LONDON (ICIS)–The global urea market is building on recent gains, with prices increasing further as producers have committed most of their June cargoes and started selling material for July.
“Brazil is buying. Asia seems short in general and there is some more demand there. We were surprised to see the [higher] Indonesian price. North Africa has sold quite a bit and people have stopped waiting for India [tender],” said one international trader.
North Africa is leading the charge with Egypt now selling above $250/tonne FOB (free on board) and Algeria agreeing small lots in the $255-260/tonne FOB range.
Some of these purchases are short covering and the destination of most of the Egyptian cargoes is still unclear.
The Arab Gulf also touched $250/tonne FOB this week, with the UAE selling to Brazil and Oman to a trader for an open destination.
Brazilian prices are continuing to increase despite a truckers’ strike, which has played havoc with the country’s logistics.
The country’s buying season is expected to begin earlier than usual as buyers return to the market.
Southeast Asia demand is also healthy despite some markets such as Thailand continuing to receive formula cargoes.
Indonesia sold over 30,000 tonnes this week at $251.75/tonne FOB, which was above most buyers’ expectations.
The US slowed down as expected after last week’s run up and trading was thin, with June trading at $225-230/short ton FOB Nola while prompt is still fetching higher prices.
Not everyone is convinced about the strength in the market.
“I don’t know who is paying these [high] prices. Markets will crash soon I guess, if this is the speed of [prices] going up,” said a trader who was sceptical about the recent uptick.
News of India delaying a tender, although already discounted by some, may still have a negative impact on prices.
High urea sticks, slow domestic sales and movement to fields and fresh payment issues to Iran due to the US sanctions has led to talk the next tender would only come in two-to-four weeks’ time.
As for China, domestic prices are lower following recent imports and as the season ends in some provinces, indicating that import opportunities for the Black Sea and other origins will once again reduce.
Europe and Turkey are quiet, with very little business transacting in these markets.
While the outlook for Brazilian and Indian demand will be key to determine future price direction, the market appears to be stable for June and even July, with so many cargoes already placed.