FocusMiddle East urea producers look past India

13 June 2008 15:54  [Source: ICIS news]

By Carl Roache

LONDON (ICIS news)--Middle East urea producers have looked to other markets after long-awaited Indian tenders from State Trading Corporation (STC) and Indian Potash Limited (IPL) failed to emerge again this week, traders said on Friday.

While India has delayed its tenders, other Asian markets have stepped in and bought, or been offered, Middle East urea, giving producers somewhere to place volume and ensured Arabian Gulf FOB (free on board) prices do not falter while India waits.

“They [Middle East producers] are focusing on what can be done in places like Sri Lanka, Bangladesh and Pakistan shortly. They have other alternatives,” said a trader.

“They seem to be in a reasonably good position and do not need India to come along immediately.”

Kuwaiti urea producer Petrochemical Industries Co (PIC) last week sold 25,000 tonnes of granular urea to a trader at just under $710/tonne (€462/tonne) FOB (free on board) for Thailand.

Saudi Basic Industries Corp (SABIC) also sold more than 20,000 tonnes of granular urea to an Asian market, believed to be the Philippines, at $710/tonne FOB.

This week, the other two major Arabian Gulf producers turned to Bangladesh and Sri Lanka to place tonnes in the short to medium term.

United Arab Emirates producer Ruwais Fertilizer Industries (Fertil) and Qatar Fertilizer Co (Qafco) backed traders with significant tonnages for the Ceylon Fertilizer Corp (CFC) and Colombo Commercial Fertilizer (CCF) tenders in Sri Lanka.

Both of these producers also participated in the Bangladesh Chemical Industries Corporation (BCIC) tender.

All the offers submitted in these two tenders, presented netbacks well above $700/tonne FOB AG for the producers.

Although the Indian buyers have not yet announced formal tenders, there are rumours of purchases by IPL from traders. IPL is believed to have purchased two-to-three cargoes of Black Sea urea at prices just below $700/tonne CFR.

However, the quantity of urea available reflecting $610/tonne FOB Yuzhny is limited and IPL will probably have to pay more to purchase larger quantities.

This is especially so for the Middle East, given the recent sales and offers above $700/tonne FOB.

Despite the advance business concluded by Indian buyers, traders fear they might struggle to secure all the tonnes needed, especially given the recent moves by the Gulf producers.

Several pointed out there are few alternative supply sources, given the effective absence of China from the market.

“I think they [India] will find it very hard to get the tonnes they need. When they come in, I think they will want the tonnes yesterday,” added a trader.

“I personally feel that the Indian buyers do not have much more time to come in,” said another.

($1 = €0.65)

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By: Carl Roache
+44 20 8652 3214

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