Insight Focus
- Middle East Granular Urea Prices Now Firmly Below USD 300 Fob
- Processed Phosphate Prices Following Urea Prices Lower
- No India Potash Contract Settlement And Potash Prices Also Keep Going Down
The global urea market is struggling to find a floor on prices and they have dropped to June 2021 levels. Lower than expected India buying, slowing down on European buying and bad weather in the midwest of the US and Latin South American buying still a few months away have contributed to pressure on prices. In addition, freights to major destinations have increased over the past couple of weeks lowering FOB levels even further.
Adding to this is the fear among buyers that Chinese urea will become more available and signs of this happening is in the export statistics for January-February 2023 with 407,271 MT exported up 72% y/Y with India taking 240,840.
Middle East granular urea prices are now firmly below USD 300 PMT FOB with netbacks for shipments to the US/NOLA and Brazil reported to be closer to USD 280 PMT FOB.
Brazil CFR prices are now reported as low as USD 310-320 CFR. Iranian granular urea prices are said to be around the USD 260-270 FOB range.
SE Asian producers are offering/selling granular urea at a premium to the Middle East due to intra coastal smaller vessel shipments to the Philippines which is not economically possible from the Middle East. Latest FOB indication from SE Asia producers at around USD 325 FOB. If this level is sustainable remains to be seen, all subject to demand, and with the Australian and Thai markets being supplied from the Middle East at well below USD 350 CFR.
Processed phosphate prices are following on from urea price developments. India is reported to have bought 40,000 MT of Russian DAP at USD 578 CFR which is down from the last reported sales in the range of USD 610-615 CFR. India is getting ready for the Kharif application season and with imports reported at closer to 2 million MT for the January to April arrival period and a total inventory estimated at closer to 4 million MT, up from closer to 3 million MT Y/Y.
India appears to not be closer to agreeing on a Q2 phosphoric acid contract settlement with major suppliers like OCP of Morocco. It is estimated that India will be requesting a substantial reduction from the current price of USD 1,050 CFR for 100% P2O5.
MAP prices in Brazil have also taken a weekly tumble now at a range of USD 620-630 CFR, down around USD 30 over the last few weeks.
India is at the focus also on potash and there has been no report on a settlement for the new potash contract price with the result of global potash prices declining every week. The current India contract price is USD 590 CFR but it is now expected that this price could drop below USD 400 PMT CFR. SE Asia standard potash prices, which normally are a good indication on an India price, has dropped USD 80 PMT since the start of 2023 and is now reported at USD 440-460 PMT CFR range with further declinces expected. The Brazil granular potash price is reported in the range of USD 440-460 CFR down another USD 10 PMT from last week.
On ammonia, the Tampa MOSAIC and YARA April contract price was agreed at USD 435 PMT CFR, down USD 155 PMT from the previous price and well below the October 2022 price of USD 1,175 PMT CFR price. The ammonia market is very quiet with few deals agreed except for China having bought at a reported USD 380 PMT CFR with Indonesia origin, down USD 75 PMT from the last purchase two weeks ago.
In summary, the global fertilizer industry is currently and has for some time been experiencing lack of demand and tumbling prices. The key question is – when will there be a price floor established?
