Insight Focus
- India is expected to import more than 1.5 million tonnes of urea under its latest tender – but this may be the last big selling opportunity of the year.
- While the ammonia market remains muted, processed phosphate prices are rising due to supply constraints.
- Conflict in the Middle East has so far not impacted Israel’s potash operations.
Eyes on India’s Urea Tender
Results from the India urea tender came out on Friday, October 20. Government agency IPL received offers at USD 400/tonne CFR West Coast of India and USD 404/tonne CFR East Coast of India. These numbers give Middle Eastern producers a netback of between USD 384/tonne and USD 386/tonne, which is substantially higher than netbacks provided for shipments to both Brazil and the US.
For shipments from China a netback of between USD 386-387/tonne FOB is estimated with freight rates to India of around USD 17-18/tonne. However, it appears that China’s National Development and Reform Commission (NDRC) has again implemented a halt to exports. It is therefore expected that only about four vessels will be participating in the India tender. The remaining tonnage for the India tender will come from Russia, North Africa and possibly Nigeria.
A significant 4.045 million tonnes were offered in this tender – possibly the last chance for a big sale in 2023. It is expected that IPL will secure in excess of 1.5 million tonnes of urea in this tender.
Iran’s official export price on granular urea is said to be USD 380/tonne FOB but actual sales have taken place at much lower numbers, which some indicate to be around USD 330/tonne FOB.
Brazil’s urea imports from January to September total 4.754 million tonnes, down 7.1% from 5.117 million tonnes last year. Thailand’s imports through September were 1.835 million tonnes, up 26.4% from 1.452 million tonnes for the same period of 2022. Italy’s imports through August jumped 48.4% to 1.005 million tonnes from 677,000 tonnes.
Processed Phosphate Prices Rise on Supply Constraints
Prices of processed phosphate are on the rise due to limited supply from Russia, where plant maintenance is taking place and exports from China are restricted. Pakistan is rumoured to have paid USD 612/tonne CFR for DAP this week and Brazil USD 360/tonne CFR for MAP, up another USD 10/tonne this week.
However, the Chinese government has informed domestic producers that the export quota for DAP will be 1 million tonnes. There will be a combined 500,000-tonne allowance for MAP and TSP. Some indicate
that around 800,000 tonnes have already been drawn from this combined 1.5 million tonnes, meaning there will not be much availability deeper into Q4.
In addition, the Indian government has yet to announce this year’s subsidy, which has encouraged importers to buy DAP with prices now USD 155/tonne higher than the low of July 2023. Current CFR DAP price in India this week remain flat at USD 594-595/tonne CFR.
It is expected that the Indian government could cut subsidies up to 31% which would lead to reduced pricing on imported DAP to India. This would most likely put pressure on international DAP prices as well.
Israeli Potash Production Remains Unaffected
The global potash market has been quiet this week with granular MOP prices in Brazil assessed lower at an average of USD 343/tonne CFR, the lowest since July 20. It is expected that prices in Brazil could drift lower in the weeks to come due to end-of-season buying. Standard MOP prices in Southeast Asia remain unchanged for the fourth week in a row at a range of USD 305-325/tonne CFR with limited if any upside.
Eyes have been on Israel’s MOP production at ICL’s 4.4 million tonne refinery, the fourth largest in the world supplying around 8% of global potash products in 2022. However, no disruptions have been reported.
All Quiet on Ammonia Market
The ammonia market has been remarkably quiet this week with no spot trade being reported. The Middle East conflict has seen the European TTF Q1/24 settle at EUR 55/MWh, which equals USD 17/MMBtu. This makes ammonia production costs in Europe USD 635/tonne ex works, excluding emission charges, which could lead to reduction in production with imports assessed at between USD 600 and USD 620 CFR.
