Insight Focus
- India’s delayed spot tender and low demand generally for urea.
- Some industry insiders are discussing production curtailments.
- Middle East urea traded at a 17-month low this week.
The start of 2023 has not been gentle on urea prices which are described in free fall.
The Middle East traded at USD 430 FOB this week at a 17 month low. NOLA traded February barge at USD 375 Short on FOB, a 19th month low before rallying to USD 425 short ton.
The consensus in the market is that the longer India delays announcing a spot tender, and with no support from demand in Brazil, US, Turkey and Europe, prices will remain under pressure. Some industry insiders are even discussing the possibility for production curtailments.
Brazil’s urea import for 2022 showed a volume of 7.2 million MT which is 7.9% down from the previous year. Nigeria increased its shipments by 44.2% to reach 1.217 million MT whilst Oman producers increased their volume by 27.9%, reaching 1.594 million MT. Qatar lost 21.8% to 1.418 million MT from 1.814 million MT.
On the processed phosphate side the only shining light is MAP prices in Brazil which traded an average of USD 8 PMT higher to reach USD 655-660 CFR. This is up an average of USD 55-60 PMT from early December on the back of improved affordability. European DAP prices remain high at USD 810-825 FCA – a whopping USD 160 higher than MAP prices in Brazil.
The Indian Department of Fertilizers is proposing a USD 60-100 PMT decline in subsidy for the January – March period in order to decrease the high subisdity bill. Starting in April, the department is proposing a cut of overall subsidies by up to 40% which if happens, could lead to as much as USD 215 PMT drop in support of DAP,
Ammonia prices lack direction with European producers contemplating restarting production with gas prices now around the USD 20 MMBTU mark If this happens, European producers will be able to produce below current import prices of around USD 925 CFR. Ammonia trading in general has been muted this week with the only exception of a Chinese cargo finding a home in Taiwan at a reported USD 750 CFR.
Potash prices in the US slumped this week with Canadian producers easing prices in the Midwest. In addition, the NOLA barge market dropped an average of USD 43 short ton to USD 400-420 ST FOB barge on the back of aggressive overseas supplies. Other regions like Brazil and SE Asia remained flat with no buying activity. Brazil is at USD 500-530 CFR and SE Asia at USD 500-560 CFR. Buyers appear to be waiting for direction and a possible contract price coming out of India. SE Asian buyers are also expecting palm oil prices to come down this year.
The year 2023 appears to become a challenging year with agricultural commodities prices dropping, USD remaining strong, and with lots of fertilizers chasing few buyers.
