Nitrogen
The urea market was generally down this week, with the one exception being the Middle East urea benchmark that our price is based on. India concluded its urea tender at the lowest prices received and booked more than 1.6 million tons.
Most urea markets were slightly down this week but very small price drops that ranged from about $10/t in North America to around $40/t in Brazil. A deal was done for a urea cargo to Southern Africa at a premium to last week’s prices which bumped the Middle Eastern benchmark price up. A factor pushing prices down is the export cargoes of urea from China (230,000t) and Russia (60,000t) booked in the past week that weren’t really factored in. There remains very little demand for urea currently so expectations are that the urea price will continue to drift sideways with the odd small downward adjustment.
Many urea producers were pinning their hopes on US demand emerging for top dressing but the US plantings thus far have been well behind historical averages as wet fields delay farming activities. High levels of soil moisture are delaying the planting of most row crops, not just maize.
Ammonium nitrate and sulphate markets also experienced moderate price declines this week. The seasonal lack of demand and increasing availability out of China are keeping amsul under pressure. Ammonium nitrate is seeing the emergence of a two tier market with Russia AN trading at a substantial discount to those countries prepared to trade with it. In Europe demand for AN/CAN remains fairly weak although some producers are trying to push through small price increases. In general European AN prices are also trending downwards in keeping with urea and amsul.
The ammonia market continues to experience a bearish sentiment with very little buying interest and only a handful of deals taking place this week. The US spring direct application ammonia season has been very poor because of excessive moisture making conditions unfavourable for ammonia. Further big downward adjustments are expected for some of the contract benchmark prices such as Tampa in the coming weeks.
On the local front, some urea cargoes have arrived in Durban and navigated their way through the port delays and flood-damaged infrastructure. At least one cargo from Iran has been discharged and this product is priced below the Middle East equivalent, so buyers prepared to accept Iranian product have been able to access product and enjoy the lowest prices seen in 6 months or more.
Phosphates
Phosphate markets were broadly steady this week, although the Middle Eastern MAP price did see a moderate increase. Global demand remains depressed due to high prices and some cargoes from Russia continue to be sold to countries friendly to it.
Bangladesh concluded a large 1 million ton tender for a range of phosphate products this week. Pakistan purchased a DAP cargo from Saudi Arabia and the Indians bought a number of phosphate cargoes from Russia at its new target price. These Asian buyers provided impetus to the Middle Eastern price benchmark.
In the Western markets, demand remained very limited with a wide range of prices being mentioned. The wide price range points to buyers and sellers having very different ideas of what they’re prepared to accept and of course the prospect of many deals being concluded is small.
Chinese phosphate production is reported to be operating at high rates and inventories are rising as the local season has largely finished. The Chinese government have not shown any signs yet of opening phosphate exports but the market remains hopeful that exports should resume by June or July at the latest.
Potash
Brazil saw a small price drop on potash but the landed price of potash into Southern Africa remains unchanged for the 7th week running.
Buyer resistance to potash prices and the steady flow of Russian potash cargoes to Brazil are behind the price decrease seen in that market. The potash market generally remains quiet as is normal for this time of year. No massive downwards adjustments are anticipated while Belarus remains completely absent from the market and Russia exports are subject to sanctions in many markets.
There is also a view that any meaningful decrease in prices could unleash a lot of pent-up demand and a sudden increase in buying activity could just push prices back up again.
There was a sign of a supply response to current prices with BHP announcing this week that its 4 million t/y potash project in Canada would be accelerated by one year. As the project is only expected online around 2026, this will do nothing to help potash supply in the short to medium term.
General Market Outlook
Demand keeps crude oil prices moving upwards, while natural gas prices stabilise this week.
Crude oil carried on with its volatile behaviour this week as prices seem to be on the upward trend again. Brent Crude touched on $114/bbl earlier this week and is trading at $111.5/bbl currently, which is up on the $109/bbl a week ago. US and European gas prices have declined this week as the gas markets seem to be more stable. Henry Hub prices in the US are sitting at $8/MMBtu and the TTF price in Europe remains at $29/MMBtu.
Maize prices softened slightly this week both on the international and local fronts but the price declines were very small. Soya on the other hand made some meaningful gains on the CME although the Safex soya prices were down week-on-week. Sunflower was the main gainer on Safex with prices up around 4% this week.
The rand recovered around 1.7% against the dollar this week, which helped offset the small gains in the international prices of nutrients.
Latest Direct Hedge quotes for urea and MAP swaps in USD:
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