Fertilizer International 499 Nov-Dec 2020
30 November 2020
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Several factors acted together to pressure prices in the second half of September. India’s tender was announced later than expected, Chinese export supply proved larger than anticipated, and a lack of trade west of Suez continued to depress f.o.b. values. Some European buying was triggered in late September after prices fell to more acceptable levels. India’s RCF set a new record by awarding 2.18 million tonnes – the first time purchases in a single tender have exceeded two million tonnes.
Chinese prices rose at the end of October, driven by a spiralling domestic market. A fresh spot sale also reconfirmed Egyptian prices in the mid $250s/t f.o.b. range. Brazil remained a weak point, however, with prices drifting below $265/t cfr amid minimal buying activity. Europe was equally quiet as buyers mostly awaited lower values.
Phosphates: Recent prices in the main destination markets were mainly flat, despite new business. Brazilian fertilizer importers purchased a total of 36,000 tonnes of MAP at $367-370/t cfr. Saudi Arabia’s Ma’aden also sold a vessel of DAP/MAP to the US for shipment in November. East of Suez, an importer in Pakistan bought 40,000 tonnes of DAP – the first sale to this market in a month – while India remained quiet. Demand in Australia picked up with two new purchases of non-Chinese product emerging.
Globally, key recent drivers of the market include OCP selling MAP to Australia, ports closing in the US and Morocco, and a sales tender being awarded by Fertinal. Argus has also launched two new DAP price assessments for Egypt and Romania. The new benchmarks are DAP f.o.b. Egypt and DAP bagged fca Romania. Prices for these two increasingly important phosphates markets will be assessed weekly.
NPKs: Chad has a tender closing 12th November for 22,400 tonnes (19-1219+55+1.2B), together with 1,750 tonnes of urea, for February shipment. Similar to Burkina Faso and Cameroon, this NPK tonnage is lower than in 2019, as the cotton market struggles amid the Covid-19 pandemic. Nonetheless, the fresh demand was welcome in a largely quiet market. Mali, Benin and Togo have yet to tender in 2020. Last year, all three tendered for NPKs between September-November, seeking a combined volume of 419,100 tonnes of mainly 14-18-18.
In India, NFL secured a 30,000 tonne cargo (10-26-26) from Sabic at $315320/t cfr (India duty unpaid). This was for shipment to India’s east coast in the second half of November. Similarly, a 30,000 tonne Russian shipment (15-15-15) sold in October at $270/t cfr (India duty unpaid) is arriving early November. Key recent market drivers include uncertainty in the Romanian market and exchange rates limiting Turkish and Chinese exports.
Sulphur: Spot granular business in China has been concluded at $92-95/t cfr. This followed several weeks of stagnation in the import market as end-users consumed domestic inventory and production. In India, business concluded in the range $92-95/t cfr (east coast India) at the start of the sugar season, with phosphate fertilizer producer CIL and Andhra Sugar among the buyers. Fellow fertilizer producer FAC issued a new tender – after it scrapped the previous one – for 15-25,000 tonnes for November shipment. Limited spot availability and Middle East pricing in November have been the two main market drivers recently.
OUTLOOK
Urea: Strong demand from India is expected to provide an outlet for Middle East and Chinese suppliers. In the west, fourth-quarter demand from Europe and
Brazil will be a key determinant of granular prices. Although suppliers are comfortable for now, prices will likely come under pressure in between Indian tenders. The lack of buying activity outside of India means the timing of these tenders will set market direction in the medium-term. While India does still need substantial imports for the rabi season, there is little to sustain prices in the interim if a lengthy period of time elapses before tendering resumes again.
Phosphates: Looking ahead, Argus expect DAP and MAP prices to remain stable in November. East of Suez, Indian and Pakistan DAP import demand has subsided, being largely confined to cargoes arriving in November’s first-half. Agricultural fundamentals in India are, however, likely to remain solid. Chinese producers will raise shipments to Australia next month while also focussing on domestic buyers.
Potash: In the US, Argus expects producers to lift prices in November on the back of tight supply and strong demand. In Brazil and northwest Europe, meanwhile, spot prices may settle at current levels as demand wanes.
NPKs: Argus expects that the stabilisation seen in raw materials prices will take some weeks to feed through to the NPK market. Market activity is being affected by soft demand in many markets and the large spread in bid-offers on several grades.
Sulphur: The push for firmer sulphur pricing – spurred by the relatively bullish phosphate market and healthy producer margins – is expected to peak. This will be followed by softening in both f.o.b. and cfr pricing in late-November and December. Spot deals are also expected to remain limited, as buyers and sellers have fixed contracts in place that will cover the majority of production output and market demand.
