Nitrogen
Urea market remains moderately bearish but firmer prices are expected in Q1 2025
It has been a buyers’ market this week in the urea sector. A number of the smaller importing countries took advantage of relatively weak pricing to secure product this week but the volumes were insufficient to support prices.
The Middle East price edged down a few dollars again this week with most producers focusing on deliveries to India after the latest tenders and only a small volume of spot trades taking place. Some sales to Ethiopia under the recent tender have occurred, helping keep volumes moving. Overall the Middle East looks long on urea for the next few weeks and the price is expected to keep dropping until substantial demand emerges, probably after the New Year.
Egypt has seen prices slip as low as $350/t FOB as producers and traders with long positions have sold aggressively this week. With Europe being Egypt’s primary export market and European procurement lagging where it would normally be by this time of year – and European ammonia/urea/ammonium nitrate production is all struggling due to high production costs thanks to expensive natural gas – it would be expected that European buying should kick in soon and Egypt would usually be in the middle of this.
Brazil saw prices fall into the $320s this week as the large vessel lineup for November and late stage of the season put importers under pressure to chase sales. The December lineup is so far quite low for Brazil, suggesting there may be scope for an increase in sales, although the timing is not ideal.
As suggested previously, the US needs to ramp up its buying at some point over their winter to ensure adequate inventories ahead of spring application. The US remains quiet on the international scene, suggesting that there will be a surge in American buying early in 2025. The Americans were out of the market this week due to their Thanksgiving holidays but their trading activity will be a flag to watch from December onwards.
The Indian FAI conference takes place in the 1st week of December and there is speculation that the Indians may be looking to squeeze in another urea tender before year-end. The Indians appear to be adequately supplied with urea for the short term but with prices at current levels, the Indians may be tempted to step into the market and take up some volumes. If this materializes, it would be supportive of prices as the surplus tons for December would be removed from the market.
In summary, we expect urea to keep easing lower through December, probably bottoming out between $300 and 320/t FOB Middle East and then rebounding in January when a number of large buyers will need to start moving to secure their spring volumes.
Ammonium sulphate demand is said to be picking up as tenders have been held in South East Asia and Europe. This increase in demand is offset by the general decline in nitrogen values caused by the falling urea price – thus prices haven’t really moved much.
Ammonium Nitrate producers in the FSU are focusing on building stocks for their domestic markets as international demand is very quiet. European nitrate producers are apparently trying to raise prices in response to their escalating production costs that have been caused by the ongoing high cost of natural gas. With urea prices looking soft in the short term, getting a price increase through will be a tough ask.
Ammonia prices, especially in the West, are firming as supply remains limited. A few key export production plants are down with breakdowns or short turnarounds, which is causing tightness on top of EU producers mostly being down due to high gas prices rendering production uneconomic.
Phosphates
Phosphate prices supported by limited availability
There has been talk of the Chinese ceasing phosphates exports for the remainder of this year and that is adding to the shortage of DAP and helping keep prices at current levels. Given unaffordability issues, if there was greater availability of phosphates, prices would surely be decreasing.
MAP prices remain unchanged as the market has seen very few spot trades being done in recent months. Most of the MAP that has been sold has done so under contract.
Moroccan phosphate major, OCP, has been selling hard into Europe and Asia in recent weeks and has seen its price dropping lower by around $10/t but overall, benchmark values for MAP and DAP remain in the low to mid $600s.
Potash
Prices rising in in Brazil and South East Asia
The Brazilian potash price rose by $5/t this week and sits just under $300/t CFR now. 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.
US president-elect Trump made noise this week about applying a 25% duty on Canadian exports to the US, which would impact the cost of potash supplied and sold into the US. At this stage no major price consequences to international markets are expected but the US domestic market is likely to see higher potash prices.
South East Asian prices have also climbed to just below $300/t CFR as a more favourable demand outlook for Q1 next year has spurred demand.
General Market Outlook
Oil prices remain in low $70s as strong Dollar and weak demand take effect
The general depression to Brent Crude oil prices continued this week with the price remaining in the low $70s/bbl. The latest price is $72.8/bbl.
The European TTF gas price hit $15/MMBtu this week, bringing more bad news to the EU fertilizer sector. US natural gas prices remain at relatively elevated price levels too as cold weather increases consumption in large parts of the US. After touching on $3.5/MMBtu earlier in the week, the US Henry Hub price is back at $3.3/MMBtu.
The Rand was flat against the Dollar this week sitting at R18.06.
international cereal prices came under pressure this week, dropping by 2% on news of excellent rains in South America boosting the yield outlook for that region. Soya prices were slightly up both at home and abroad.
An unusual development this week was the announcement that South Africa is seeking to import some white maize to cover domestic shortfalls. This is underpinning the sustained high price of maize which is trending towards import parity. This has seen the Safex values for both white and yellow maize jump this week, with white maize now trading above R6,300/t and yellow at R5,050/t which is a two year high.
Latest Direct Hedge quotes for Urea and MAP Swaps in USD:
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