The ICIS weekly Urea reports are covered in China, Europe and the US as well as globally in The Market report. For China, there is an extensive coverage of export, ex-works and ex-warehouse prices, and the Europe report concentrates on spot prilled and granular grades in Yuzhny, Baltic, Middle East and northwest Europe, while the US has spot quotes for the US Gulf and Arab Gulf. All these prices assessments are supported by an independent market commentary that includes details of production news, exports, regional updates, demand and supply and any other key influencing factors. This reliable market intelligence can help you to make informed commercial choices.
Updated to Q4 2020
Chinese export availability increased at the start of Q4 as the domestic season slowed. Halfway through the quarter there was a significant decline in Chinese availability because of gas supply cuts. Indonesian supply was committed because of spot sales to India and as fresh licences for the New Year were awaited. Producers in Malaysia and Indonesia underwent planned and unplanned maintenance, but this did not cause any big disruption in supply.
India continued to be a key importer and closed tenders for a total of 3.5m tonnes. It bought from all major origins with producers keen to sell because of better netbacks compared to the US or Brazil. Demand in southeast Asian markets was limited while Sri Lanka continued to issue small and regular tenders.
The large volumes required by India during Q4 meant that tonnes, which would have been offered to Europe, were redirected to India. This prevented any sense of oversupply or downward pressure on price. Egypt moved 25% more volume to India year on year; some of these tonnes would have been offered to Europe. European producers ran production without any problems and were able to serve domestic demand.
Demand had been widely expected to kick in during October, but this failed to occur because of poor harvest, financial concerns and general market uncertainty. November was then slated as the favoured month for buyers to return for first application storage. It was a slow start but buying eventually improved during H2 November. In December things started to slow, which was typical for the time of year, maybe even more pronounced due to the pandemic.
Supply remained constant during the quarter with demand easing as the season was concluded. New Orleans barge values stayed steady over the period so the market was not as attractive for imports as would typically be seen to close the year.
Although urea values remained favourable for farmers, as the quarter progressed the overall pace of demand steadily decreased as harvesting concluded. Many key areas saw winter advance further through much of the later period, which effectively halted additional fertilizing over fields and limited any extra buying.
Chinese supply is expected to be thin with operating rates at around 50% of capacity at the start of Q1. Several plants have shut down on high coal prices, and limited gas supply, with environment protection measures also affecting production. Cold weather and increased economic activity has increased consumption of gas and electricity in the country, leading to less availability for the fertilizer sector. Malaysia also plans scheduled maintenance at two units for a fortnight.
Indian buying has slowed down because of seasonal factors. A tender is expected in February for stocking up purposes. Sowing for the kharif season begins only around June. Buying is expected to emerge in southeast Asia, while other regions such as the US and Europe should account for most of the remaining demand.
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Nitrogen (N) fertilizers are produced chemically using natural gas and hydrogen that is contained in the air. Ammonia is produced by mixing nitrogen and hydrogen gases in the presence of heat, pressure and a catalyst compound.
Urea is the most widely-produced and commonly-traded nitrogen fertilizer. Production amounts to more than 140m. tonnes a year, of which about 30m.
Urea occurs as white hygroscopic crystals, which are either odourless or have a slight smell of ammonia. Urea is not considered to be harmful at normal temperature, but the dust may irritate the skin, eyes and nose.
The major outlet for urea, accounting for nearly 90% of total consumption, is as a fertilizer. Urea is also used in the manufacture of urea-formaldehyde resins, the synthesis of melamine, in adhesives and paints, and for laminates, moulding compounds, impregnating paper and textiles.
Urea is widely traded on international fertilizer markets. There are two main hubs in urea trade – the Black Sea and Arab Gulf. These flows are said to determine the global urea prices.
Urea production involves a two step process where the ammonia and carbon dioxide react to form ammonium carbamate which is then dehydrated to urea. In the process, ammonia and carbon dioxide are fed to the synthesis reactor which operates around 180-210oC and 150 bar pressure.
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