Market Outlook

Historical price trends $/tonne

AMMONIA

Ammonia prices are expected to remain soft moving through January into February, with little in the way of price support from both a supply and demand perspective. January’s Tampa settlement was $100/t down on December at $525/t CFR.

Further declines are expected in Q1 2024 due to fresh supply, particularly the new Gulf Coast Ammonia (GCA) project.

Overall the supply outlook for ammonia is stable, with a lack of downstream demand for both industrial consumers and fertilizer producers, leading to further reductions in ammonia prices into the New Year.

Feedstock costs remain relatively modest in spite of the onset of cold weather in North America and Europe, with Henry Hub spot prices down to just $2.50/MMBtu at the end of December, and even European TTF prices below $10/MMBtu for February delivery.

UREA

Urea prices have fallen, although the recent Indian tender may put a floor under prices and tempt European and US buyers back into the market. It is believed that the US still needs an additional 1.0 million tonnes of urea. However, with US delivered prices close to f.o.b. offer levels some movement is needed either on the supply or purchase side.

Brazilian demand for the Safrinha second corn crop, sown in January-March, remains uncertain. Last year the harvest reached record levels, but El Nino drought conditions may slow or delay planting and application. Mosaic says that it expects Safrinha fertilizer demand to be 12% down on last year.

Paper markets indicate modestly firmer prices for urea through the first quarter and by the second week of January. Egypt has been particularly bullish, with a number of sales lifting export prices from Damietta as high as $370/t FOB.

METHANOL

On the supply side, Malaysia’s Petronas restarted its No.2 methanol plant at Labuan on 27th December, restoring 1.7 million t/a of capacity after several weeks shutdown due to mechanical issues, and keeping southeast Asian prices at their relatively low level of $340/t f.o.b. Other plants have also had unscheduled outages, including several in Iran due to gas supply issues. Methanex’s Damietta plant, with 1.3 million t/a of capacity has been down since October because of ongoing gas supply issues.

Methanol prices have recovered from their low point of Q3 2023 thanks to more stable Chinese MTO production, boosting Chinese domestic demand and imports. However, falling oil prices may impact upon MTO production, and slowing global growth may also impact upon demand for methanol derivatives.