UREA PRICES REBOUND AS EUROPE RESUMES BUYING, PHOSPHORUS AND POTASSIUM PRICES REMAIN FLAT
The sharp rise in the price of natural gas in Europe has caused the price of urea to rebound sharply. Nitrate price is also on the rise in Europe due to rising production costs, while ammonium sulfate continues to decrease.
The sudden purchase from European is a bit surprise to the urea market and reversed the 8% decline of urea price of last week. The urea market is now keeping close attention to the upcoming Indian urea tender, as well as the purchases from Brazil. The Indian tender is scheduled for mid-July (rumoured to be in excess of 1 million tonnes), with delivery expected by the end of August. Brazil's summer rainy season came a month later than usual, so urea purchases are expected to pick up and add some support to urea prices.
With the third quarter on the way, the purchase from southern hemisphere will be faster, and the urea price may have hit its lowest for the year. Buyers are watching how quickly and at what level urea prices will recover.
The price of ammonium sulfate continued to drop 13% due to lack of demand. Ammonium sulfate is now a cheaper nitrogen fertilizer than urea, and the value of sulfur in ammonium sulfate has been neglected due to the rebound of urea price. As the price of urea rebounds again, the price of ammonium sulfate may start to rise. Russian ammonium nitrate prices have weakened again, while ammonium nitrate prices from other sources are rising like urea.
Ammonia price is unchanged as most buyers/consumers are currently well stocked. But the surge in EU gas prices has led to speculation that ammonia prices may be starting to recover.
Locally in South Africa, Durban port has reasonable urea inventory, and the product supply is around 12,000 Rand per ton. A slight strengthening in the Rand helped ease the pressure of higher urea prices. As the market continues to fluctuate, sellers will adjust prices on a weekly basis, so buyers are advised to be decisive and lock in prices quickly after deciding to buy.
While prices at most benchmark locations remained unchanged, the phosphate market remained under price pressure. Phosphate exports from China continue to pick up pace, while demand in most regions continues to be weak as buyers consider prices as too high.
Demand for spring application of phosphate has disappeared in North America and Europe, and producers are now waiting for purchases to begin in the southern hemisphere. Buyers in the southern hemisphere are reluctant to over-buy at current prices, so buyers and sellers are currently at odds. Brazilian prices fell by $10-15/ton, which is not a meaningful drop that will not get buyers excited to purchase. But it does give a signal that phosphate prices are under pressure. Unlike urea, Brazilian phosphate stocks are high among all Russian exports to Latin America.
The Asian market did not buy much spot phosphate, and most of the current activity is related to the delivery of phosphate and NPK that Asian countries bought through tenders. India's subsidy scheme does not allow private traders to benefit from phosphate imports, so Indian purchases were made only by state entities and in limited quantities.
Production at Foskor, South African phosphate producer, has been running well in recent months and the production will continue. The lack of phosphate stocks in the region means that all of its product will quickly move to buyers ahead of the upcoming season. Phosphate import cargoes are currently booked at the ports of Beira and Durban, so stock levels at the ports are expected to gradually increase. Of course, massive berthing delays remain a concern, and another key factor likely to be the impending September-October rainy season. A delay of about 30 days is currently expected, which not only increases import costs (demurrage fees are around $40/ton), but also increases the risk that growers will not be able to get fertilizer in time.
Prices at most potash benchmarks were flat. Potash prices have started to fall in some Asian markets and the overall outlook for potash prices will be weaker.
With Brazil purchased potash from Russia, it's hard to see potash prices falling anywhere. The question on everyone's lips is "when" and "how much." Potash sales will start to pick up as the third quarter approaches and demand in the southern hemisphere slowly kicks in, which should slow any price declines. If prices don't fall in the next month or two, then rising demand should ensure potash prices remain stable. The supply of potash is still limited, so the balance between supply and demand will not swing into oversupply anytime soon.
Crude oil prices fell nearly $10 a barrel as recession fears intensified. Rising U.S. interest rates sent stocks and commodities lower.
Brent Crude fell to $111 a barrel from $120 a barrel, dented by growing recession fears. The Fed's hike in interest rates to curb inflation has cooled commodity markets, and crude oil prices have responded accordingly. In terms of gas prices, European TTF gas prices rose above $40/MMBtu and are currently just below $40. European gas prices are unlikely to see any relief until the gas supply situation in Europe is somehow resolved. U.S. natural gas prices have fallen to $6.25/MMBtu, bringing relief to U.S. gas consumers, including nitrogen producers.
U.S. CME corn prices continue to show losses as the broad forward sell-off continues. Safex corn prices also fell as the dollar rose, with a stronger Rand exacerbating the drop in local prices. Oilseeds also fell across the board for similar reasons.
The net return for fertilizer sellers and exporters improved as freight rates were lowered by a few dollars.
Source from: Fshow.