Fertilizer Market Report – August 9, 2023

News of the Week:

B.C. port dispute ends as workers vote to accept new deal

Port workers in British Columbia have accepted a new tentative deal with their employers, bringing an end to a tumultuous, weeks-long contract dispute that has paralyzed industries and supply chains across Canada.

Late last Friday, the vast majority of its 7,400-plus members voted to ratify a deal reached with help from the Canada Industrial Relations Board (CIRB), according to the International Longshore and Warehouse Union Canada (ILWU).

The two-day vote closed at 6 p.m. PT on Friday.

“The results of the ratification vote for the tentative agreement show 74.66% in favour of accepting the terms of settlement,” ILWU president Rob Ashton wrote in a letter posted to the union’s Facebook page shortly before 8 p.m. PT on Friday.

Summary of the Global Urea Market from Argus Media

Urea prices were up on high trading liquidity, strong demand and tight supply. Latin America was the most active import market buying over 160,000 mt at US$445-US$455/mt. In the US, urea prices slumped but liquidity was high. Middle East producers sold several granular urea cargoes on FOB basis. The market is now waiting for the results of the India tender expected on August 9. The outlook is volatile with supply and demand tightness easing, but risk remaining high amid Indian demand, gas market vulnerability and an uncertain Chinese export policy.

In the phosphate market, strong rainfall in India is supporting Indian DAP demand with prices rising nearly US$50/mt during the week. China is reluctant to offer export tons due to firm domestic demand. In Brazil, MAP prices rose US$20/mt on the week. In Europe, demand is returning. In the US, NOLA barge prices rose over US$30/st. The outlook firm with DAP prices set to rise through August.

North America Urea Last Week

Last week, Urea Western Canada DEL prices rose another 7% to a range of C$680-C$760/mt from the previous week’s C$665-C$680/mt.

In Eastern Canada, urea firmed to C$705-C$770/mt FOB for the latest offers, up from C$615-C$660/mt FOB in early July.

NOLA urea barges once again covered a broad range for the trading week, but prices were up from last week’s US$355-US$425/st FOB.

After reaching a reported high of US$445/st FOB for prompt tons late on July 28, new trades slipped to US$400-US$415/st FOB for August-September business on July 31 and Aug. 1. Another drop on Aug. 2-3 pushed the market to a low of US$375-US$395/st FOB for August-September business, with the focus reportedly on September tons as the week came to a close.

Urea prices firmed to US$450-US$480/st FOB in the Eastern Cornbelt, up another US$20-US$25/st from last week, with the low confirmed at Cincinnati, Ohio, and the high at river terminals in Illinois. Pricing out of Michigan warehouses jumped to US$525-US$535/st FOB during the week.

Urea strengthened to US$450-US$470/st FOB in the Western Cornbelt, up another US$10-US$20/st from last week, with the low confirmed at St. Louis, Mo.

In the Northern Plains urea prices were reported at US$475-US$485/st FOB St. Paul, Minn., with delivered tons firming to a broad US$485-US$525/st range in North Dakota, depending on location and point of origin.

North America Phosphate Last Week

MAP pricing in Western Canada was flat week-over-week in a range of C$890-C$900/mt DEL for August-September offers.

In Eastern Canada, MAP was quoted at C$880-C$925/mt FOB, down from the previous C$1,010-C$1,260/mt FOB range. DAP pricing slipped to C$825/mt FOB Montreal, down sharply from the prior C$1,010/mt FOB level.

NOLA DAP barges climbed to US$500-US$515/st FOB, above the last-reported US$470-US$500/st FOB range. MAP barges also moved higher to US$580-US$600/st FOB from the week-ago US$535-US$585/st FOB.

In the Eastern Cornbelt, DAP and MAP prices remained strong, fueled by firming NOLA barge values and reports of tight supply for the fall application season. DAP was pegged at US$535-US$560/st FOB, with the low reported in Illinois and the high at Cincinnati, reflecting a US$10/st increase from last week’s Cincinnati price.

