Nitrogen
Urea prices on a bull run as India queues up to buy bigger volumes
Happy New Year to everyone and we trust a good holiday and family time were enjoyed!
The nitrogen market has been lifted by a buoyant urea sector. We finished 2025 with an Indian urea tender that was somewhat unexpected and helped lift prices as a result. That tender secured an incredibly small volume of less than 200,000t when there was talk of the Indians taking up to 1.5 million tons if offered. What transpired was that the Indians did their usual thing of countering all the offers by bidding the lowest offer price received under the tender. Usually this secures decent volumes but on this occasion, most players rejected the counter. This left the Indians with small volumes and sent a message throughout the market that producers and traders are confident of achieving higher prices.
As a result, the Indians are now expected to open yet another tender, probably by next week, but certainly during the course of January. All the likely participants are well-aware that the Indians are under big pressure and they will be keen to extract high prices, given current market dynamics.
So what is happening in the market? The Chinese remain absent, as they were for most of 2024 and this does not look likely to change in the near future. The primary source of cheap or ‘discounted’ urea, Iran, has been out of the market because most of their industry is shutdown because of natural gas (raw material) shortages. This has pushed the usual buyers of those volumes into buying regular, non-sanctioned product and that has tightened the urea market across the board.
On the demand side, we are right in the middle of peak procurement for the big Northern Hemisphere markets. India has been mentioned above but North America and Europe also need to stock up, and there are a number of big Asian markets looking for urea. Thus there is substantial competition amongst buyers for a somewhat constrained amount of product. All pointing towards higher prices, which is what is being seen in the market.
Brazil is on the lookout for more urea as its Safrinha season is just around the corner. The Brazilian price has run up significantly over the past month and is now at $380/t cfr and likely to be pushing $400/t given the limited sources available to them. Despite having a quiet December in terms of volumes, Brazil closed 2024 urea imports with a record volume of over 8.3 million tons, which is 14% higher than the prior year. And still the demand for urea remains.
The Middle East urea price jumped another $15/t this week and is selling at over $380/t FOB – hence the Brazilians will likely have to pay higher numbers if they want to access Middle Eastern product. .
Egypt has seen prices break through $430/t FOB as healthy European demand is supporting the run on prices around the Mediterranean.
On the local scene, there has been widespread rain across the region. We also have the ongoing civil strife in Mozambique which has disrupted the in-flow of fertilizer into the big interior markets. There are therefore relatively few imports still due to take place and the stocks that are in the various ports and inland markets are what we have to play with for the current planting season.
In South Africa, it has been a late season but the good rains in the past 10 days have kicked-off intensive planting wherever growers had not already done so. Demand for fertilizer is extremely high right now and dispatches out of Durban are busy! It is a similar story in the neighbouring SADC markets, with lots of demand and the fertilizer distribution system is operating at close to maximum. There appears to be adequate fertilizer available but if demand continues to be strong, there is a likelihood of a shortage of fertilizer because the scope for additional imports is almost zero, as mentioned previously.
Ammonium sulphate has seen some moderate price support thanks to urea but with Brazilian demand for amsul declining by the day, the support for amsul seems a little less than other products. Demand from most Northern Hemisphere markets is solid but more focused on urea and nitrates at this stage.
Nitrates prices are being lifted by the general rise in Nitrogen prices courtesy of urea. The European procurement season is now underway after the holidays and this is driving domestic European Ammonium Nitrate prices upwards. All of the big EU players have lifted their AN and CAN prices up by around 10%. This ambitious increase is driven by two factors – the higher value of nitrogen in general but more importantly, the relative shortage on nitrate in the market as many EU producers have either stopped or substantially reduced their nitrate production because of uneconomic feedstock prices.
Ammonia prices are dropping in both hemispheres as demand, especially in the industrial sector is soft. The Western hemisphere is still significantly higher at over $600/t CFR in Europe and about $540/t CFR in the USA but prices have eased down by around $10, with further reductions expected. In the East the market is a lot weaker and prices dropped around $25/t, putting the Middle East benchmark at just below $400/t.
Phosphates
Phosphate prices continue to be stable, although market sentiment leans towards price declines.
The phosphate market is mostly in limbo – trading activity outside of contract business is very limited, there is limited stock of both DAP and MAP available and buyers are generally unhappy about the price being on the high side and are therefore reluctant to buy anything more than the minimum volumes they require.
Chinese exports are non-existent at present as they focus on building domestic inventory ahead of their spring, so the big swing supply of phosphates is not there. The Chinese are only expected to return at the end of Q1, suggesting that major price adjustments may be unlikely before then.
The wide divergence between DAP and MAP prices in the US has now almost completely unwound as DAP prices have risen and MAP declined to where the products are now trading at close to historical parity.
MAP imports to Brazil continue to slow down as December was way lower than December 2023 – overall Brazilian MAP imports were almost 20% lower year-on-year than 2023. Part of the shortfall was covered with the substitution of other phosphate products, especially SSP, but overall phosphate consumption has likely slowed down in Brazil, in line with poorer crop economics.
The Q1 Indian phos acid contract price is yet to be settled – there are argument both ways for a small up or down adjustment, which suggests that the number will likely be similar to the Q4 value of $1,060/t CFR India.
Potash
Brazil continues to support higher Potash prices.
The Potash price in Brazil ran up steadily over the holiday period gained a few dollar per week to now trade at around $310/t CFR. Prices in South East Asia are at a similar level after some gains in the latter part of December.
The primary limitation to potash demand in Brazil is the low forward prices for both maize and soya, which are likely to cause growers to cut back on potash consumption if the price rises to the point where profitability is threatened. Brazil imported a record volume of 14 million tons of potash in 2024.
Potash prices are holding steady at around $320/t CFR Durban but stocks are diminishing steadily as fertilizer distribution is at its peak presently – stocks are expected to be adequate for the season but if there is any extra demand or a rise in re-exports to inland countries, then potash supply may become tight.
General Market Outlook
Energy prices escalating due to increased winter demand
Brent Crude oil prices rose sharply over the holidays, thanks to cold weather in the Northern Hemisphere driving energy demand and rising geopolitical tensions causing traders to take longer positions. The oil price has risen from the low $70s per barrel to currently trade just below $80/bbl.
As with crude oil, winter demand has pushed the European gas price up to $13.8/MMBtu, after it peaked as high as $15/MMBtu just after New Year. The US gas price has also trended up and trades at $3.8/MMBtu.
The US Dollar has continued to show strength versus other currencies on the back of the upcoming Trump presidency. The Dollar has pushed the Rand to almost 19 this week, which has had a detrimental effect on import parity pricing of fertilizers.
The weaker Rand continues to help crop values however. Safex maize prices remain very high with white maize at R6,700/t and yellow at R5,500/t ex-Randfontein. The imports of North American maize into Durban are continuing. The oilseed prices both locally and internationally have softened in recent weeks, as North and South American soya outlooks point to very large crops.
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