23 July 2013 13:14 [Source: ICIS news]
LONDON (ICIS)--The benchmark Tampa ammonia contract price has fallen by almost 10% month-on-month after it was settled at $470/tonne (€357/tonne) CFR (cost & freight) for August loadings, market sources said on Tuesday.
The settlement between Oslo-headquartered fertilizer giant Yara and its customers was agreed at a $55/tonne discount to July's price level of $525/tonne CFR, and will put fresh downward pressure on price levels in the Black Sea and Arabian Gulf.
No business has yet been concluded for August in Yuzhny, but the latest Tampa price suggests a price level of $395-400/tonne FOB (free on board), compared to second-half July business at $425-435/tonne FOB.
Major European producer NF Trading has tried to find a floor to ammonia prices by cutting production by 50% this month, but with demand from agricultural and industrial buyers in the crucial US and Asian markets still very soft, no price rebound is expected until September at the earliest.
In addition, there is currently ample spot availability in the Middle East, where leading ammonia producer SABIC last week failed to sell a 23,000 tonne spot cargo.
The Saudi producer is also trying to shift its surplus ammonia to contract buyers in the Asia-Pacific, with customers in Taiwan and Korea asked to take larger than usual cargoes.
The Tampa ammonia price has fallen steadily from its 2012 peak of $720/tonne CFR for November loadings, and is only likely to stop sliding when distributors and farmers start to refill their systems and tanks ahead of the next application season.
($1 = €0.76)
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