Insight Focus
- Chinese urea exports fell sharply in 2022.
- OCP of Morocco signs MOU supply contract with Indian buyers for 1.7 million MT of processed phosphates.
- Ammonia prices under enormous pressure due to substantially lower gas prices in the US and Europe.
The global urea market goes from bad to worse.
US/NOLA prices fell this week to a two year low range of USD 340-390 ST FOB barge versus the previous week range assessed at between USD 385-418 ST.
Middle East producers are offering at between USD 390-400 PMT FOB with little traction thus now producers are offering formula pricing for February shipment. Prices reported with producers in SE Asia range between USD 400-420 PMT FOB.
Lack of demand from major markets like Brazil, the US and Europe in addition to India delaying announcing a spot urea tender are all supporting further falls in urea prices. Question is for how low the urea price will need to go before incentives to buy kick in.
In 2022 the Chinese urea export fell to 2.8 million MT versus 5.29 million MT in 2021 and 5.45 million MT in 2020. India was by far the largest market for Chinese producers with 1.2 million MT.
Thailand imports in 2022 fell 21% to reach 1.77 million MT versus 2.25 million MT in 2021 and 2.34 million MT in 2020. Largest supplier to the Thailand market in 2022 was Saudi Arabia with close to 700 KT followed by Malaysia with just above 400 KT then Qatar with close to 400 KT. Government ceiling prices to assist affordability for farmers put brakes on imports.
On another note on the nitrogen side, the US government has extended anti dumping measures against Chinese produced ammonium sulphate for another five years with anti dumping tariffs of 493.6% and counter available tariffs of 206.7%.
The processed phosphate market is awaiting the India phosphoric acid Q1/23 contract price with the India government looking to achieve a settlement of sub USD 950 CFR for 100% P2O5 versus the Q4/22 price of USD 1,175 and Q2/Q3 2022 price of USD 1,715. Last week’s Chinese sale of DAP to India at a reported USD 660 CFR has alerted buyers to lower prices to come thus very little activity has taken place this week. In addition, it is expected that the India government will significantly reduce subsidies of fertilizers in India which have received a massive level of more than USD 30 billion.
OCP of Morocco has announced an MOU with various buyers in India totalling 1.7 million MT of which DAP represents 1 million MT and TSP 700 KT. The latter is a surprise since India has never been an importer of TSP on any scale.
OCP increased its sales of DAP to India in 2022 by 150% to reach 1.9 million MT giving them a market share of India DAP imports of 31%. Russian suppliers increased their sales to 716,605 MT, up from 92,563 the year before. The US increased its exports to India to 238,466 MT from zero the year before. Trade flows changed dramatically on the back of reduced Chinese exports of DAP which in 2022 fell to 3,571 million MT from 6,256 the year before, a drop of 42.8%. Chinese MAP exports dropped to 1,946 million MT from 3,785 million MT, a drop of 48.6%.
The global potash market has been inactive this past week. Again India is playing a major role with the market looking for India to settle contract prices and volumes for 2023. However, the India government is reported to be considering reducing its phosphate and potash (P&K) subsidy thus any settlement could be delayed until the subsidy levels are decided.
Chinese imports of MOP in 2022 increased 4.3% to 7,999.7 million MT up from 7,673.5 million MT. The surprise is the volume of imported Belarus MOP at 1.91 million MT, up 9% from the previous year. Belarus is also rumored to be in discussion the the Indonesian government on a government to government (G/G) supply arrangement – all this on the back of sanctions against Belarus exports.
Ammonia prices are under enormous pressure with a bearish outlook resulting in a February Tampa price agreed between Yara and Mosaic at USD 790 PMT CFR, the lowest level since October 2021 which settled at USD 625 PMT only to reach USD 828 CFR in November and another USD 165 PMT in December.
The Henry Hub gas price in the US this week reached a level sub USD 3 MMBTU for the first time since the middle of 2021. Gas prices in Europe have also reached levels which saw ammonia production cost in Europe getting closer to USD 700 PMT.
Chinese ammonia imports fell dramatically in 2022 reaching a volume of 231.5 KT down from 808.6 KT. Exports surves to 238.2 KT, up from 2.2 KT the year before.
