Urea Overview

In the urea market worldwide, things are pretty quiet, creating a calm atmosphere. The slowdown is mainly due to reduced urea production in Egypt because of limited gas supply. Additionally, in Brazil, farmers are holding back on investing in planting, which is not what was initially expected. This trend is likely to continue in the coming weeks.

Buyers in Europe are a bit hesitant, with only a few small inquiries seen in Spain and Italy. People in all markets are being careful and not rushing to agree to current prices, especially considering the slower demand we’re seeing in Brazil and Europe.

Sellers are getting worried. They’re concerned that the next round of purchases may not happen until January or February 2024, unless there’s a price drop.

In Egypt, there’s a focus on challenges with gas supply. Plants in Helwan and KIMA have been down since late last week. Other facilities are running at a reduced capacity, about 70-80%. Improvement is expected soon, but there’s still uncertainty about future supply.

India, after recently buying 1.7 million tonnes, is well-supplied and isn’t likely to seek more until December, with shipments planned for January and February of the next year. This shows there’s currently an excess in the country.

Major fertilizer producers like SABIC, Nutrien, and CF Industries have reported disappointing earnings. This further confirms the current slow state of the market.

Urea Outlook: Stable

Prices for urea are getting close to levels that have attracted significant interest from buyers before. With the usual increase in demand at this time of year and ongoing geopolitical uncertainties, sellers are expected to stand firm on prices and may not be willing to make big reductions.

Geopolitical Tensions

Because of the conflicts in Palestine and Ukraine, traders are being careful about making short-term commitments. Producers are also hesitant to lower prices, recognizing the potential risk to urea supply chains due to these geopolitical issues.

Highlights:

• India: IPL has recently issued Letters of Intent (LOIs) for the shipment of 1.67 million tons of urea by 10th December, aligning with the volume confirmed by suppliers on 26th October.
• US – The Nola Urea Price has experienced a slight uptick, albeit on thin trade.
• Egypt – Both Alexfert and Mopco have successfully sold 5,000 tons of granular urea each at $410 per ton (FOB). This comes in the wake of a reduction in urea production.
• Brazil – Urea trade activity has decelerated, with granular urea prices fluctuating between $385 and $395 per ton (CFR).
• Ethiopia – EBAC has issued tenders to procure 562,600 tons of granular urea for shipments scheduled between December 2023 and May.
• Bangladesh – Aditya Birla has submitted the lowest offers in BCIC’s tenders for the purchase of urea, quoting $498 per ton (CFR Chattogram) and $506 per ton (CFR Mongla).
• Vietnam – Petro Vietnam has initiated tenders to sell between 10,000 to 40,000 tons of prilled urea, with shipments slated for November and December.
• China: The focal point of export discussions has primarily revolved around availability for the Indian market following the conclusion of the IPL tender late last weekTechnical Grade Urea

Technical Grade Urea

• In Europe, the demand for industrial-grade urea, particularly technical-grade urea (TGU) and AdBlue, is robust. The surge in demand has put a strain on logistics, prompting transportation companies to make substantial investments in fleet expansion to ensure timely deliveries of AdBlue.
• A UK-based company, GreenChem, has recently granted a five-year contract extension to Sutton Tankers for the distribution of its AdBlue product throughout the UK. This partnership has spurred Sutton Tankers to allocate £3 million towards enlarging its fleet, a move aimed at meeting the increased demand and maintaining reliable service.
• Meanwhile, in Germany, BASF has opted for a more conservative approach to pricing, implementing a modest increase of only €10 per ton for TGU. This stands in contrast to their initial plan of a €25 per ton increment. This adjustment reflects BASF’s adaptability to market dynamics.