Urea prices set to surge in Q4 due to India demand

21 September 2007 13:02  [Source: ICIS news]

LONDON (ICIS news)--Massive import demand from India is expected to push up urea prices during the fourth quarter, traders said today, with the cost of fertilizer from China already up $10/tonne on the week.

 

India has estimated its import requirement for the Rabi (winter) cropping season, which runs from October-March, at 3.2m tonnes of urea. So far, Indian buying agencies have contracted 800-900,000 tonnes.

 

Trading sources believed India would buy as much as 2m tonnes of this for October-December shipment. Fertilizer application ends in January in India, hence the need to concentrate imports during the fourth quarter.

 

Anticipated demand from India has already helped to firm prices from China. Traders bought urea this week in the high-$280s/tonne FOB (free-on-board) for November shipment, up about $10/tonne on the week.

 

Huge Indian buying led to a $100/tonne increase in urea prices last year. Starting at $210-220/tonne FOB China in September 2006, prices rose steadily until March when they peaked at close to $320/tonne.

 

This year, the starting point is higher and Chinese exports are running at much higher levels due to increased supply. Chinese traders expect exports to average 600-700,000 tonnes/month in the fourth quarter, compared to 230,000 tonnes/month in the corresponding period in 2006, according to customs statistics.

 

However, traders expect the pull from India and other major markets such as Brazil and the US to be sufficient to lift prices during October and November.

By: Stephen Mitchell
+44 20 8652 3214

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