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Nitrogen+Syngas 369 Jan-Feb 2021

31 January 2021

Market Outlook

Market Outlook

Historical price trends $/tonne

AMMONIA

  • Ammonia supplies have been curtailed by production shutdowns, including Kaltim and PT PAU in Indonesia, SABIC and Ma’aden in Saudi Arabia, Sorfert in Algeria and Chinese gas-based producers. There have also been gas curtailments in Iran and Trinidad.
  • Low inventories in the US due to a bumper fall application season are likely to lead to stronger than usual buying in anticipation of the spring application season.
  • Yara and Mosaic agreed a price for January of $270/t c.fr Tampa, up $15/t on the $255/t c.fr agreed for December and in line with expectations of a higher settlement.
  • Industrial ammonia demand is also recovering after much Covid-related disruption during 2020.
  • With supply still constrained in some areas, the prospects are for higher ammonia prices during 2021 in the western hemisphere, although prospects are slightly flatter in the eastern hemisphere.

UREA

  • Last year’s record Indian demand seems to have abated, and fresh tenders are not expected before March/April.
  • A fresh outbreak of Covid-19 and resultant lockdown has affected urea plant operations in China’s northeastern Hebei province
  • China is also facing urea production cuts due to gas supplies being cut to plants to allow increased power production during the winter. This is leading to high Chinese domestic prices and a lack of product being offered to the export market.
  • Lack of availability and good prices for grain have led to New Orleans prices jumping at the start of 2021 to $320/ st f.o.b. NOLA ($350/metric tonne), up $65/t in just the first couple of weeks of the new year, to secure cargoes from around the world.
  • At the moment the prospect seems to be for higher prices in the short term, especially once Indian buyers return to the market.

METHANOL

  • Methanol prices have been rising as supply tightens. Gas curtailments have affected production in Iran and China. Other supply outages have occurred at Tomet in Russia and Equinor in Norway. This has coupled with low storage levels due to previous outages to tighten supply in all major markets.
  • Conversely, demand has appeared to be robust in spite of the second wave of coronavirus infections in Europe and North America. Demand was particularly strong in Europe, especially into the formaldehyde sector. In the US, a strong construction sector also helped lift prices for chemical derivatives.
  • Methanex posted its January 2021 US reference price at $1.45/gallon ($482/ metric tonne), a jump of $0.25/gallon ($83/t), the fifth monthly price rise in a row, and the highest posted price for Methanex since November 2018.
  • Continuing supply tightness and strong demand are expected to lead to prices continuing to rise through 1Q 2021.

Latest in Outlook & Reviews

Running the gamut

This issue of Sulphur magazine contains a preview of CRU’s Sulphur + Sulphuric Acid conference in Woodlands, Texas, which is being held from November 3rd to 5th this year, giving delegates the opportunity to meet and discuss some of the trends which are continuing to change the sulphur and sulphuric acid industries. Some of this is echoed in our editorial coverage this issue; the rise of electric vehicles and the continuing electrification of society is changing demand for metals and impacting upon both sulphur and sulphuric acid markets alike. As CRU’s principal analyst Peter Harrison discusses on pages 36-37, battery demand for nickel is leading to a surge in new nickel leaching capacity in Indonesia which is drawing in greatly increased volumes of sulphur, while rising demand for copper is leading to additional volumes of smelter acid from China, India and Indonesia which are impacting the merchant market for acid, as detailed by CRU’s Viviana Alvorado on pages 38-40. In the United States, new lithium mines will require additional sulphur (see pages 22-23). Rare earths and battery metal recovery will form a major topic on the first day of the Sulphur + Sulphuric Acid conference, with speakers from Lithium Americas, one of the pioneers of the new US lithium industry.

Is the world ready for CBAM?

At the end of this year, the European Union’s Carbon Border Adjustment Mechanism (CBAM) will move from its transitional phase into its ‘definitive’ phase, whereby the carbon costs of goods entering the EU will need to be priced in. CBAM requires suppliers to calculate the carbon emissions of their fertilizer (and other, e.g. steel) products, including indirect emissions, for example from electricity consumed in the process, and emissions of precursor or raw materials. They will then need to purchase CBAM certificates to cover embedded emissions above the established free allowance benchmark rates determined by the European Commission: 1.57 tonnes CO2e/tonne ammonia and 0.23 tCO2e/t nitric acid.