FocusGlobal urea shoots past $700/t to records

04 July 2008 17:12  [Source: ICIS news]

By Carl Roache

LONDON (ICIS news)--Global urea prices reached record highs as traders jumped in ahead of expected buying in major markets and a predicted shortfall in supply for the US, they said on Friday.

The key benchmark Black Sea prilled urea price reached $700/tonne (€448/tonne) FOB (free on board) Yuzhny for the first time.

The rise of around $40/tonne in a week was prompted by traders jumping in anticipating large-scale buying in Latin America and India.

Indian Potash Limited (IPL) bought 50,000 tonnes of Romanian urea at a reported price of $725/tonne CFR (cost and freight) this week, and substantial further purchases were expected.

“Indian buying is getting closer so people want to go long and be prepared,” explained a trader.

The surge in Black Sea urea prices prompted a rush into the market by Latin American buyers.

The Brazilian market was active as traders raised offer prices to $730-735/tonne CFR following the rise in FOB levels.

Elsewhere in Latin America and Central America, buyers flooded into the market to try to find urea and importers began checking prices and availability.

In Guatemala, buyers Incofe and Mayafert enquired for 25,000 tonne cargoes.

With Chinese exports all but excluded, traders predicted a shortfall of supply for the US market.

This prompted many to snap up available granular urea in anticipation of this, causing prices to rise.

One of the most dramatic rises was witnessed in Egypt where granular urea prices rocketed $60-65/tonne in just over a week.

Producer Egyptian Fertilizer Co (EFC) on Thursday sold close to 80,000 tonnes of urea at a record high $790-795/tonne FOB for July-first week of August shipment to the US, or possibly Latin America.

Last week, Egyptian producer Helwan Fertilizers sold 15,000 tonnes of urea at $730/tonne EXW (ex works) to traders Hagrpota for the US.

“US prices are going up so most of this product will go there. People are positioning themselves for this market,” said a trader.

US prices rose to record highs on the back of a buying spree for rice and autumn application. Although slightly calmer this week, market prices continued to firm.

With limited July tonnes available, granular urea barges traded at $735-745/short ton FOB Nola (New Orleans) for August this week, up from around $710-715/short ton FOB Nola for July-August loading at the end of last week.

Trading company Keytrade began offering granular urea at $740/short ton FOB Nola for August arrival from Kuwait, but subsequently raised offers to $750/short ton FOB Nola due to the increased international prices.

Traders also bid Middle Eastern producers at $760-765/tonne FOB for granular urea for shipment to the US.

This level was around $50/tonne higher than the last business done.

It was unclear whether global urea prices would continue to climb after these recent dramatic jumps, although buying interest from several major markets remained strong.

“Maybe we are seeing the peak or maybe it will go up. It is hard to say at the moment,” said a trader.

($1 = €0.64)

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By: Carl Roache
+44 20 8652 3214

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