Fertilizer International 511 Nov-Dec 2022
30 November 2022
Market Insight
Market Insight
Market Insight courtesy of Argus Media
PRICE TRENDS
Urea: Prices fell in most markets at the start of November after a sell-off in Egypt sparked a broader reset. Egyptian producers – sitting on high inventories and a meagre November sales-book – cut prices by around $55/t in early November, before rapidly regaining this lost ground as buying continued. The net result has been to clear most remaining unsold tonnes for November loading from producer inventories. Although Europe remains short of nitrogen, urea spot buying remains at a low ebb after some EU AN/CAN producers cut their prices by as much as e80/t.
Key market drivers: In Europe, increasing nitrates output and European Commission proposals to subsidise natural gas to fertilizer plants are major bear factors. India helped spark a price rally by calling its purchase tender. But the market could weaken if the tonnages booked are below expectations.
Ammonia: Prices continue to edge lower with the majority of buyers covered for the month ahead – especially in Europe where producers are ramping up production where possible. Delivered prices in northwest Europe fell $25/t to $1,1401,150/t cfr as October ended and November began. Larger buyers are covered into early-December. Continued uncertainty over feedstock costs in Europe is preventing traders from committing to firm yearend positions. In the east, smaller export cargoes from China are covering steady pockets of demand in east Asia.
Key market drivers: In Northwest Europe, producers across the continent raised production as spot gas prices eased at the end of October. But steady import demand is expected to persist as producers are unlikely to ramp up to full capacity. An array of supply options on offer from Chinese producers are covering demand from Taiwan, the Philippines and China.
Phosphates: India has once again been the main source of activity, with prices rising slightly as November began. Indian buyers lined up 160,000 tonnes from Tunisia and
Saudi Arabia. This lifted its import price by $3/t at the low end to $743-750/t cfr. In the Americas, Nola MAP prices, under pressure from Brazil, fell in early November. NOLA DAP, in contrast, rose slightly creating an unusual premium to MAP. With liquidity remaining low in Brazil and Argentina, prices for both markets remained steady in the first week of November. There was some price movement in Europe as producers – without much success – made concessions to spur demand. Ghent DAP prices declined from $890-900/t fca to $850-880/t fca at the end of October.
Key market drivers: India’s government reduced the DAP subsidy by three percent for the rabi season, a move that is likely to support already strong domestic demand in the near term.
Potash: The Indian government has reduced the potash subsidy for the October 2022 to March 2023 rabi season by seven percent, down to Rs14,190/t from Rs15,186/t previously. The fall reflects potash price erosion since the previous subsidy settlement in May. Elsewhere, the market remains relatively muted. With lower prices emerging in southeast Asia, Brazil, the US and Europe, most regions are in a lull while the downwards price pressure persists.
Key market drivers: Rising China’s MOP port inventories reached 2.5 million tonnes at the start of November, up from 2.15 million tonnes at the end of September. This should provide the country with a more favourable position ahead of its annual MOP contract price negotiations for 2023. Laos is capitalising on its freight rate advantage by growing its share of the southeast Asian market.
Sulphur: There is evidence of a lifting trend in the market with November Middle East prices announced in the range $149-155/t f.o.b. Qatar and Kuwait. Some netbacks from Middle East origin have shifted to even higher levels. Recent sales to Brazil, Indonesia and Africa, for example, have concluded in the range $190-205/t cfr. Delivered cfr prices to other markets such as China, India and North Africa do remain lower.
Key market drivers: Recent sales to Indonesia and Africa in $190s-200s/t cfr, and the West of Suez sale to CMOC Brazil at $190/t cfr. Curbs in FSU supply for November lifting are likely to extend into early December.
OUTLOOK
Urea: The market will remain heavy as long as Europe remains on the sidelines. However, this softer trend should evaporate if buying resumes in earnest, especially as the scale of the imports needed by Europe and the US ahead of spring will be above average.
Ammonia: A slight deterioration in pricing is expected until the end of the year. This is linked to weaker sentiment and slowing buying interest, combined with steady supply optionality.
Phosphates: Demand globally remains muted, despite some raw material price rises, with short-term demand from India and seasonal imports into Australia being the exception. Prices will be under pressure both east and west of Suez until the end of the year, once India’s rabi season demand has been met.
Potash: Activity for the remainder of the year is expected to be slow. Prices are therefore expected to fall further in key regions, although the anticipated increase in European demand may stabilise prices towards the end of the year.
Sulphur: Limited availability and supply delays are lifting delivered prices for the few sulphur cargoes available. Remaining market demand is likely to lift pricing further in the coming weeks. There is, however, some downward risk going forward, if pricing becomes supportive of higher inland freight cargoes from the Black Sea. This would allow Turkmenistan and Uzbekistan and Iran to enter the market, normalise Kazakh output and release Russian product. The entry of these stockpiled tonnages could potentially see the market move rapidly into surplus from the year’s end.
