Currency Adjusted Spread Between NOLA
and Western Canada is Reverting to
Long-Term Average
I shortened the timeframe on my favourite chart to give a clearer picture of the movement in the CAD/mt spread between Urea NOLA and Urea Western Canada DEL prices. Last week Western Canada prices were flat week-over-week while NOLA prices jumped by 10.4%. This closed that spread as displayed in the chart below. The spread closed last week at C$175/mt versus the long-term average of C$155/mt.
April Urea NOLA Swaps Pricing Up in Last Few Weeks; Likely Have Seen the Floor for Spring Prices
April Urea NOLA paper (SWAPS) prices have been strong in the past few weeks, moving off most recent trough of US$305/st on March 29 to US$352.50/st on April 12, as the US spring planting season has come to life and finding empty barges creating a short-term supply squeeze on the Mississippi. This seems to be influencing Urea Western Canada delivered prices earlier this week as mentioned below. This strength, however, could be short-lived as it seems to be partially underpinned by a shortage of barges on the Mississippi.
North America Urea Last Two Weeks
According to Green Markets, urea prices in Western Canada last week were flat week-over-week in a range of C$670-C$680.
This week however, In Western Canada, delivered urea was quoted at C$670-C$700/mt, up from the prior C$670-C$680/mt range.
Last week, with spring demand picking up steam and barge availability becoming an issue, sources reported rapidly firming NOLA urea prices during the week, according to Green Markets.
Barge trades were reported in a wide US$318-US$355/st FOB range for first-half April, up from last week’s US$295-US$312/st FOB. The week began with trades at US$318-US$320/st FOB before firming to US$320-US$328/st FOB on April 4 and US$330/st FOB on April 5. By April 6, new NOLA business was confirmed at US$350-US$355/st FOB for loaded barges, with reports of first-half May offers at US$335/st FOB.
“The market has a very healthy amount of buyers and sellers,” commented one industry contact. “Freight seems to be the hot topic, in that empty barges are extremely tight. Getting rides is even slower than normal for loaded barges across all products.”
Early this week, NOLA urea continued to strengthen as spring demand surges. New business was quoted at US$357-US$363/st FOB for first-half April, up from last week’s broad US$318-US$355/st range, with unconfirmed reports of business at the US$365/st FOB level at midweek.
North America Phosphate Last Two Weeks
Last week, MAP pricing in Western Canada was flat week-over-week in a range of C$1,050-C$1,060/mt for the third week in a row.
This week however, MAP pricing in Western Canada appeared to be inching up as well, with new offers quoted at C$1,060-C$1,080/mt FOB and C$1,080-C$1,115/mt DEL, up from the prior C$1,030-C$1,080/mt FOB and C$1,050-C$1,060/mt DEL ranges.
Last week, sources noted NOLA DAP and MAP barges firming from week-ago levels.
On the MAP side, early-week pricing heard in a US$570-US$575/st FOB range moved up to US$575-US$580/st FOB by the end of the March 31-April 6 trading period, sources said. MAP barge offers from domestic producers lifted to US$580/st FOB, US$5/st above the week-ago US$575/st FOB.
Freight issues were said to impact the market, with sources describing difficulty finding both empty barges and space on a tow for a loaded barge. As a result, DAP barges were noted trading at US$625/st FOB from Cairo, Ill., on April 5, while subsequent US$630/st FOB bids failed to attract offers on April 6.
Weaker prices in the May futures market belied uncertainty regarding the market’s staying power, however. Some players described paper values considerably below the April spot market, and possibly into the US$530s/st FOB.
The NOLA barge DAP market firmed to a US$610-US$620/st FOB range for the week, rising from US$600-US$615/st FOB reported previously. Players put MAP at US$570-US$580/st FOB, above US$570-US$575/st FOB at last check.
This week, NOLA MAP was indicated as high as $600/st FOB amid tight supply, up from $570-$580/st last week.
Green Markets Global Macro Comments
India
Expectations have not changed as to when the next urea tender will be called. Sources remain firm in their belief that nothing will happen until the last two weeks of May, after vessels are nominated for all of the tonnage awarded in the previous tender. Two more ships in the Arab Gulf were said to be loading cargo awarded in the last tender.
Brazil
Urea prices dropped to US$295-US$310/mt CFR, in line with the general softness of the global urea market. Sources noted that an uptick in NOLA pricing prompted sellers to dig in their heels at the upper end of the price range. At the same time, buyers looked at the softening prices elsewhere and began to draw the line for a deal at the lower end of the range.
China
Sources said the estimated price for exported urea remains in the US$370s/mt FOB. At this level, said one trader, no one will be approaching any producer for tons, given the continuing softness of the global urea market.
As if to make a point that Chinese urea producers are not interested in any international sales, sources said they have been told by producers that bids under US$350/mt FOB will not be entertained. One trader noted that in order for Chinese product to be competitive in the current market, it would have to be under US$300/mt FOB.
Middle East
Traders noted sales at US$295/mt FOB. At the same time, others are now putting the low end of the market at US$292/mt FOB, but without any hard business to cite. The price has been moving down steadily since the close of the Indian urea tender in March. Sources now put the price at US$295-US$305/mt FOB, with no one really interested in offers above US$300/mt FOB.
Producers are said to be sold out for April and first-half May. Arab Gulf producers will end up being the main suppliers of the 1.1 million mt awarded in the March Indian tender. For now, sources said that no one is going long, especially while prices keep falling.
In Egypt, MOPCO sold a total of 30,000 mt in a variety of small lots to buyers in Turkey and Europe. The price was reported at US$330-US$335/mt FOB, a serious drop from US$375-US$380/mt FOB achieved in March. Sources reported that new bids are coming in at US$310/mt FOB, with buyers walking away if producers balk at that price.
Industry Tidbits
