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    Nitrogen+Syngas 389 May-Jun 2024

    31 May 2024

    Market Outlook

    Market Outlook

    Historical price trends $/tonne

    AMMONIA

    • Prices in the West are unlikely to garner much support moving into the latter stages of Q2. The May Tampa ammonia settlement was settled by Yara and Mosaic at $450/t c.fr, down $25/t on the $475/t c.fr agreed for April. With seasonal domestic demand in the US drawing to a close 2H April, many had anticipated that either a rollover or a slight decline would be agreed.
    • Prices in the Far East appear to have registered some support in recent weeks, the prospect of this tailwind lasting beyond June appears unlikely. Petronas says it would be commencing a 16-day maintenance at its 450,000 t/year Bintulu facility as of 4 May.
    • In Saudi Arabia, Ma’aden said that the planned curtailment at its 1.1 million t/a Wa’ad Al Shamal Phosphate Company (MWSPC) II unit will begin in mid-May. Netbacks on the group’s latest contract shipments remain unchanged at around the $275/t f.o.b. mark, as it continues to receive healthy spot interest from Asia for June deliveries.

    UREA

    • The market is bearish with little to report on the demand side and length on the supply side of the equation. It is difficult to see which region will step in to soak up June tonnes. India is sitting on 10 million tonnes of inventory and is not expected back into the market any time soon.
    • Small granular buyers in Southeast Asia are putting out soft bids at $320330/t c.fr which seemingly are too low to attract trader interest following a raft of purchases from Indonesia at $305306/t f.o.b.. Offers in the region have been in the low $330s to $340s/t c.fr.
    • There are no fresh updates on China urea export restriction policy. Considering the current firm domestic prices, the export inspection approval time may be delayed to June-July 2024.

    METHANOL

    • Methanol prices have been rising in North America. Commercial production at the Methanex Geismar 3 plant, which will bring an additional 1.8 million t/a of production, has been delayed due to what the company describes as “complications” with the refractory bricks in the autothermal reformer, possibly until Q4 2024. Continuing strong demand in North America has contributed to the price rises, and the news comes after a series of production outages in the US during Q1.
    • Availability was also tight in the Middle East, with supply constrained in Saudi Arabi in March. This had a knock-on effect on major importing regions such as India and China. There have also been plant shutdowns in the Asia-Pacific region, including Malaysia, continuing to tighten availability, and natural gas related production shortages in China and Iran.

    Latest in Outlook & Reviews

    Uncharted waters

    The fragile ceasefire between the United States and Iran broke down at the start of July, just three weeks after the signing of the June memorandum of understanding, after Iran fired at several vessels who had failed to notify them of their transit of the Strait of Hormuz, and the US retaliated with a missile barrage. While the two month negotiation period it had specified to solve all of the outstanding issues between the two parties had always seemed over-ambitious, market participants had at least expected to have that grace period to arrange for new cargoes and tranship them through the Strait. Now that the ceasefire has ended early, markets are truly entering uncharted waters.

    Price Trends

    The global sulphur market has entered a holding pattern, as a wave of bearish sentiment has so far failed to move stubbornly high spot prices. The departure of a significant volume of product from the Middle East has emboldened buyers and shifted market sentiment firmly towards bearish, but at time of writing this has so far failed to translate into lower prices. With sellers in no hurry to lower prices and spot availability still tight, the market has stalled as both sides wait for the other to blink first.