Global FOB prices have experienced significant fluctuations over the past week. A liquidity shortage in the East, coupled with the ongoing threat to China’s export trade, has led to decreased quantities in Southeast Asia and the Middle East. In contrast, gas supply issues faced by Egyptian producers have bolstered North African spot values at a time when European buyers are assessing nitrate offers and off-season import needs.
It is noteworthy that the anticipated confirmation from the European Parliament regarding tariffs on Russian fertilizers was released today, indicating that these tariffs will take effect from July 1. Trade flows will be impacted by this news following the emergence of the first two rounds of new season nitrate offers. Some immediate urea purchases have been made in Europe, while forward trading for July/August has been conducted at $405-$410 per ton CFR in France. These levels correspond to $370 per ton FOB in North Africa.
However, for nearby tons, North African values have been set at $400 per ton FOB or higher. Egyptian producers have been unable or unwilling to offer products due to gas issues, creating constraints on access to nearby products. Algerian suppliers have benefited from several sales that continued until early June.
Latin American buyers have generally postponed their requests, but demand is expected to rise in June and July in Mexico and Argentina. Immediate demand has emerged in Brazil; however, there are mixed opinions on whether this demand will persist in the coming weeks. The Nola market, which has significantly lost value, is approaching the final phase of the season and is no longer a desirable market for Western producers.
Trade in the East has been more meaningful. Large quantities of Indonesian granular urea have been sold at $370 per ton FOB, including shipments to India under prior contracts. Smaller quantities have also been sold at $380 per ton FOB for closer markets.
Middle Eastern producers have accepted lower levels, with sales occurring above $370 per ton FOB up to $380 per ton FOB. Ethiopia has once again proven to be a valuable market, supported by traders from these sales. A positive note for many is that Indian demand may emerge in the coming weeks.
The market is dependent on any news coming from China. Recent reports indicate that CIQ inspections will soon resume; however, the export process may impose restrictions on product access until the end of June. So far, the only significant commitments have been for Ethiopia.
—
Analysis:
The above text analyzes the current state of the urea fertilizer market globally, examining various factors influencing prices and demand.
1. Liquidity Fluctuations: The liquidity shortage in the East and threats from Chinese activities have had notable impacts on Asian and Middle Eastern markets, indicating instability in these regions.
2. Gas Issues in Egypt: Mentioning gas problems faced by Egyptian producers suggests that supply could be affected, leading to increased values in North Africa.
3. New European Tariffs: The European Parliament’s decision to raise tariffs on Russian fertilizers appears to have widespread implications for trade flows and prices. This trend could benefit non-importing producers.
4. Future Demand: Reports indicate that demand in Latin America, particularly in Mexico and Argentina, may increase in the future, although there are varying opinions about the sustainability of Brazilian demand.
5. Importance of New Markets: The need to identify and capitalize on new markets like Ethiopia suggests that producers should seek opportunities in non-traditional markets.
This text clearly illustrates the challenges and opportunities facing producers and traders in the global urea fertilizer market, emphasizing that amidst changing conditions, it is essential for market participants to utilize accurate information and analyses for optimal decision-making.
Sincerely,
Dr. Nader Salek
www.Ghlolo.com
