Lack of demand and surprising weakness in the US and China combined to pull urea prices down further in
late-February. Interest from buyers was becoming evident for April shipment in several countries, but this
was leaving a void for March and making it hard for suppliers to place their tonnage.
The main selling took place in Egypt and Indonesia, granular urea prices finding support at $260/t fob in
Egypt and $252-255/t fob Indonesia. These levels were $15-25/t lower than earlier business and represented a
necessary correction. Arabian Gulf urea also moved down, but not enough to enable spot sales. The most
striking prices were seen in the US and China, places where only a month earlier some were forecasting
rising prices and shortages of urea. Granular urea traded as low as $219/st fob Nola, equivalent to $236/t
cfr, while Chinese prilled urea sold at $232-233/t fob for March; scant evidence of any shortage.
Rising production levels, a late spring and increased inventories pushed Chinese prices down. The continued
fall in US prices was more of a mystery, deriving partly from a heavy line-up of vessels that arrived in
February, concerns over a possible decrease in demand, as well as a large dose of sentiment.
Low demand for March shipment appeared set to keep prices under pressure in the first and second week of
March. Prices will fall closer to the levels at which buyers feel comfortable, but it appears that they will
only stabilise when selling for April begins. At that stage, a stronger pull from large markets such as
Thailand, Australia, India and southern Europe will be evident.
Abu Qir held sales tenders on 22 February for a total of 35,000t of granular urea, 25,000t for loading from
El Dekheila and 10,000t from Abu Qir, and 20,000t of prilled urea for loading from Abu Qir. All the urea was
for shipment by 15 March at the latest. It sold the granular urea at $260/t fob to Ameropa (25,000t) and
Agrium (12,000t). Dreymoor bought prilled urea, reportedly at $252/t fob.
Mopco sold a further 10,000t of Egyptian granular urea to Keytrade for February shipment at $260/t fob. The
price was $3.50/t lower than its purchase from Mopco on 16 February.
Alexfert also sold 10,000t of granular urea to Keytrade at $260/t fob and sold 6,000t to another buyer at
the same price. Helwan sold 10,000t to Keytrade at $260/t fob for February loading.
Egyptian producers said that the ministry of agriculture will take 40pc of the output of each export urea
plant in the country in March, restricting availability for export to about 210,000t from the seven plants.
Following an announcement by Sorfert on 20 February that its urea plant had closed for maintenance, it
emerged that AOA's ammonia and urea plants had also been shut down. Reports indicated that AOA's plants were
closed around 16 February and remain down. AOA has two granular urea units at Arzew with a capacity of
3,500t/day each and one 4,000t/ day ammonia unit. Sorfert operates two ammonia units and one 3,500t/day
granular urea unit. Sorfert's plant was down for 7-10 days, losing 25-30,000t of production, but the
duration of the AOA closures is likely to be much longer. Sorfert loaded two vessels in February, 29,777t on
the Dorothea Oldendorff for Europe and 29,185t on the Great Reward for the US Gulf.
Indorama was scheduled to restart its urea plant following the completion of a turnaround in early-March.
After that, it was expected the plant would operate at its full capacity of 4,000t/day.
Under a government programme to revive production at blending plants throughout Nigeria, Indorama has been
asked to supply 30,000t of granular urea in February-March. The government indicated it may require up to
30,000t/month under the programme. Besides this quantity, Indorama had cargoes to load for Ameropa and
Trammo in late- February/early-March.
The phosphates market saw supply tightened further, with April sales already being lined-up as March offers
swiftly dried up. Late February saw a flurry of tenders with demand being raised in Argentina, Central
America, Pakistan and Iran for various phosphates products. In the Indian subcontinent, the market was
focused on the prices being offered under Pakistani Fauji’s 40,000t DAP enquiry. Offers were primarily
backed by Chinese product, and prices ranged $385-390/t cfr.
