Ammonia Supply Ramps Up

Opinions Focus

Ammonia production is resuming in Poland and Germany.
This adds to worldwide supply, which now exceeds demand.
India and Pakistan are tendering for urea.

I recently wrote that phosphate and potash prices were falling. Now ammonia supply is also increasing and exceeds demand. Reports are now coming out that ammonia production is resuming in both Poland and Germany. This on top of length in ammonia in Indonesia, China and possibly Bangladesh seeking outlets in Europe where prices are now pegged at USD 1,200 CFR duty paid. OCP of Morocco is absent from the market, and Indian buyers are sniffing lower prices from the prevailing high USD 800s CFR east coast.

Elsewhere, all eyes are now on the India urea tender closing on October 17th. RCF is expected to book between 1-1.5 million MT to fill the expected 3 million MT import demand needed through January 2023. Further to the India tender, Pakistan surprised the market with a tender closing on the same day as India for 300,000 MT to be shipped by December 5th. Consequently, producers are not in a hurry to conclude imminent spot deals hoping for improved prices in both India and Pakistan. However, again, China may spring a surprise since producers in China are processing export permits and it is anticipated that up to 300,000 MT could be made available for the India tender. Chinese FOB prices are sub USD 600 and with a freight of around USD 20 PMT, India’s lowest CFR price may not be to the liking of other producers.

Processed phosphate prices are under pressure with the benchmark phosphoric acid 4th quarter negotiations in India hitting a snag. The government of India wants CFR prices not to exceed USD 1,100 – down from the last negotiated price of USD 1,715 CFR. Indian buyers have booked 6.2 million MT of DAP for 2022 arrival which is up 30% y/y. Current DAP prices in India are pegged between USD 720-740 but buyers are requesting lower prices for November shipment. MAP prices in Brazil keep falling now pegged between USD 650-660 which is down an average of USD 645 PMT or 49.6% down from the highs in April 2022. The market is expecting that Brazil’s MAP prices to fall towards USD 600.

Potash prices are now fragmented globally with a downward pressure in all regions. SE Asia prices are expected to fall and come in line with Brazilian MOP prices which on average are USD 165 lower than the current SE Asian prices. MOP prices in Brazil fell another USD 10 this week now pegged between USD 620-640 CR, down an average of USD 545 PMT or 46% since the peak in April 2022.

Stein Chingen Haugan

Stein C Haugan, boasting four decades of experience and an extensive global fertilizer network, founded Fertimetrics Pte Ltd in Singapore in June 2019. The company offers advisory, consultancy, and brokerage services aimed at helping businesses and individuals enhance their core competencies and create sustainable incremental value.

Stein’s fertilizer expertise encompasses senior management roles and board representation positions with Yara International ASA and Ma’aden Phosphate Company. He has also successfully established and managed fertilizer trading companies. Stein holds a master’s degree in business from the University of Oregon and has completed postgraduate studies at IMD.