Insight Focus
- Duty thought to be for revenue-raising.
- No suggestion duty would reduce export volumes.
- Meanwhile urea prices have fallen heavily.
According to Interfax news agency reports, the Russian industry and trade minister, Denis Manturov, stated on 11 November that a new export duty on all fertilizers will be introduced. A duty of 23.5% will be charged on sales prices over $450pt with the duty to be progressed through the second reading of the budget. A draft government resolution has already been prepared. Russian fertilizer producers are awaiting further details. The prospect of such a duty was first mooted in September. The initial response from the market is that the export duty is primarily intended to raise revenue. There has been no suggestion that such a duty would reduce overall export volumes of fertilizers from Russia, or heavily influence prices.
India’s NFL received offers from 15 companies for a total of 1.95m. tonnes of urea for shipment by 22 December. Bids were received on 14 November with price bids revealed on 16 November. NFL countered all participants at the L1 offer levels of $573pt cfr west coast and $578.77pt cfr east coast. L1s submitted in this NFL session are down sharply on awards at $649.48/t CFR WCI and at $655/t CFR ECI in IPL’s 17 October tender which resulted in purchases of 1.5 Mt.
The latest Indian tender has brought with it a major revision in spot values. A Middle East producer offered at a level reflecting just over $550pt fob, well below asking prices in the region earlier this month over $600pt fob. This said, returns from Indian business are above those from shipments to western markets. As a result, producers are expected to follow the business with up to 400,000t considered possible.
The pace of price declines for granular MOP spot sales to Brazil has slowed to a trickle for now, with market participants unsure about the extent of further downside in the coming weeks. Multiple sources in Brazil pegged the latest prices at around $550/t CFR, with some importers suggesting that prices above $570/t CFR were no longer achievable for producers. One producer said it had been offered at $590/t CFR. Rumours of business as low as around $530-540/t CFR were not confirmed by the time of writing. Some participants said that these were inland prices at CFR equivalent levels, while others said that they were for sanctioned Belarusian products. Brazil’s granular MOP prices are now assessed at an indicative $550-580/t CFR pending further reports, down an average of $5/t from $550-590/t CFR previously.
Phosphate prices are continuing to decline in Europe and the USA but with both India and Pakistan DAP prices increasing marginally. The European DAP price premium continues to narrow on weak demand. Northwest Europe prices are down another $10/t to $835-855/t FCA Terneuzen/Ghent with bids reported as low as $780-800/t CFR across the continent. In a year which has seen record price spreads, the European DAP price remains as much as $230/t above latest MAP prices in Brazil. The Brazil MAP price eased slightly this week though most indications have remained around $600-620/t CFR for the last four weeks while small-volume activity in Argentina/Uruguay is now being reported as high as $650/t CFR. One market which has seen high DAP demand this year is India, where January through October consumption is up 7% year on year at 7.8 Mt and expected full year 2022 DAP imports are set to rise at least 40%, as the Maximum Retail Price and Nutrient Based Subsidy system shields the market from high international prices. This week saw limited DAP activity in both India and Pakistan at $5/t higher prices, to $750- 755/t CFR and $755-760/t CFR respectively, as buyers attempted to procure final cargoes for Rabi sales. While demand destruction remains predominant in the phosphates markets, reduced supply from China, the US and Saudi Arabia should limit any price pressure in the near term.
It has been a bearish week for ammonia with little new demand emerging and gas prices showing no signs of a sharp rebound in Europe. Ammonia is offered at or around the USD 1,000 mark – and with production cost much higher than this level, buyers are still wary of committing to any price in a deteriorating market.