MAP pricing jumped to US$635-US$645/st FOB in the Eastern Cornbelt, up from last week’s US$595-US$625/st, with the low reported at Cincinnati and the high in Illinois. MAP offers out of Michigan warehouses were quoted firmly in the US$645-US$655/st FOB range during the week.

DAP remained at US$540-US$560/st FOB in the Western Corn belt, with the lower end of the range reported at St. Louis. MAP pricing strengthened to US$630-US$650/st FOB in the region, up from last week’s US$590-US$630/st, with the low again confirmed at St. Louis.

Green Markets Global Macro Comments – Market is Quiet Awaiting India Tender Prices

India

The urea market has gone quiet as traders contemplate the price increases that followed the Indian Potash Ltd. (IPL) tender announcement. The tender will close Aug. 9. Sources said they expected to see prices significantly above India’s last tender. IPL is expected to try to purchase 1.5 million mt of urea.

So far, prices seem to be focusing on US$410-US$415/mt CFR based on the current Arab Gulf price and expectations reported from Chinese producers, an increase of US$135/mt from the last tender. If the final price comes in at that level, it will be about US$185/mt below the average 2022 tender price of US$635-US$640/mt CFR.

Middle East

Arab Gulf producers have gone quiet as they and traders work out pricing for the upcoming Indian tender. Sources said producers were hoping to maintain the US$400/mt FOB level achieved by SABIC last week and move the price higher.

Brazil

Urea prices rallied US$30-US$40/mt, to US$440-US$450/mt CFR, on the expectation that the Brazil market will be in direct competition with the Indian tender for available supply. Offers subsequently moved up to US$455-US$460/mt CFR, but no transactions were confirmed at that level. Buyers said an import price of US$455-US$460/mt CFR would effectively kill farm-level demand.

China

Expectations that a large amount of Chinese urea would be offered in the Indian tender received a shock during the week, as the Chinese government appeared to object to a sizable transfer of material from domestic warehouses to portside facilities for export, sources reported.

Approximately 200,000 mt of urea were reportedly sent to export facilities from the domestic supply pipeline. Sources said that once the move was discovered, the Chinese government decided the tonnage needed a closer look to ensure the action would not impact domestic supplies.

The government appears to be angling toward a more intensive export inspection, which could throw the material’s availability for the Indian tender into question. Sources have already reported that pricing out of China appeared to be on the rise because of the action.

So far, the public price was put at US$410/mt FOB for granular urea and US$400/mt FOB for prilled urea. These pricing ideas, while not yet achieved, were higher than expectations from last week. The move prompted some traders to speculate that the US$400/mt FOB price could be treated as the basis for sales into India.

Industry Tidbits

• • Global urea and nitrate prices have strengthened in the third quarter of 2023, driven by increased demand and supply constraints, including plant turnarounds and reduced Egyptian gas supplies, According to Nutrien. As part of its second quarter results, the company said it expected ammonia markets to strengthen during the balance of the year due to low global inventories, continued supply constraints, and higher values for other nitrogen products.
  • CF Industries’ President and CEO Tony Will believes despite downward pressure in the global nitrogen market compared to the unprecedented pricing environment in 2022, the fundamentals in the industry remained positive and forward global energy curves suggest attractive margin opportunities for our cost-advantaged network for the foreseeable future. “Longer-term, we expect the global nitrogen supply-demand balance will remain positive, underpinned by agriculture-led demand and forward energy curves that point to wider-than-average energy spreads for LNG-dependent producers in Europe and Asia,” he said.
  • Mosaic President and CEO Joc O’Rourke sees the fertilizer market recovery playing out very much as expected. “In a tight market, volumes are moving and prices are following. Phosphate prices have risen over the last month, while potash prices have stabilized and are now beginning to move higher,” he said.
  • Russia plans to introduce an 8% duty on the export of all types of fertilizers from Sept. 1 through Dec. 31, 2024, according to an Interfax report this week, citing a government resolution drafted by the Finance Ministry and notes posted on the regulation.gov.ru website.
  • There is a strong likelihood that the Canada durum crop especially, and possibly the U.S. durum crop, may not produce enough durum to meet the demands of the countries that normally import durum for their pasta needs, DTN Progressive Farmer reported.