and with Indonesia returning to the international market in July from supporting the domestic market in June.
The global processed phosphate market was quiet this week with even India absent from any deals. Buyers are eyeing lower prices and some market insiders think that USD 400 PMT DAP price is not an impossible outcome. Ample supplies from all major producers in Saudi Arabia, Morocco and China combined with weak demand sets the stage for pressure on prices.
The global potash market is coming to terms with the most recent CANPOTEX China contract price of USD 307 PMT CFR down from the previous USD 590 PMT CFR and down from the India settlement of USD 422 PMT CFR. Indian buyers are now reported to be asking for a renegotiated potash price on the back of the new contract price in China.
Prices are coming down in all major markets. Brazil’s granular MOP price this week is assessed at between USD 330-340 which is down USD 180 PMT or 35% since the start of the year. Further declines are expected.
The SE Asia standard MOP price is now falling towards USD 340 PMT CFR.
Uralkali is reported to have agreed a supply MOU contract with five major importers in China where potash will be shipped on rail. Each of the five importers are expected to buy between 200,000 – 300,000 MT of potash with a combined volume of 3.5 million MT over a three year period.
The European ammonia market is on hold expecting a decision by the European Commission on the status of import duties of 5.5% to be reinstated which have been suspended since December of 2022 and valid until June 17th. In addition, the month ahead TTF gas price has increased sharply from a low of USD 7 MMBTU a few weeks ago and settling at above USD 14 MMBTU On Friday June 15th which made ammonia production cost increase to USD 575 CFR equivalent vs imports prices of between USD 355-360 PMT CFR.
Ammonia prices in the Far East reflect USD 300 PMT FOB Indonesia with small sales in China reported at around the USD 330 CFR mark.
