Fertilizer Market Report – June 7, 2023

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Fertilizer Prices Continue to Feel the Pressure Globally

Canpotex Cuts China Potash Price $307/mt CFR in New Contract

In my view, this was the most intriguing news item of the week thus far. This latest contract between Canpotex and China represents a 48% year-over-year drop in contracted potash price.

Canpotex on June 6 confirmed that it has agreed to a potash supply contract with China for shipments through Dec. 31, 2023 at US$307/mt CFR. The price is down from the US$590/mt CFR agreement that Canpotex concluded las year with China and the US$422/mt CFR contract inked with India on April 2023 which are usually agreed on similar terms.

North America Urea Last Week

According to Green Markets, urea pricing in Western Canada was quoted C$720-C$760/mt DEL, depending on location and time of shipment which is flat to the previous week’s reported prices.

Eastern Canada urea slipped to a broad C$675-C$850/mt FOB in late May, depending on location and supplier, down C$25/mt at the high end of the range.

The NOLA barge price range stretched as the week progressed, from US$300/st FOB for all-June up to US$375/st FOB for prompt. By late Thursday, however, those prices were US$275/st FOB and US$400/st FOB, respectively. That steepening of the price curve from prompt through all June indicates that players are getting even more bullish looking forward.

North America Phosphate Last Week

Western Canada MAP DEL prices were flat to last week in a range of C$1,115-C$1,150/mt.

New MAP offers in Eastern Canada were pegged at C$1,049-C$1,260/mt FOB, depending on location and supplier, down C$20/mt at the high end of the range. DAP remained at the C$1,038/mt FOB level in Montreal.

Sources reported a quiet week in the NOLA DAP and MAP barge markets, noting limited trading.

Imported DAP loading in June continued to be priced at a US$450-US$460/st FOB floor, unchanged the market’s week-ago low, while domestically-produced tons carried a premium at US$500/st FOB, steady from the week-ago high. Sources were unable to point to concluded business at any level, leaving prices unchanged from the prior week. Third-quarter paper trades and offers were noted in a US$450-US$455/st FOB range.

June-loaded import MAP barges were heard even with DAP in a US$450-US$460/st FOB range at the low side, unchanged from last-reported US$450/st FOB floor, while sources described a block of domestic MAP barges trading at US$470/st FOB, off from the prior US$490/st FOB top. Domestically-produced tons continued to be indicated at US$500/st FOB, although no trades were noted at that level. Players reported a July MAP barge changing hands at US$465/st FOB

NOLA DAP barges loading through June were priced in a US$450-US$500/st FOB range, steady from the week-ago US$450-US$500/st FOB level. Players put MAP pricing at US$450-US$470/st FOB, falling from US$450-US$490/st FOB at last check.

Green Markets Global Macro Comments – Growing Urea Supply Pressuring Prices Globally

India

India has finally called its much-anticipated urea tender. Rashtriya Chemicals and Fertilizers Ltd. (RCF) released the tender documents just after the close of business on May 31. The tender is slated to close June 12, with a shipping deadline of July 17. The buyer advertised that it wishes to purchase 800,000 mt, but may take more depending on recommendations from the Department of Fertilizers.

Just a week ago, as the IFA Annual Conference in Prague was winding down, sources estimated the price in the tender at approximately US$300/mt CFR. This week, however, estimates have softened to US$275-US$280/mt CFR, with a rising bearish attitude. Sources pointed to growing reserves from both China and Russian Baltic ports that could be targeted toward India. China alone was estimated have 500,000 mt available for export through July 15.

Increased urea production in India, along with the introduction of liquid Nano Urea, were designed to reduce dependency on imported urea, thus saving money on subsidy payments. Even with these actions, sources said India would need to call another tender soon after the last of the tons from the about-to-close tender are loaded. One trader said that by keeping purchases limited, India will not empty global reserves, leaving strong global surpluses that will help keep prices down.

Middle East

Large reserves of Chinese and Russian urea could push Arab Gulf producers to the sidelines for the just-called RCF/India tender.

Producers wrapped up the last of the shipments to India under the March Indian Potash Ltd. (IPL) tender this week. Sources reported no spot deals coming in to change pricing ideas in the area.

If the RCF/India tender comes in at the currently-projected US$275-US$280/mt CFR level, the estimated netback to the Arab Gulf would be US$255-US$260/mt FOB at best, a drop of about US$70/mt from the area’s current public price.

Iranian producers are now said to be quoting US$280/mt FOB to potential buyers, off about US$10/mt from offers reported during last week’s IFA conference in Prague. With stockpiles building for June and July, sources expect softer prices to continue.

Egyptian producer MOPCO sold 6,000 mt of granular urea at US$320/mt FOB to a trader for delivery to Europe. The price was off about US$40/mt from the last public deal, but in the range expected by traders.

Softer prices are already under discussion. As soon as MOPCO closed its deal, traders began bidding at US$305-US$310/mt FOB for mid-June shipments, while some aggressive buyers were even reported pushing for US$300/mt FOB or less. Sources said these prices were being offered for about 50,000 mt of granular product, with an eye toward securing a series of small 6,000-8,000 mt lots for sale into Europe. No one seemed to be looking to take the full 50,000 mt for a long-distance sale.

Brazil

Prices dipped slightly on the news of the Indian urea tender. Sources now put the price at US$290-US$300/mt CFR, just US$5/mt down from last week. RCF’s request for just 800,000 mt added to the bearish attitude, as traders in Brazil did not think this would be enough to absorb the surplus in the global market.

New bids for urea were said to come in at US$280/mt FOB, previously reported as the price level for sanctioned material. Now, buyers are trying to make this the standard price.

China

After price discussions were reported starting the week at US$300/mt FOB, sales of prilled urea to Taiwan and the Philippines showed netbacks to China at US$275-US$280/mt FOB. Sources were not surprised at the drop, having predicted the price would soften to the low-US$300s/mt FOB and beyond one week earlier.

The less-available granular urea was priced at US$305-US$310/mt FOB, sources said.

Sources speculated that China will have reserves as high as 500,000 mt through the middle of July. This comes as domestic demand has drawn to a close and production remains at nearly 165,000 mt/d, about 75% of rated capacity.

Chinese urea is expected to be a major player in the soon-to-close RCF/India tender. The tender’s estimated US$275-US$280/mt CFR price into India would mean the Chinese price will have to come down to the upper-US$250s/mt FOB to be viable. Sources did not think this would be a problem.

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