Insight Focus
- Urea prices continue to tumble.
- Some hope for Urea producers of another large Indian tender.
- No ammonia buyers in sight, tanks reaching capacity.
Global urea prices are continuing to take a severe beating. Prices are still tumbling and there is very little optimism except for the rumor of a meeting on February 17th at the Department of Fertilizers (DoF) in India which may indicate that a major spot tender is on the cards for March shipment.
Current spot prices in the Middle East are hovering around the USD 330-335 MT FOB versus USD 340-350 MT FOB just a few days ago. Contract shipments to the US give netbacks substantially lower than this reaching closer to USD 300 MT FOB. Compounding the pressure on prices is the persistent rumor that China’s government will relax export restrictions and will re-enter the international market once the domestic application season comes to an end by April/May. This could result in a major blow to any hope of urea prices lifting in the near term as the current oversupply plus buyers’ reluctance to engage will keep pressure on prices ongoing. Major markets like the US, Brazil and Europe need to come back into the market to ignite optimism for producers.
The processed phosphate market is taking note of the depressed nitrogen market and prices are coming down both east and west of Suez. India, which paid USD 1,000 MT CFR for DAP ess than 12 months ago are now shooting for USD 600 MT CFR with one cargo of Chinese DAP rumored to be sold at USD 630 most recently. India is expected to become dormant from importing over the next few weeks anticipating an even softer market.
MAP prices in Brazil have cemented themselves at around the USD 655-660 CFR range.
The potash market is still awaiting contract prices to be settled in India. However, the longer it takes to get this done, expectations for lower prices keep growing with some now thinking a price level around the USD 440 MT CFR vs the previous contract price of USD 590 MT CFR could be achieved by the Indian buyers. Granular MOP price in Brazil fell another USD 5 PMT this week to reach an assessed level between USD 500-520 MT CFR. Potash from sanctioned Belarus is coming in everywhere putting pressure on prices. It is expected that Belarus could supply closer to 2 million MT of potash to Brazil in 2023. SE Asia standard potash prices are now heard as low as USD 470-480 MT CFR with Belarus being the source. Indonesia reported a 20% reduction in imports of MOP in 2022 to 3.216 million MT versus 4.015 million MT in 2021.
The global ammonia market is under enormous pressure with no buyers in sight and tanks getting full everywhere. Eyes are again pointed towards the Tampa March settlement price between Mosaic and Yara. The February price of USD 790 MT CFR is expected to be soundly beaten with some expecting a price as low as USD 600 MT CFR. Whether this ignites interest from buyers remains to be seen on the back of depressed nitrogen prices everywhere. In addition,, gas prices in Europe are now settling in at around USD 16-17 MMBTU giving a production cost of ammonia in Europe at around USD 660 MT CFR equivalent.
In summary, huge pressure on fertilizer prices across all nutrients and all regions.
