Insight Focus
- India has delayed a spot tender for urea.
- Demand is also weak in Brazil, US and EU.
- Producers are having to rethink their prices for January.
Instead of announcing a spot tender for urea, India announced a 12 month supply contract tender for 600,000 MT to commence on March 1, 2023 with expiry 29th February 2024. Consequently urea prices fell across the board and are now reported to be sub USD 450 FOB the Middle East and sub USD 500 FOB Egypt. The Brazilian market traded down to USD 460-480 CFR down from a previous range of USD 485-500 CFR range. NOLA/US area barges have traded to a 17-month low.
Unless major markets pick up steam we may expect to see lower urea prices in the weeks to come. Producers at all origins have substantial volumes to place in January.
There’s also news that Indonesia urea producer Kaltim is considering a USD 500m IPO.
Phosphate prices also fell the first week of January 2023 with the only light in the tunnel being MAP prices in Brazil recording a USD 15 PMT improvement from the previous week now assessed at between USD 645-655 CFR with some say as high as USD 660 CFR. This represents an improvement of USD 50 PMT since early December 2022.
DAP prices in India fell another USD 15 PMT now trading at USD 690-705 CFR band.
The potash market is expecting a long term contract to be concluded in India within the next few weeks with anticipation of prices to be around the USD 450-500 CFR mark. This would be down from the current USD 595 CFR contract price.
SE Asia prices keep falling on standard MOP down another USD 10 PMT to reach a level of around USD 500-510 PMT CFR. Further declines are expected since buyers are holding back on commitments for replacement tons.
Granular MOP prices are stable and unchanged at between USD 500-530 PMT CFR.
Ammonia prices in Europe are under pressure due to lower TTF gas prices which may see European producers come back with production. In addition, the restart of Kaltim 5 in Indonesia may see them look for markets outside of SE Asia China putting further pressure on ammonia prices in Europe. The Tampa January 203 ammonia contract was concluded USD 55 PMT below the previous contract which was at USD 975 CFR.
The Indian government is also reported to be looking to reduce its fertilizer subsidy by up to 40%, from INR 2.3t (USD 27.8b) to INR 1.4t (USD 16.8b).
The start of 2023 has indeed been gloomy for the fertilizer industry at large and the next few weeks may see even lower prices unless major markets pick up steam.
