Yuzhny ammonia buying at standstill, price to drop
24 October 2008 12:28 [Source: ICIS news]
LONDON (ICIS news)--Ammonia buying in Yuzhny is at a standstill as producers and buyers look at the weakness in other nitrogen products and consider what prices to agree next, however it is generally accepted when new deals are concluded they will be at lower prices, market sources said on Friday.
Sources were speculating this week that Yuzhny prices could drop below $500/tonne (€390/tonne) FOB (free on board) before long.
Traders were avoiding buying forward while there was still tonnage moving to end-users that was purchased some time ago at much higher prices than the market would now command, they said.
A lack of demand and lack of finance/credit have been blamed as the main reason behind the lull in business but the sharp price falls seen in other related commodities has also been a cause for concern.
Last done business in Yuzhny was reported at $825-840/tonne FOB.
The Tampa ammonia price for November is expected to give a level to the market and as soon as an agreement is reached traders are likely to step forward and finalise their Yuzhny tonnes for November. A settlement is expected later on Friday.
Ukrainian and Russian producers are starting to consider shutting down production to re-establish the market equilibrium and set a definite floor for prices.
Yara, meanwhile, announced that it was closing ammonia and urea production at its
Yuzhny urea prices have dropped from a high of $810/tonne FOB at the start of September to $280-330/tonne FOB this week.
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By: Rebecca Clarke
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