Nitrogen
Outlook for urea prices remains quite pessimistic, with prices already falling in certain regions
Brazil lead the urea market downwards as prices fell quite rapidly this week. Overall the value of urea imports to Brazil dropped by almost $20/t as the price headed below $350/t CFR. It was a buyers' market as traders were anxious to sell cargoes for September knowing that Brazilian urea demand will be very weak soon.
Egyptian producers were unable to secure any sales and there was no interest from Europe. There is speculation that there might be some demand from Europe building but with gas prices coming down, there is no immediate threat of local European production cuts and EU buyers are therefore happy to wait and see how far urea prices fall in the coming weeks before going into the market.
The Middle East urea price was unchanged this week as producers focused on fulfilling deliveries under the Indian tender and other contract customers and minimal spot trading took place. There was some brief excitement when rumours emerged of the Indians returning to the market with a new tender but this was ended when August urea sales data out of India showed low volumes being sold due to poor monsoon rainfall so far, ruling out any immediate Indian purchases..
Ammonium sulphate prices fell abruptly this week as the lack of buying interest pressured sellers into some big cuts. Compacted amsul was particularly hard hit with the price falling by $30/t (>15%) to $150/t ex-China. Crystalline product fell about $10/t - the premium for compacted product is almost zero, which is not sustainable for any period of time. The end of the Brazilian season and the negative outlook for urea are impacting amsul heavily.
Ammonium nitrate values carried on heading down for the same reasons as amsul prices. Russian AN dropped $30/t as prices head towards $200/t once more. AN prices in Brazil are in freefall. CAN prices in Europe are said to be soft but with little buying activity taking place, the European CAN price has not really been tested.
Ammonia prices bucked the trend of the other other nitrogen products and are heading up. Prices showed strong gains in Tampa (up by $95/t) and the Far East (up by $45/t) as most benchmark prices are approaching $400/t. Supply of ammonia is quite tight at present and to some extent prices moving up is a sign of the market trying to find a new equilibrium.
Phosphates
Phosphates prices stable this week as the global phosphates market seems to have found an equilibrium.
A combination of a lull between fertilizer seasons, most importers sitting on sufficient stocks and export availability being somewhat tight have all aligned to keep phosphate prices unchanged in most regions this week.
The DAP price saw slight gains in Europe but the big market of India was very quiet this week. US DAP was the only major benchmark price to fall this week. There was concern that Hurricane Idalia that struck Florida this week might impact phosphate operations there but there were no reports of any impact on production.
MAP prices were unchanged as the slowdown in Brazil was the biggest driver of price sentiment. The Brazil MAP price was flat and that kept the Saudi benchmark price unchanged too. Most opinions point to MAP in Brazil falling during September, which suggests that the Saudi price can be expected to do the same.
The one factor that could support phosphate prices rising is what China does regarding exports. Their quota for Q3 has been met and if the government restricts further exports then this would tighten phosphate supply.
Potash
The long awaited downward revision of the Indian contract price came through this week. The potash spot market was otherwise very quiet
The Indian potash annual contract price that was settled in April at $422/t CFR was adjusted downwards by more than $100/t to $319/t CFR, bringing it more in line with the Chinese contract price. Producers have apparently been reluctant to make public comments about this but the lower price was inevitable with most other major markets being in the $300s.
Speculation is mounting about how long potash prices can be maintained at current levels. Prices have fallen by $120-150/t during 2023 but demand for potash still looks weak. If Q4 demand in the Northern Hemisphere is no different to Q4 last year, then further downward pressure on prices seems probable.
A number of potash vessel arrivals are scheduled for Durban during September. This should ease the current tightness in the local market quite significantly. Whether local demand is adequately covered is unclear and importers are reluctant to speculate on additional cargoes because of the risk of further international price declines.
General Market Outlook
Crude oil prices rose sharply, as Rand enjoyed a week of rare stability.
Brent crude oil prices rose sharply to approach the $90/bbl level by the end of the week. Concerns over possible impact of Hurricane Idalia on US production and supply cuts from OPEC+ start to hit home. The European TTF gas price remained close to $11/MMBtu, while US natural gas prices rose on hurricane fears to $2.7/MMBtu.
This week brought more gloom to grain growers with CME prices falling for cereals and oilseeds. The stable Rand offered little relief on Safex with both maize and wheat falling too. Local soya and sunflower prices did rise moderately.
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