Yuzhny urea falls $20-25/t on India, Brazil hiatus

22 August 2008 11:21  [Source: ICIS news]

LONDON (ICIS news)--A lack of buying from India and Brazil has prompted Black Sea prilled urea prices to tumble $20-25/tonne (€13-17/tonne) this week, market sources said on Friday.

With no physical business taking place and traders sensing further weakness to come, the key benchmark Black Sea urea price has softened notably and was assessed at $760-780/tonne FOB (free on board) Yuzhny, down $20-25/tonne from the end of last week.

Over the last two weeks, Black Sea prilled urea has dropped $40-50/tonne on the back of market inactivity.

Large scale Indian urea buying is expected imminently, with State Trading Corp (STC) currently negotiating long-term, formula based contracts with Arabian Gulf producers.

However, the absence of actual urea buying or a tender announcement has contributed to the current bearishness in Yuzhny.

With prices softening, Indian buyers are encouraged to remain absent for the time being, despite requiring substantial tonnage in the short to medium term.

Alongside this, the Brazilian market is extremely quiet, with high inventory levels and low end user demand.

As a result of these two factors, traders are not willing to buy urea at the level producers are offering, as there is no obvious market where this product can be sold into at these prices.

India, the world’s largest urea buyer, still requires an estimated 5m tonnes of urea for delivery through to March 2009.

Brazil consumes around 3.5m tonnes/year of urea, of which around two-thirds is imported.

($1 = €0.67)

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By: Carl Roache
+44 20 8652 3214

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