Insight Focus
- DAP prices in India keep on falling.
- China expected to feature more heavily in the DAP/MAP export markets.
- Global ammonia market has taken an early Easter holiday observance with little or no demand.
Global urea prices are still facing south with Middle East FOB values now firmly below USD 300 PMT with some traders looking for USD 28o PMT FOB. India is not expected to come into the market with a tender until June and that will eventually put more pressure on prices in the months leading up to a tender announcement. SE Asia FOB prices this week saw an award in the Pupuk Indonesia tender at USD 318 FOB on the back of limited exports from China and smaller intra SE Asia vessel movements not possible with Middle East origin.
Brazil CFR prices have deteriorated again with reports of sales as low as USD 295 PMT CFR presumably from Venezuela. Iranian producers are offering at USD 260 PMT FOB whilst bids are coming in at around USD 240 PMT FOB.
The only bright spot this week was seasonally adjusted demand in NOLA/US which saw prices FOB barge per short ton go from around USD 310 FOB early in the week to as high as USD 357. This surge is expected to be limited in time due to increased supplies from overseas vessels arriving.
The outlook for the urea industry over the next couple of months appears to be slow with ever decreasing prices also with Europe heading into summer.
Processed phosphate prices are emulating urea prices with India DAP falling to the USD 570s PMT CFR down an average of USD 12 PMT week on week and as much as USD 130 PMT since the start of 2023. India bids are now reported at around the USD 550 PMT CFR mark. The Indian government is expected to reduce the subsidy for the Kharif season starting April 1st to September 30th with a substantial amount to curb government expenditures. Adding pressure on prices is also the expectation of China featuring more heavily in the export market with export allocations expected to be as high as 5 million MT for DAP, up from 3.6 million in 2022. Export clearance process is also said to be reduced to a maximum of ten days, down from as much as 60 days previously.
India is taking into account all of the above factors in holding out for a low Q2 phosphoric acid contract price with OCP and other major producers.
The Brazil benchmark for MAP fell another USD 20 PMT this week to USD 590 PMT CFR. This price is above USD 50 PMT lower than at the end of February this year.
Finally the potash contract price in India has been agreed with IPL reaching an agreement with both Canpotex of Canada and Uralkali of Russia at USD 422 CFR including 180 days credit for deliveries until the end of September this year. This price is USD 168 PMT lower than the 2022 contract price of USD 590 PMT CFR. IPL announced that India will buy up to around 5 million MT of potash in 2023. Despite this conclusion, SE Asian standard MOP price fell another USD 10 PMT to a range of between USD 430-450 PMT CFR, the lowest since August of 2021.
The global ammonia market appears to have taken an early Easter break with very limited activity reported. The only exception is Turkey which is said to have imported Iranian cargo at USD 340-345 PMT CFR level.
European demand for ammonia is non-existent although production cost of ammonia pre-carbon tax is around USD 600 PMT and much higher than imported price, high nitrate stocks and low urea prices are the deterrents. TTF gas prices moved up to around USD 15 mmbtu to fall back towards USD 13 mmbtu.
In summary, the global fertilizer industry is going through a period of low prices which are expected to continue for another few months unless production cutbacks are taking place and unexpected high demand emerges in major markets. However, the northern hemisphere summer is a low demand period for fertilizers so Brazil needs to step up with major imports. This is highly unlikely since Brazil is stocked up with phosphates and potash.
