Insight Focus
- Processed phosphate prices keep on falling bar the US market.
- Ammonia price war in the Far East sees low prices.
- Potash market prices coming down across the board except for the USA.
Price increases this week on urea, except for a late spring rush of NOLA/US imports, were more a result of production cutbacks rather than a demand surge. An undisclosed and with few details incident in the Petronas Sipitang (Malaysia) production unit caused it to close down and will remain closed for an unspecified period of time. It is rumored that Petronas may have bought Middle East urea to fill contractual demand in the SE Asia Pacific region. BFI of Brunei will be down for most of May due to a scheduled maintenance of the Brunei gas network. Latest FOB Brunei pricing is said to be closer to USD 330 PMT FOB for April/May shipment. Combined these two production outages resulted in Middle East urea increasing around USD 30 PMT in one week and is now at or around the USD 325-330 FOB mark with one producer claiming to have sold at USD 330 PMT apparently for the Australia market. However, it appears that this price increase might be short lived with buyers in the southern hemisphere resisting higher prices on the back of future more availability now that China will ease restrictions on May 1st plus massive export increases announced by Russian customs on all products from June 30th to November 30th. On top of this Iranian product is sold in Brazil at around USD 320-330 PMT CFR. Activity on the fertilizer front will come to a halt this week with Eid Mubarak being celebrated in the Middle East, Indonesia and Malaysia.
The market is also anticipating India to come back with a major spot import tender with some expecting this to happen in May rather than June. India’s drive to become self-sufficient on urea got a boost in the first quarter of 2023 with domestic production reaching 7.4 million MT up 17% Y/Y. Import for Q1 2023 was a palty 1.34 million MT down 58% from Q1 2022.
Phosphate prices keep on tumbling with India down another USD 11 this week to USD 553-555. Chinese producers have failed in their bid to maintain the lowest export price at USD 550 PMT FOB and it appears that as low as USD 525 – 530 PMT FOB has been achieved by some buyers. India DAP CFR prices are down USD 147 PMT since the start of 2023 and with Kharif subsidies on potash and phosphates expected to be down 38% INR 440 billion (USD 5.37) the downward pressure on prices could be maintained for the foreseeable future.
Brazil’s MAP price was down another USD 10 PMT this week reaching USD 580-590 PMT CFR with some saying as low as USD 570-580 PMT CFR.
The international potash market did not take much comfort in the contract settlement in India at USD 422 PMT CFR down from the previous level of USD 590 PMT CFR. This is because it is a short term deal and no other contracts have been agreed. Except for the US market, all other markets continue the price fall. SE Asia granular potash prices fell another USD 20 PMT this week to USD 480-500 PMT CFR albeit still being around USD 60 PMT higher than the price in Brazil at USD 420-440 PMT CFR.
The global ammonia market continues to be under price pressure with the Middle East FOB level down another USD 20 PMT reaching a range of USD 250-280 FOB. Far East prices are now at USD 300 PMT CFR down another USD 25 PMT CFR with sales reported to Taiwan and PR China. All eyes are on the Tampa Mosaic Yara price settlement for May with the market expecting a price well below USD 400 PMT CFR down from the April price of USD 435 CFR.
On another note of concern, Reuters has reported that major scientists have warned that the world could breach a new average temperature record in 2023 or 2024, fueled by climate change and the anticipated return of the El Nino weather phenomenon, climate scientists say. Climate models suggest that after three years of the La Nina weather pattern in the Pacific Ocean, the world will experience a return to El Nino later this year.
In summary, with Russian customs announcing all time high exports of fertilizers from Russia for the period June 30th – November 30th and with China expected to come into the market with force from May 1st, and with OCP reported to have another 3 million MT of processed phosphates available for exports in 2023, the outlook for fertilizer prices are grim unless major buying take place from markets like Brazil, the US and Europe. The northern hemisphere summer will limit both US and Europe from engaging on any meaningful buying spree.
