Our detailed Fertilizer coverage includes the Outlook Urea report published monthly. This independent and comprehensive report gives the reader details on market overview, key drivers, price forecasts and supply outlook for both granular and prilled urea as well as demand outlook and any other key factors influencing the price movements at the time. Whether looking at short-term impacts for trading or longer term strategies, this unbiased and trustworthy report can help you to make informed business choices. Integer Research produces these reports on behalf of ICIS.
Updated to Q4 2018
Outlets for Iranian product continue to diminish in the face of the US sanctions with even India coming out and saying it would not be able to guarantee payments to sanctioned countries. Malaysia will have maintenance at its Bintulu plant for nearly two months. There are some signs that domestic supply will soon improve in Pakistan and Bangladesh has gas supply resumes to some plants.
India returned to the market with an import tender at the start of the quarter. Its statement that payments to Iranian suppliers could not be guaranteed have supported the uptick in prices. Bangladesh is in the market for 450,000-500,000 tonnes of prilled and granular urea while Pakistan is also looking to buy 100,000 tonnes.
Supply is expected to decrease as traders take positions in order to supply India with tonnes rather than the European market. A flurry of Egyptian business was secured in the final days of September, much of which is expected to go to destinations other than Europe.
Demand typically picks up in the fourth quarter as the co-operatives start to buy for spring application. But there is some discussion that buyers will attempt to hold off securing spring volumes until much later in the year. This of course remains to be seen but now India has stepped back into the market, business may will start picking up sooner rather than later.
Updated to Q3 2018
Chinese supply is a key focus for the market. While prilled supply is expected to be committed domestically, granular export cargoes are now likely to be available from China given the increase in international prices. Arab Gulf availability is seen constant while there may be some maintenance in Malaysia. Export licences in Indonesia are also being eyed.
Demand in southeast Asia is seen firm but contract cargoes from the Arab Gulf and other availability from Malaysia and Indonesia and even Russia is expected to meet any requirements. India will remain a key buyer while other markets in south Asia such as Sri Lanka, Nepal and Bangladesh are also expected to return to the market.
European markets will continue to source from Russia and North Africa as producers in Ukraine are shut down because of gas supply issues. The outcome of OPZ’s tender for a new gas tolling partner is eyed while it is not clear when gas supply will be restored to Dnipro. Iranian supply is also available but most buyers are not able to accept these tonnes anymore following the US sanctions.
European markets are done with their requirements for the time being with the next round of buying expected to emerge only at the end of the year. Domestic demand in Russia and Ukraine is likely to pick up around the end of the quarter while Turkey will continue to look for value and step in at lower levels.
With the spring demand faded and the US entering a traditionally slower period, making it an unfavourable import destination, the market for the short term will need to find a new outlet for the volumes coming forth. Sentiment is that exports will again become a solid strategy for producers able to undertake such movements.
Overall demand, outside of some remaining rice applications, has retreated as would be expected upon conclusion of spring plants and secondary applications, with the next uptick not expected until refill activities begin later in the quarter. The amount of that demand though will be dependent on whether crop prices stay challenged.
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Ammonia is one of the main sources of nitrogen in fertilisers, as it contains 82% of nitrogen (N), which is essential for the life of plants. Ammonia (NH3) is produced through a chemical reaction (electrolysis).
Urea is the most widely-produced and commonly-traded nitrogen fertilizer. Production amounts to more than 140m. tonnes a year, of which about 30m. tonnes are traded internationally.
Urea is the most widely-produced and commonly-traded nitrogen fertilizer. Production amounts to around 150m tonnes a year, of which about 40m tonnes are traded internationally. It is produced in nearly 50 countries worldwide and consumed in every developed agricultural market.
The largest producers are Chinese and Indian companies, who have massive domestic markets to serve. The main exporters are producers in areas where feedstock costs are lowest, notably the Middle East, Russia, Ukraine and Caribbean.
An estimated 10-15% of urea manufactured is used in industrial processes, mainly the production of melamine and resins and as an animal feed. The balance is used in agriculture.
Due to primary use being in agriculture, demand for urea is very seasonal. Application takes place either at the time the crop is planted or during the growth phase of the crop, generally this is during the spring season. In the northern hemisphere, this leads to a significant peak in demand in March-April, with a smaller southern hemisphere peak in October-November.
The main exceptions to this are in tropical agriculture and the Indian subcontinent, where application follows rainfall patterns. The main application periods in India, for example, are July-September, following the monsoon, and November-December.
Urea contains 46% nitrogen by weight. It is made by combining anhydrous ammonia and carbon dioxide produced in the manufacture of the ammonia. For this reason, urea plants are always located adjacent to upstream ammonia units. The production of one tonne of urea requires 0.58 tonnes of ammonia and 0.76 tonnes of CO2.
Urea is produced initially in liquid form and then generally solidified either through granulation or prilling. Prilled urea is still the most widely-produced form of the fertilizer, but virtually all new urea plants are designed to make granular material. Granular production is expected to outpace prilled production in the next decade. Granular urea has superior handling, storage and spreading characteristics.
Where urea is kept in liquid form it is normally combined with ammonium nitrate to produce a urea ammonium nitrate solution (28-32% nitrogen) for sale to the agricultural sector.
Urea is not considered to be a hazardous substance at normal temperature. It is not flammable and no special precautions are necessary in handling.
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