Tight granular urea supply supports global prices
Global urea prices continue to rise amid tight granular supply, strong demand in Latin America and higher natural gas prices in Europe. According to Profercy, its Nitrogen Index gained 6.3 points over the week, returning to levels last seen in July.
Price gains have been most pronounced in western markets. Offers in Brazil have climbed above $460/t CFR, around $20/t above the highest levels seen the previous week. Active buying has also been reported in Mexico, Argentina and Chile, with some deals concluded in the high-$400s/t CFR.
The situation in Europe is also supporting the market. Regional natural gas prices have approached $25/MMBtu, implying break-even urea production costs of around $650/t ex-works before emissions costs. Against this backdrop, Egyptian export prices have remained in the high-$400s/t FOB.
Additional demand is emerging from markets that previously relied heavily on Iranian product, supplies of which have recently remained limited. Up to 70 thsd tons of Chinese granular urea have already been committed to Turkey, while Russian prilled urea has also been booked.
Meanwhile, Southeast Asian markets remain less active, with buyers reluctant to accept prices of $430/t CFR and above. As a result, available granular urea cargoes are increasingly moving west. Expectations of new Chinese export quotas have so far failed to put significant pressure on global prices.
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