Fertilizer Market Report – July 19, 2023
News of the Week:
Strike at Canada’s Pacific Ports Ends with Tentative, Four-Year Deal
Dock workers at ports along Canada’s Pacific coast and their employers accepted a tentative wage deal on Thursday (July 13), ending a 13-day strike that disrupted trade at the country’s busiest ports and risked worsening inflation, Reuters reported on July 13.
The BCMEA announced in a statement that both parties had reached a tentative agreement on a new four-year deal, a sentiment echoed by the ILWU. However, the agreement still needs to be ratified by both sides. The ILWU had been advocating for wage increases and an expansion of their jurisdiction to include regular maintenance work on terminals.
Some 7,500 dock workers represented by the ILWU walked off the job on July 1 after failing to reach a new work contract with the BCMEA representing the companies involved.
The strike had a significant impact on operations at two of Canada’s busiest ports, namely the Port of Vancouver and the Port of Prince Rupert, which serve as crucial gateways for the country’s exports of natural resources and commodities, as well as the import of raw materials.
Economists have expressed concerns that the strike could lead to further disruptions in the supply chain and exacerbate inflationary pressures at a time when the Bank of Canada is actively working to cool down the economy.
Preliminary results from a survey conducted by the Canadian Federation of Independent Business indicate that more than half of Canadian small business owners anticipate the strike at the Port of Vancouver will negatively affect their operations.
Based on calculations by the industry body Canadian Manufacturers & Exporters, the strike is estimated to have caused approximately C$6.5 billion in disrupted cargo movement at the ports, equating to an average of C$500 million in disrupted trade per day.
Rail trade from Canada plummets due to West Coast ports strike, down nearly 50%
- The Association of American Railroads reports a 46% drop in freight rail traffic entering the U.S. from Canada over the week ended July 8, as a result of the strike at West Coast ports including Vancouver.
- Top trade sectors impacted include chemicals, forest products, oil, and non-metallic minerals.
- The volume of trade being disrupted by the strike, and the diversion of ships and cargo, has sparked supply chain concerns in the U.S. and fears of congestion at both East and West Coast ports.
(Source: CNBC)
North America Urea Last Week
According to Green Markets, the latest delivered urea prices in Western Canada were reported in the C$535-C$568/mt range for July-August shipment, flat to last week’s prices.
The Eastern Canada urea market slipped to C$615-C$660/mt FOB, down from C$635-C$850/mt FOB in mid-June.
NOLA urea barge business was reported in the US$315-US$330/st FOB range for July shipment, with August-September trades quoted in the US$323-US$330/st FOB range. Some speculated that US$325-US$335/st FOB is likely for the next round, citing thin supply at NOLA and stepped-up buying in international markets, including Brazil and the EU.
“Producers are well-sold forward and are now making September sales,” reported one contact. “I expect 3Q to remain firm.”
Urea prices plunged to US$380-US$400/st FOB in the Eastern Cornbelt, down from US$440-US$480/st at last report, with the low confirmed at Cincinnati, Ohio, for limited supply.
Urea prices dropped to US$360-US$390/st FOB in the Western Cornbelt, down from last week’s US$425-US$460/st FOB range, with the low confirmed at St. Louis, Mo. The latest offers at Catoosa/Inola, Okla., were pegged in the US$380-US$390/st FOB range, down from the prior US$430-US$470/st FOB.
North America Phosphate Last Week
MAP was flat week-over-week in Western Canada at C$815-C$830/mt FOB and C$810-C$825/mt rail-DEL for the latest offers.
MAP prices in Eastern Canada slipped to C$1,010-C$1,260/mt FOB, down slightly at the low end of the range. DAP was also pegged at the C$1,010/mt FOB level in Montreal, down C$28/mt from last report.
NOLA DAP barges were reported trading at US$435-US$445/st FOB, below last week’s US$445-US$460/st FOB range. MAP barge prices also declined, to US$460-US$470/st FOB from the week-ago US$465-US$485/st FOB.
Green Markets Global Macro Comments – Bullishness in Urea Ahead of Upcoming Indian Urea Tender
India
India remains on track to call another urea tender by July 17, sources said. National Fertilizers Ltd. (NFL) is expected to make the call.
With Rashtriya Chemicals and Fertilizers Ltd. (RCF) fell short of its 800,000 mt purchasing goal in the last tender, sources speculate that NFL will have to make up for the shortage and bring in another 800,000 mt, for a total target of 1 million mt.
One of the reasons that RCF could not secure its desired tonnage was the low price it paid. Chinese producers refused to budge from their price, as they were able to get higher netbacks from a strong domestic market. There may still be limitations on Chinese product when the next tender is called, but as urea prices have been going up, sources expect that some Chinese urea might make up part of the tender offers.
The next Indian tender will face a bullish urea market. Prices have been edging up in every major producing country. The higher prices could free up tons that would not be offered at prices similar to the previous tender. However, there is still the issue of getting Chinese urea cleared by inspectors in time. If the new tender stipulates a short shipping period – as the RCF tender did – traders said they might be reluctant to seek Chinese product to offer.
With most Russian urea out of play because of logistics and the possibility that Chinese product might make a limited appearance, sources said the bulk of the tender requirements would once again come from the Middle East. Arab Gulf producers are pushing for higher prices each week.
Middle East
Sources said urea price had moved up to US$315-US$320/mt FOB, citing increased demand from Brazil and Australia.
Discussions have taken place in the low-US$330s/mt FOB for August shipments, but there is no confirming data yet. At the same time, sources noted an end-September deal brokered out of Oman at US$350/mt FOB. Other September deals were rumored at a similar level.
If the price moves into the US$330s/mt FOB as expected, the India tender will end up with prices in the mid- to upper-US$340s/mt CFR, a big boost from the US$280-US$285/mt CFR level that India achieved in the last tender.
Brazil
Selling to Brazil has become the mantra of the global urea market. Prices moved up to US$355-US$365/mt CFR on stronger demand. Sources reported more offers coming in at the higher end of the range, with expectations that prices would continue to rise.
China
Sources reportedly spent most of the week trying to figure out what was happening in the Chinese urea market. Players noted increased domestic demand at a time when that market is traditionally quiet.
The movement has caused pricing ideas to shift upward. Prilled urea was pegged at US$310-US$315/mt FOB, with a goal of US$320/mt FOB by next week. Granular was put at US$320-US$325/mt FOB, with discussions pushing to US$330/mt FOB later in the week.
Expectations that Chinese product might be considered in the upcoming India tender were dampened by reports that export inspections at China are unlikely to get faster. Sources had previously reported that the speed of the inspections – necessary to export urea – would be reduced to a week from the current 15-30 days. However, now they are of the opinion that there does not appear to be any effort to speed up the inspection process, nor in reducing the time needed to clear all the required bureaucratic paperwork.
If the Indian tender is called in mid-July and has a long shipping date – into October, for example – some Chinese product might be considered for the tender. However, should the tender carry a shorter shipping window, such as a mid-September shipping date, traders will be too concerned that China’s clearance process may not conclude in time to meet the deadline.
Industry Tidbits
- Nutrien Ltd. announced on July 11 that it has curtailed production at its Cory potash mine in Saskatchewan due to the loss of export capacity through Canpotex’s Neptune terminal resulting from the International Longshore and Warehouse Union (ILWU) Canada strike at the Port of Vancouver.
- Black Sea wheat estimates difficult to pin down, The Western Producer
- Russia suspends Black Sea grain deal in blow to global food security, reported ca
- The UN Secretary-General issued a statement saying UN-brokered grain and fertilizer deals ‘indispensable’ to global food security.
