US granular urea prices spiral on China duty hikes

10 April 2008 16:07  [Source: ICIS news]

 

LONDON (ICIS news)--US granular urea prices have shot up around $35-40/short ton following news of the imminent Chinese export tax hike, traders said on Thursday.

 

Prompt barges have been sold at $385/short ton FOB (free on board) Nola (New Orleans), with price ideas now around $400/short ton FOB Nola.

 

This is a notable jump from the same time last week when urea barges were priced at $360-365/short ton FOB Nola.

 

The jump in price was caused by a spike in buying prompted by the news that China would effectively block exports from late April.

 

The Chinese government intends to impose an additional 100% export tax on exports of all fertilizers, taking the export tax total to 135%.

 

This will in effect remove an average of 450,000 tonnes/month of urea from the market.

 

International prices have leapt, prompting traders to re-export urea barges out of the US Gulf.

 

“The barges went like crazy,” explained a trader. “People who have got positions for China are trying to cover with barges.”

 

The ongoing wet conditions in the US Gulf region were encouraging this re-export trade as the US river systems remained unnavigable

 

“The trouble is there has been lots of rain so everywhere is flooded,” a trader said. “You still can’t move up the Arkansas river.”

 

The outlook was firm according to traders, with forward prices also being assessed upward.

By: Carl Roache
+44 20 8652 3214

< previous article(ICIS Chemical Business podcast November 2, 2009)

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