Nitrogen
Urea prices move down across all global benchmarks as the next Indian urea tender closes today
Pessimism was rife in urea markets this week as the market increasingly appears to be oversupplied. The latest Indian urea tender closes today and expectations are that some aggressively low numbers may be offered as producers look to shift stock. Chinese producers looked unlikely to participate but domestic urea prices in China have really tanked of late. The Chinese are thus expected to target the Indian tender and this will ensure that we see prices pushed lower in the next week or so.
Egypt was able to secure substantial sales this week but at reduced prices – over the course of the week Egyptian prices fell around $20/t to touch on the $400/t mark. Prices in other regions are well below this level with most prices in the $360-380/t range.
The Middle East saw minimal spot buying this week, even with price offers being trimmed by $10/t to offer prices of below $400/t. The Middle East producers will have little choice but to target the Indian tender to move some of their stock as sales for Q4 have been below expectations thus far.
Urea prices in Brazil fell quite sharply, losing almost $25/t as supply far outweighs demand. More than 1 million tons of urea are headed to Brazil this month, which is way more than current demand. Weather conditions in Brazil haven’t been great and there are concerns for the current, meaning urea top-dressing demand could be lower too. With Brazil not offering Middle East producers more than $370/t netback at best, the Middle East producers have a clear guideline on where to pitch their Indian tender offers.
Ammonium sulphate prices remained steady this week as buyers keep a close watch on the falling urea market. Amsul sales are looking solid but there is sufficient supply such that buyers can negotiate hard on price in the knowledge that there are plenty of other options available to them. Price for amsul granular are just below $200/t ex-China (around $240-250/t CFR Durban) and crystalline product is $25/t cheaper.
Likewise Ammonium nitrate prices were generally unmoved this week. There were some localized price spikes in Europe where small pockets of demand generated some sales. AN exporters keep looking at Brazil for demand but, as mentioned in connection with urea, Brazilian demand for nitrogen is looking shaky and a likely urea price drop will put downward pressure on AN prices.
The recent bull run in Ammonia prices seems to be ending as some idled capacity is increasing production with mega-plants such as the Ma’aden ammonia plant being restarted. Gas prices remain relatively elevated in Europe but soft demand for nitrogen means that there’s no huge push for ammonia imports at this stage. If urea prices do soften as expected with the upcoming tender, then ammonia prices are likely to remain flat. Most of the fundamentals do point towards ammonia prices firming through November and December.
Phosphates
The main theme in phosphates markets this week is the tightness of supply.
Phosphate supply seems to be steadily tightening and while demand remains quite weak, the lack of supply is more severe, such that prices are gaining support. As yet there are no significant changes to phosphate prices around the world but if the supply-demand balance keeps tightening, then price rises are inevitable.
MAP availability remains tight, driven by Southern Hemisphere (mostly Brazilian) buying. Local MAP shortages continue to bite with local importers buying whatever they can get their hands on and prices of local stock are moving rapidly upwards. Most of the price increases are hypothetical until physical stock is available. We understand at least one part cargo (around 10,000t) is due to arrive in Durban in the coming few weeks. With the summer rains now having arrived, vessel discharges in Durban are quite delayed, which doesn’t help desperate buyers waiting for MAP.
The ongoing wait for the announcement of the revised Indian Nutrient Based Subsidy scheme is keeping DAP prices stuck. Some short term increases seem likely with product availability being short but later in Q4 when the Indian subsidy adjustment is known, lower prices are expected.
China’s DAP export quota for Q4 has been set at 1 million tons, which is a reasonable figure albeit lower than some historical Q4 export volumes. Chinese DAP prices rose around $5/t this week. Overall, world DAP prices are sitting at around $600/t and MAP is $50/t cheaper at $550/t.
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Potash
Potash prices begin to fall in Brazil again as most regions report lack of demand
Most global Potash prices were unchanged this week although poor demand and high potash stocks in Brazil saw the low end of the price spread falling by $5/t this week. There has been plenty of talk about the Israel conflict causing a shortage of potash but there has been no noticeable impact on availability, even for Israeli potash.
In a rather unusual development, the potash producer in Laos (South East Asia) has started to target sales in Europe, which has undercut the European price by €20/t. Suddenly the regular European suppliers are happy to maintain potash prices at current levels, whereas they were pushing for a price increase previously. The EU potash price remains the highest in the world at €400/t, which is encouraging producers such as the Laotians to try and sell there.
The potash price in India is likely to come under pressure as the Indian subsidy on potash is expected to be reduced, which will leave importers having to achieve lower prices or make no profit. With a lack of alternative demand, potash producers will have little option but to accept a price cut into India.
General Market Outlook
Brent crude oil keeps rising on the back of the Middle East conflict.
Brent crude oil climbed steadily through the week, going from $89/bbl to the present level of $93/bbl driven by the concerns around Middle East instability and the risk of war spreading across the region. Predictably the geo-political concerns are also affecting the TTF price gas price in Europe, which peaked this week at $17/MMBtu and is presently just below $16/MMBtu. US natural gas price seems to be insulated from international energy worries and actually declined slightly this week to $2.9/MMBtu.
War seems to be good news for crop prices, with most of the cereals and oilseeds making gains on the international stage. Maize and Soya rose about 2% in Dollar terms and wheat doubled that, with a 4% rise week-on-week. As is often the case, the Safex is delayed in seeing these gains pulls through into Rand terms. In fact Safex maize futures declined by around 2% on the week. At least the Rand remained flat this week against the dollar at R19.03.
Latest Direct Hedge quotes for urea and MAP Swaps in USD:
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