Updated to mid-August 2009
European market review by Carl Roache, ICIS pricing
Over the period mid-May to mid-August 2009, Black Sea urea prices fluctuated around the low/mid-$200s/tonne FOB (free on board) Yuzhny.
In mid-May, Black Sea urea prices were assessed at $246-250/tonne FOB Yuzhny, before falling to around $227-237/tonne FOB by mid-June on the back of flat demand.
By mid-July, however, prices in the Black Sea had edged up to the low/mid $240s/tonne FOB supported by buying in Asian markets like Pakistan. Producers were comfortably positioned and could therefore reject bids below $240/tonne FOB.
Around mid-August, Black Sea urea prices were again falling on the back of light trading. Prices were assessed at $248-250/tonne FOB Yuzhny. Traders refused to pay $250/tonne FOB and above as they lacked an obvious end market where these purchases could be worked in at a profit. Added to the limited trade, around 100,000 tonnes was still available for August out of the Ukraine which was adding bearishness to the market.
US market review by Frank Zaworski, ICIS pricing
The US granular urea market traded higher over the three month period to mid-August, with a limited number of barges selling at $285-290/st (short ton) FOB Nola (New Orleans). Several cargoes from Europe were enroute to the US Gulf, however.
Prices were expected to ease with the arrival of import cargoes in September. Once the river closes for the winter, low prices for ammonia may eat into demand for urea, pushing prices down. Against this, the number of cargoes booked to arrive in the US Gulf was modest, and urea was unlikely to be in oversupply through to the autumn (fall) period. Urea producers, resellers, dealers and growers anticipate a strong fall in the fertilizer application season.
Nitrogen fertilizer dealers were expecting a good fall in the fertilizer application season with volumes expected to increase from fall of 2008 when fertilizer prices were peaking along with crude oil and other commodities.
The 2009 corn crop was predicted by the US Department of Agriculture to be large at over 12.3bn bushels. Low levels of carryover stocks will hold prices and create the farm economics necessary for grower investment in soil nutrients.
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Urea
Uses and Outlook
Urea is a popular solid nitrogen fertilizer because of its high nitrogen content (46%), with nearly 90% of output going into this application. Most world output is in a solid form, either prills or granules, or crystalline for specialised small-volume uses. In a number of industrialised countries, a growing volume of liquid product is consumed in the production of nitrogen solution fertilizers, and in liquid cattle feeds.
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Urea
Process Technologies
Urea was first produced industrially by the hydration of calcium cyanamide but the easy availability of ammonia led to the development of ammonia/carbon dioxide technology. This is a two step process where the ammonia and carbon dioxide react to form ammonium carbamate which is then dehydrated to urea.
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