Nitrogen
Indian tender fails to absorb enough volumes to support prices
India purchased over 1 million tons of urea under its latest tender. The primary suppliers are the Middle East, Russia. Egypt, Malaysia and Nigeria at $362/t CFR India, which is equivalent to low $340s FOB Middle East. While this was a considerable volume, the market remains long as other sales have been slow and this has caused prices to keep edging downwards.
The published Middle East urea price dropped a few more dollars as a handful of spot trades took place. The Middle East price is hovering around $340/t and appears likely to go lower in the short term until solid demand emerges.
The Brazilian market probably gives the best pulse-check of the urea market. Huge volumes (more than 1.4 million tons) have been committed to Brazil for November and the price there is sliding down. In fact the Brazil price is down by more than $10/t and the delivered price to Brazil is lower than the Middle East FOB price. This indicates how aggressive other origins have been in targeting Brazil, knowing that the season there runs out soon.
Iran has been active in trying to shift its urea volumes and has been offering more than 100,000t for immediate sale. The best prices offered are in the $290s and the Iranians are believed to be looking for $305-310/t, so they are going to tender. If the usual discount of $25/t is factored in, this suggests that the Middle East price may need to drop to $320-330/t FOB to compete with Iran. Some speculators have suggested that the Iranians may need to go as low $270/t to shift all their tons, which could drag the Middle Eats price below $300/t. This is a rather pessimistic take on pricing but if demand continues to disappoint, then it is a possible scenario.
In the local market, most importers are sitting on large stock positions of urea and most other grades. With rains in South Africa being late and moderate, deliveries out of Durban has been slow. In neighbouring countries, the rains have been better but the wet weather has slowed down port operations, leaving a big backlog of fertilizer cargoes waiting to berth.
With North America and Europe being slower than usual, trade activity for Ammonium sulphate has focused on Brazil. With ample supply coming out of China, prices have declined a few dollars again this week. Ex-China prices ranges from $130 to $145/t FOB for crystalline and granular grades respectively. Freight from China to Brazil is around $15-20/t.
Urea is dragging nitrogen values down and this is impacting Ammonium Nitrate values. Trade in AN and CAN is very slow as EU producers are struggling to make ends meet at current gas prices and demand remains weak.
The high cost of natural gas in Europe is impacting domestic Ammonia production in that region and pushing prices up, which is negatively impacting demand, especially as imported nitrogen fertilizer prices are way below the cost of European production. In the Asian market, ammonia prices are starting to fall.
Phosphates
Phosphate prices are stable to slightly declining
Trade in the phosphates sector continues to be slower than usual for this time of year. The small volume of deals that were concluded this week pointed to lower prices but the limited liquidity prevented prices from falling too far. DAP prices in Pakistan and the US were down a few dollars this week but none of the major benchmark prices shifted much.
MAP prices in Saudi Arabia and Brazil remained stable for the 4th month in a row. The Forward price for Brazilian MAP is suggesting that prices there could head towards the $600/t CFR level from the current $635/t but it would need greater availability of product for this to actually happen.
In Southern and East African markets, phosphate availability is good, with both MAP and DAP available at the main import centres.
Potash
Price sentiment in the Potash sector is starting to switch towards higher prices
Expectations of rising potash prices are growing, although current prices remain stable. Consumption in the big Asian markets of China and India remains decent and the annual contracts that set prices expire at the end of December. Potash producers are thus targeting increases for early 2025.
The Brazilian potash price is still around $285/t CFR but early negotiations around December-January deliveries are showing prices of $290/t and higher. This is the clearest indication of price rises to come.
General Market Outlook
Energy prices rise as cold weather hits Northern Hemisphere
The strong US dollar has suppressed Brent Crude oil prices, with the low this week touching on $71/bbl. Some unexpected outages at a few major oilfields have caused prices to recover somewhat in the past couple of days and the oil price is presently at $74.3/bbl.
Gas prices in the EU kept rising this week and the TTF index has reached $14.5/MMBtu which is rendering the production of most nitrogen fertilizers uneconomic in that region. High European gas prices are now attracting LNG cargoes, which is supporting US natural gas prices. The US Henry Hub benchmark has risen sharply in the past week to $3.3/MMBtu as traders are taking long positions and cold weather is increasing domestic demand for heating gas.
The Rand has remained relatively weak against the Dollar this week but has managed to improve slightly from R18.26 last week to trade currently at R18.05.
Maize prices were generally strong this week, with the international CME index rising by almost 2% and the local Safex white maize price gaining 1% to close the week at just over R6,150/t. The oilseeds were broadly stable and wheat showed some gains.
Latest Direct Hedge quotes for Urea and MAP Swaps in USD:
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