Middle East crisis sees global urea prices established above $700pt fob

The majority of Middle East supply remains blocked from international trade, resulting in ever mounting challenges for major import markets.

The pace of global price gains has slowed, yet urea and amsul values continue to edge higher by the day.

At most major fob points, spot prices for granular urea are now established at $700 per tonne free-on-board (pt fob) and above. Producers in the Black Sea, Brunei, Malaysia, Egypt and Nigeria have been actively placing product. Traders have been willing to extend positions, although the stakes have become far higher.

In business yesterday, Nigeria’s Dangote sold 30,000t for April shipment at $700pt fob. Egyptian producers have placed over 30,000t at $710-720pt fob since late last week.

The situation remains incredibly difficult for major markets, including the USA, Australia and India, with offshore replacement costs advancing daily.

The global market is watching India closely given any move to secure large volumes will have significant implications in what is already a tight market. With the Indian domestic market subsidised, all import purchases are on government account.

Authorities elsewhere, including SE Asia and Turkey, are quickly assessing local supply and utilising policy options, including restrictions on re-exports, to mitigate the impact on farmers and industrial buyers.

In some markets, efforts to secure amsul have ramped up, while recent news effectively banning Chinese NK exports is limiting options for buyers in Latin America.

For markets approaching peak application, such as the USA, advancing replacement costs are forcing liquidity and local values higher. In New Orleans, barge business was concluded late yesterday above $645ps ton, over $700pt cfr metric equivalent, with bid interest for full vessels for April arrival evident marginally below this level. The most recent price trend is available in the chart.

European warehouse values are also up around €40pt with quotes in La Pallice now at €700pt FCA.

For now, buyers are managing exposure carefully, taking positions day by day rather than committing to large volumes.

Should India move to secure significant supplies — a decision the market is watching closely — it would tighten an already stretched market further and force buyers everywhere to reassess their strategies quickly.

Tags: prices, fertilizers