Cost per kilogram of nutrient (R/kg):

Nitrogen

Indian urea tender yielded prices at the same level as last week, as the Indians attracted almost 3 million tons of offers

The latest Indian tender attracted 2.9 million tons of offers and the Indians countered at the lowest price received, around $650/t CFR, and have locked in around 1.5 million tons, which is what they were seeking. Urea will be supplied from the Middle East, South East Asia and China. The Pakistan tender for 300,000 tons only received one offer and this was deemed to be too expensive, so the Pakistanis will re-tender.

Urea prices across most regions were stable this week as the high-low spreads narrowed. US prices fell around $20/t but the American price was out of line with most benchmarks, so this is more of an adjustment than a sign of the US market collapsing. The ever-optimistic producers and traders are saying that the Indian tender should have brought the urea market into some sort of balance and they believe prices are set to rise from November through the rest of the year. While the Europeans are expected to buy urea in considerable volumes through Q4, the Americans will be largely exiting the market as the river system closes for winter in 10 days. As things currently stand, it is hard to see urea prices moving upwards massively over the next month or two.

The ammonium sulphate market was a repeat of last week – prices moving slightly down and a few cargoes traded but no fireworks. The Brazilians are reporting high stock levels, so the buying interest that exporters were hoping for is not materializing. European ammonium nitrate production is reported to be gradually restarting, so the easing of supply in the region should bring AN prices down and closer to urea, although the European gas price remains the big unknown and dramatic price movements could change the picture for AN quickly.

The ammonia price is coming under downward pressure as a few Europeans restart production. The Middle East price shed another $25/t this week and indications are that ammonia demand in the US is also weakening. As yet, ammonia prices have not oved much yet but the outlook is for it to decline.

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Phosphates

The Phosphates markets in most benchmark locations suffer from ongoing lack of demand as prices drop slightly in most benchmark locations. The Indian quarterly Phos Acid contract is finally settled.

MAP prices in Brazil dropped $10/t this week, while the Middle East price was unchanged. Phosphate prices in America and Europe also lost a few dollars, as the same story persists – demand is weak as buyers object to current price levels.

The Indian Q4 phos acid contract price was settled at $1,175/t CFR. This now gives the phosphates market a base from which to work as the phos acid price sets the cost of producing DAP in India, which in turn sets the import parity level at which importing DAP and MAP to Indian makes sense.

The downward trend on MAP prices is likely to carry on for the remainder of the year, at a similar slow rate of decline week on week. All of the major exporters, Saudi Arabia, Morocco and China, are reporting slow sales for November and substantial unsold volumes available.

 

Potash

Potash prices fall again this week, as the Brazilian price approaches the $600/t level.

The South African potash price lost another $15/t this week, as it fell below the $800/t threshold for the first time since February this year. There is still a big delta between South African prices and those of Brazil but the likelihood is that we will see an extended but gradual decline in prices over the coming months.

 

General Market Outlook 

Brent crude oil prices settle down in the low to mid-$90s per barrel as the global economy slows down.

Brent crude price had a broadly stable week as it eased down from $95/bbl where it started the week, to sit at $93/bbl as interest rate hikes around the world take effect on economies. The European TTF gas price is enjoying some downward momentum as it shed more than $10/MMBtu this week, falling from $45/MMBtu to trade at $32/MMBtu currently. This fall in European gas prices is what has prompted the restarting of a few nitrogen facilities in the region. The US natural gas was also impacted by the slowing economy and negative sentiment around interest rates as it fell close to 20% from around $6.5/MMBtu to touch on $5.2/MMBtu by the end of the week.

Latest Direct Hedge quotes for urea and MAP swaps in USD:

The announcement of the Indian tender prices was largely in line with market expectations and the Swaps market did not react hugely to the news. Swaps quotes did adjust slightly down to align closely with current physical prices. If we presume that the Swaps indications for urea into 2023 are representative of market views, it seems that urea is likely to end the year around $600/t and probably trend downwards from there through the first half of 2023.

On MAP, we saw Swaps quotes being adjusted down substantially to bring them closer to the physical MAP prices.

If you would like to discuss these fertilizer price trends in more detail, or discuss other fertilizer products not addressed in this report, we would love to hear from you. We would also be happy to discuss your fertilizer procurement needs with you.