Nitrogen
The conclusion of the Indian urea tender sees Urea prices dropping $20-30/ton across most regional benchmarks. Price outlook remains weak
The Indian Urea tender was settled with Indian delivered prices of $330/t CFR, which netbacks to $310/t fob Middle East. This dragged the Middle East benchmark price down almost 7% week on week. Despite the Indians being expected to lock in 1.3 million tons of product, instead of the indicated 1 million tons, the overall price sentiment remains gloomy. The market remains massively oversupplied, which is encouraging most buyers to keep buying their bare minimum requirements and leaving the opportunity open to take bigger positions if the price falls further.
The Northern Hemisphere spring season has disappointed and much of the remaining demand will be covered by contract cargoes, which means spot traders are battling to find any opportunities.
The US domestic season is now in full swing with the river system opening and all the urea imports delivered to New Orleans (the entry point to the Mississippi River system) over the Northern Hemisphere winter now starting to be distributed into the US interior. With high stock levels and a large lineup of urea cargoes already underway to New Orleans, American appetite for additional spot cargoes will be minimal. Maize and wheat futures falling in recent weeks haven’t helped to raise urea demand expectations either.
Brazil remains amply supplied with urea and local buyers are pressuring traders to match the recent price falls caused by the Indian tender. In other Southern Hemisphere markets, traders have contracted large volumes of urea for delivery to Australia from April, which is earlier than usual but an understandable move given current urea price levels.
Ammonium sulphate prices shed a few dollars this week, although traded volumes remain quite low. Ammonium sulphate is trading at a >20% premium over urea as urea prices have fallen much faster than amsul prices. Ammonium nitrate continues to move rapidly downwards – Russian fert-grade AN dropped 10% this week to fall below $250/t fob Baltic, which will be of interest to buyers not sensitive to Russian sanctions, such as Brazil and perhaps even some African buyers. This is certainly a price level that AN producers not integrated into ammonia production cannot compete with. CAN prices in Europe declined €30/t this week, meaning CAN has fallen by €100/t (22%) over the last month.
Ammonia prices maintained their bearish trend. with the Middle East price losing almost $70/t and the Far East price dropping $75/t as Asian requirements for ammonia are almost non-existent. The lower pricing did generate some purchasing activity but the ammonia sector remains heavily oversupplied and prices will keep tumbling until supply and demand move into balance.
Phosphates
Similar sentiment to last week in Phosphates market with prices continuing to edge down as producers remain anxious to maintain buyer interest.
India has remained unusually active with its phosphates procurement, with its phosphates stock at the start of its fertilizer year in April looking likely to hit 3.7 million tons, compared to 2.7 million tons in April 2022. This is consequence of India experiencing some shortages of MAP and DAP during the season last year as well as prices being almost half of what they were this time last year.
DAP prices came off about $10/t in the large Northern Hemisphere markets. The US price was dragged down by a more pessimistic outlook for crop prices, and last week’s huge reduction in the Tampa ammonia price has reduced production costs for US DAP producers. The European DAP price remains the highest in the world and sales volumes are very low.
The Middle East MAP price dropped $10/t this week, as did the Brazilian price as MAP imports so far this year are almost 40% up on the same period last year. Exports volumes for the major phosphate producers in Morocco, Russia and China are all hugely lower than capacity, which underlines how supply of phosphates exceeds demand. Prices are likely to continue heading down until this balance tightens, especially if production costs keep falling too.
Potash
Potash price sentiment remains negative as prices fall again across most markets this week
The Indians postponed the signature of their annual contract price yet again this week. With many buyers delaying their purchases to see where the Indian numbers ends up, the lack of trading activity pressured potash prices again. The latest round of price reductions has prompted industry analysts to lower their estimates for the Indian contract price from $450/t down to $400/t cfr.
The potash price in Brazil fell $20/t this week as domestic demand was quiet and stocks remain high following numerous cargoes arriving from Russia.
No meaningful imports of potash into South Africa were reported for January, however with the Cape winter rainfall season nearing, the first potash cargoes for this year can be expected in the coming 4-6 weeks. This may see the local potash price being trimmed by a few dollars and importers are likely to be keen to shift volumes in case there are further price declines in the coming 2-3 months.
General Market Outlook
Hard and soft commodity price outlooks take a more bearish tone this week. The Rand weakens by 2% against the USD.
Brent crude oil prices trended downwards this week, falling through $80/bbl lev3el by the end of the week. Various banks and other financial institutions have been vocal this week in cutting their price forecasts for crude oil for 2023, but most are still predicting oil to average $90-100/bbl for the year. The European TTF gas price is approaching $13/MMBtu as many of the gas storage facilities around Europe are close to full. High gas stock levels are an understandable response to the enormous concerns of gas availability following the cutting of Russian supplies. US natural gas prices returned to the $2.5/MMBtu level this week, although upcoming cold weather in the US may cause prices to rise in the very short term.
Maize prices worldwide seem headed downwards as latest indications for the US planting season point to big acreages and with US interest rates being hiked, demand for US corn from other countries is cooling off. Talks around a deal to export Ukrainian grains, while positive for Ukraine, have a dampening effect on prices as this could add significantly to grain supply into world markets.
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