Insight Focus
- India’s urea tender on Monday could be concluded below USD 300/mt.
- India alone cannot carry the urea market.
- Many other fertilizer markets remain bearish.
Simply put – the international urea market is expected to be under downward pressure for the next couple of months. On Monday the RCF India tender will close and prices will be known within the following 24 hours and the bet is that the L1 price will be sub USD 300 CFR.
Current Middle East range is USD 280-290 FOB but could drop even lower with the impending and expected low price results in the India tender.
Russian products will surely come in at below USD 300 CFR – the issue is rather how much lower. Freight rates from Russia have dropped a good USD 25 PMT over the past few weeks.
Chinese products will also feature but to a lesser extent. A sudden unexpected surge in domestic demand saw prices in China edge above USD 300 PMT FOB with some traders having sold short well below USD 300 PMT FOB.
In all, the India tender calls for 800,000 MT but the government may buy more if prices come in at lower levels than expected.
The latest CFR price heard for the Australian market is USD 345 CFR but that price should easily be beaten by now – prediction is that we can see USD 320 CFR east coast – or a tad lower with freight rates coming down sharply over the past couple of weeks from the Middle East.
In all, unless major markets come in with substantial purchases, with India alone not able to carry the market – we will see urea prices continuing to struggle over the next couple of months until Brazil shows strength and the European market comes into play.
Processed phosphate prices are also under downward pressure with limited or no demand in any market bar the scant India activity which saw yet another week of decreasing prices. India CFR range now is said to be in the USD 483-493 band with Indian prices having fallen an average of USD 210 PMT or 30% since the start of 2023. It is expected that DAP prices will gravitate towards USD 400 PMT over the next 6 months.
Brazil’s MAP price fell another USD 5 PMT this week and is now hovering around the USD 450-470 PMT CFR range. Large inventory buildup in the 1H of the year and falling ag commodities have meant less affordability for the Brazilian farmers.
The only light in the tunnel is the announcement by the Bangladesh government on a 630,000 MT combined DAP/MAP/TSP tender closing on June 25th. Competition will be fierce and will set the price trend for the following months.
The potash world is in shock on the announcement of CANPOTEX and China concluding a contract at USD 307 CFR – down USD 80 PMT from the most recent India contract and down from the USD 590 CFR from the previous year.
The industry is divided on the reaction with some claiming that unless CANPOTEX caved in they would forfeit the opportunity to sell.
Brazil potash prices are continuing the downward trend with the range this week between USD 330-350 PMT CFR down from last week of USD 350-380 PMT CFR. The current price is the lowest since April 2023 and down USD 175 PMT since the start of 2023.
SE Asia standard MOP is now trading between USD 410-420 PMT CFR with little demand and buyers expecting lower prices on the back of the new China price.
The outlook for potash is grim with too much product chasing few buyers.
The global ammonia market is split between what is happening in Europe, which is about nothing, and what has been concluded in Asia with prices gaining USD 15 from USD 285 CFR last week to USD 300 PMT CFR this week. All this is related to production shutdowns and not increased demand.
This week the ammonia pipeline between Togliatti and Yuzhnyy got hit and albeit it has not been in operation for some time – the prospects for ammonia supplies are now severely hampered. The war mongering Russians claim the Ukraine side did the damage and says that a grain deal will most likely not be renewed.
Current FOB ammonia prices in the Middle East dropped another USD 15PMT this week and the range now is between USD 210 -250 PMT FOB.
The outlook for the ammonia market is bearish to say the least.
