Insight Focus
- High gas prices supporting European ammonia prices
- Chinese import restrictions on phosphates offsetting sulphur price drop
- Falling palm oil prices dampen SE Asian potash demand
Both raw materials and processed fertiliser prices are falling except for ammonia prices in Europe because of high gas prices.
Sulphur prices in the Middle East were assessed at USD 150-200 a tonne FOB, a fall from a peak of USD 470-485/tonne in mid July 2022.
Sulphur is a key ingredient of granulated phosphates such as di-ammonium (DAP) and mono-ammonium phosphate (MAP) through raw materials inputs of sulphuric acid then phosphoric acid.
The main reason prices plummeting is greater sulphur supply in the US, Europe, the Middle East and China coupled with demand destruction.
It is expected that prices will fall further in the weeks to come.
Chinese Export Limits Support Phosphate Prices
Some market observers think the fall in sulphur prices could lead to lower DAP and MAP prices. However, with restrictions on exports from China having caused a drop in exports of over 4m tonnes to 3.33 m tonnes in the first half of 2022, prices are expected stabilise at current levels of around USD 925/tonne CFR India. Production rates in China are now believed to be less than 50% of capacity.
On the other hand, OCP of Morocco, a leading producer, has said that it will increase granulated phosphate production by 10% to 11.8 million tonnes a year.
Indian Urea Tender Prices Low
The lowest prices of USD 517/tonne CFR East Coast India and USD 520/tonne CFR West Coast at India’s 500,000-tonne urea tender last week rendered a netback to Middle Eastern producers of less than USD 490/tonne FOB. This marked a significant drop because in the week leading up to the tender, sales were made at USD 580/tonne FOB.
US barge prices are also down from a 52 week peak of USD 925 short ton FOB New Orleans barge to last week*s price of USD 470-510 short ton.
Potash Demand Weak
Potash prices are also under pressure from a lack of demand and a build-up in inventories. In addition, Russian supplies are finding their way to more and more destinations despite payment issues and logistics challenges.
Prices in Brazil are unchanged this week at USD 900-1,000/tonne CFR however, there have been no sales, making it difficult to pin the market price down.
Southeast Asian demand is also muted because crude palm oil prices are falling and plantation owners are reluctant to add to their large inventories. Prices are pegged at USD 980-1,000/tonne CFR, down from an all time high of USD 1,015 CFR. By comparison the standard potash price was USD 280/tonne CFR SE Asia in April 2021.