The hike in prices is despite the lack of Indian import demand. India all but abandoned its buying enquiries
– both GSFC and NFL were inquiring for 100,000t of DAP apiece but there existed a wide chasm between the
offered prices under the aforementioned tenders, and India's buy-side price indication, which was previously
reported in the mid-$350s/t cfr levels (much higher prices are not workable under the subsidy and MRP
schemes). High stocks and subsidy uncertainty mean India will remain out of the market for a while at least.
West of Suez, Latin American markets seemed to be at the forefront of activity during end February. With
Brazilian offers jumping at the rate seen in early February, Argentina’s Profertil tendered for 25,000t of
MAP for April delivery. It was a strategic move in the region, especially in the light of various global
producers clamouring for Brazil to break the $400/t cfr ceiling very soon. This was significant - Argus'
Brazilian cfr price index had remained below $360/t cfr for most of 2016. And with Argentina in no rush to
buy DAP tonnes (DAP imports seasonally accelerate from April onwards), the tenders may well be a
price-checking move. Within the region, it was also reported that Incofe tendered for small volumes of DAP
and MAP as part of a bigger combo vessel arrangement, but no prices were established under that tender.
In Brazil, Saudi Arabia sold a DAP/MAP cargo at a reported price of mid-high $380s/t cfr. Most reports
suggested that the Brazilian cfr range had increased to $395/t cfr. Low stocks and a need to cover blender
sales saw imports jump dramatically for MAP.
OCP sold 70,000t of MAP to Brazil for March loading, with netbacks reflecting around $385/t fob. OCP
reported that it was completely sold out for March. The producer was offering product for April/May
delivery, DAP price targets ranged from $385-395/t fob dependent on destination.
OCP’s March line-up is as follows:
- 300,000t of DAP/NPKs/NPS to West Africa
- 50,000t of DAP to Nigeria
- 150,000t of DAP/MAP to US
- 130,000t largely of DAP to Europe
- 70,000t of MAP to Brazil
OCP Morocco February commitments '000t
Europe 150 DAP
US 150 DAP/MAP
Nigeria 50 DAP
Bangladesh 25 DAP
Africa 225 NPKs
E. Africa via trader 15-18 DAP/MAP
GCT reported no further sales as it was sold out for February.
GCT Tunisia January commitments '000t
Domestic & Libya 10
W. & E. Europe 30
Italy, France & Spain 20
The potash market in China saw no reason why the consortium of buyers should be in any hurry to settle 2017
seaborne contracts. Suppliers are pinning their hopes of a successful year, in part, on an early settlement
for seaborne contracts to China. But with custom-cleared stocks still at over 2mn t in ports, as well as
reports of as much as 5mn t elsewhere in China, and railed shipments coming in steadily from Russia, the
spring application season is covered.
Domestic spring season buying has begun already, and demand was described as normal. This, coupled with the
improved supply from domestic suppliers such as QHSL, all slowed the urgency with which suppliers hope China
will need to settle. And with no product available for China until at least May-June from many of the major
suppliers who are, or are nearly, fully committed well into the second quarter, some market participants are
already seeing a later signing date than last year.
But prices were firming globally. Brazilian demand has been strong all year, and prices were up to
$245-250/t cfr for granular MOP in the last week of February, with suppliers confident about future
increases. European prices firmed on the top end of the assessment, to €235-255/t cfr for granular MOP. Nola
barge prices increased to $217-225/st fob in the fourth week of February, up from $215-222/st the previous
week. Mosaic even lifted its March price to $230/st fob Nola. And standard MOP prices in southeast Asia
looked set to increase, as low inventories and limited supply drove prices upwards.
If the consortium sees no incentive to sign early on demand requirements this year, perhaps the focus will
move to the possibility of signing early on future price increase expectations. MOP prices have been inching
up across the globe since July last year, and seem to be defying the fundamentals of an over-supplied
market, at least for now.
NPK: Around 8,000t of 15-15-15 ex-Baltic was sold to a West African market at $230/t fob, equivalent to
around $255- 260/t cfr. The cargo was to load at the end of February.
A company in Ghana was heard to have bought 5,500-6,500t of granular MOP. Details were unconfirmed but the
transaction was heard to have been completed by a trader that had MOP from Canada or northwest Europe.
Source: Argus FMB
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