Opinion Focus
- High gas prices mean strong netbacks for urea exporters to Europe.
- Sulphur price plunge weighs on phosphate market.
- Potash prices expected to fall due to bearish fundamentals.
Offshore Urea imports to the US East Coast and New Orleans were significantly higher during the July 2021-June 2022 season at 5.11m tonnes compared with 3.85m tonnes the year before.
There are two reasons for these massive imports: The first is the reduction in domestic production due to Hurricane Ida in August 2021; and the second, US producers switching production in favour of urea-ammonia nitrate solution in the second half of the year.
In addition, due to severe weather in the US, exports and re-exports of urea grew in 2021/22 to 798k tonnes from 665k tonnes in 2020/21.
High netbacks for urea exports to Europe
Source: Shutterstock
The current international market for urea is subdued apart from the European market where high gas prices offer high netbacks to producers from a myriad of origins. The Southeast Asian and Oceania markets are all very quiet with high inventories in Thailand and the market in Australia coming to an end for the season.
Phosphate, Potash Prices Seen Falling
Source: Shutterstock
Di- and monoammonium phosphate (DAP/MAP) producers are under pressure from buyers to reduce prices after sulphur prices plummeted around 75% over the last 30 days. Sulphur is a key ingredient in processed phosphate production. It is therefore expected that producers may be forced to cut prices to move cargoes from inventory at the end of August and throughout September.
Potash prices are expected to extend their fall as weak demand persists across all global markets and supply from the former Soviet Union continues to grow despite Western sanctions.
Ammonia prices are flat due to lack of demand from Europe as well as OCP of Morocco keeping a low profile on imports.
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