Ammonia stalls on limited availability, uncertain demand

03 April 2009 14:48  [Source: ICIS news]

LONDON (ICIS news)--The ammonia market has stalled this week on the back limited availability and an uncertain demand outlook, particularly in Europe and the US, market sources said on Friday.

No new business from Yuzhny or the Middle East was reported with little product available to sell and a lack of buyers.

Buyers generally viewed the market as balanced to tight, but were unwilling to commit forward at higher prices because of the unclear demand picture, particularly in Europe.

Sources noted that European ammonia producers were restarting a number of plants as gas prices were lower from 1 April and, as a result, were using this as a bargaining tool when they come to import ammonia.

Meanwhile, US buyers were avoiding buying as the spring application season has been delayed, storage tanks are full and the outlook for industrial use and phosphates demand is unclear.

Additionally, much higher prices than agreed under the April Tampa contract at $318/tonne (€235/tonne) cost and freight (CFR) would have to be paid to secure Yuzhny or Middle East ammonia, sources said.

However, April availability is reduced from major supply sources.

In Yuzhny, some 190,000 tonnes is already committed for April shipment, with just 10,000 tonnes still available from Ukrainian supplier Odessa Port Plant.

Traders were unwilling to pay higher than last done business at $280-285/tonne free on board (FOB) saying they do not need the extra tonnage.

Producers were confident, however, that demand would pick up in May.

Middle East producers have less product in April due to a number of plant problems and, in some cases, higher urea production. As a result, there was no spot tonnage on offer.

Sources note that earlier spot offers above $300/tonne FOB Middle East were unworkable in most markets at present.

Meanwhile, the closure of PCS Nitrogen’s No 04 ammonia plant in Port Lisas, Trinidad, was creating some demand for shipments into the US Gulf. A number of companies were reported to be inquiring, but appear to be cautiously waiting before concluding purchases.

($1 = €0.74)

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By: Rebecca Clarke
+44 20 8652 3214

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