Insight Focus
- Chinese CIQ Urea inspections will resume in March.
- This means Chinese urea will enter the market in April/May.
- Prices have been falling as a result.
Predicting the future is not an enviable task but it appears inevitable that the general outcome for urea prices will be bearish. Fundamentals are pointing towards a correction unless something totally unexpected will happen.
With the announcement by China that CIQ inspections will resume by the middle of March with an initial processing time of 40 days, Chinese urea will enter the market at the end of April and the beginning of May. In response to this announcement prices for urea fell in the Middle East to the low USD 370s FOB down from as high as USD 385 PMT FOB week on week. Egyptian producers are struggling to maintain USD 380 PMT FOB levels due to lacklustre demand for urea in Europe. Demand from Australia and Thailand have subsided with the latter still a few weeks from the start of the main buying season. The only shining light at the moment is the NOLA/US FOB barge price with multiple deals this week at around the USD 400 Short Ton mark for March. However, the NOLA May market has seen physicals traded at as low as USD 334-335 Short Ton.
India again appears to be tendering soon for urea with the market expecting shipment times will coincide with Chinese availability which will put pressure on the regular suppliers from the Middle East and CIS. However, India alone cannot carry the international urea market – and we have seen evidence of this over the past few tenders when urea prices went down rather than up after a tender announcement. Europe needs to come into play to assist Egyptian producers.
On the processed phosphate side NOLA/US saw DAP prices reach around the USD 700 Short Ton FOB barge on the back of tight availability. MAP in Brazil saw a glimpse of USD 570 PMT CFR for small amounts but the majority of prices still at the USD 560 PMT CFR mark a price which has been carved in stone for the past 4 months! India appears to have continued buying DAP at USD 595 PMT CFR on a limited volume due to uncertainty of the NBS subsidy situation for the Kharif season. According to market sources the importer break-even is at USD 535 PMT CFR. In addition, Chinese supplies will become available at the end of April and the beginning of May and it is expected this will bring downward pressure on prices on all processed phosphates.
According to ANDA, full year 2023 phosphate consumption in Brazil was up 10% year on year to 6.41 million MT P2O5 versus 2022 of 5.8 million MT. Fertilizer production in 2023 reached 1.53 million MT P2O5, down 2% from 2022. MAP imports on the other hand increased year on year 21% to reach close to 5 million MT. MAP production in Brazil decreased 9% year on year to 448,996 MT P2O5.
Potash markets only shining light is Brazil where prices averaged USD 300 PMT CFR, the highest in 2024. SE Asian markets remain unchanged and are awaiting final results from the Pupuk Indonesia tender for price guidance. Average granular MOP prices in SE Asia have dropped 10% this year while standard MOP dropped 5%. India keeps on negotiating contract prices for the coming season and expectation is that India is pushing hard for a settlement in the USD 280-290 PMT range. India imported 300,000 MT of Potash in February which was up 700% year on year and 47% higher than January 2024.
In general, the potash market is in a bearish mood and it’s expected that prices will be under pressure for the coming months.
Price discovery on ammonia has been elusive this week with producers selling on CFR basis rather than on FOB. The ammonia market appears to be relatively stable with fundamentals continuing to balance out surpluses in Asia. Morocco and India were the only two major markets active in the past week both buying on CFR basis.
Middle East spot prices are reported in the range of USD 270-290 PMT FOB whilst contract prices have a higher and much wider range of USD 300-350 PMT. It is expected that both Saudi Arabia and Algeria would enter the export market soon to alleviate increasing inventories.
The Tampa contract price was rolled over at USD 4450 PMT CFR Tampa.
The outlook for the ammonia market is stable to soft.
