Asian potash hits new high as tight availability bites

Source: ICIS News

2018/04/20

LONDON (ICIS)--Southeast Asian standard-grade muriate of potash (MOP) prices hit a new high this week, as hefty freight costs and tight availability pushed offers up, leaving buyers scrambling for what little volume was available.

Indonesia has cemented its position as the region’s premium market, after news surfaced of buyers battling to secure MOP cargoes amid a roaring trade for spot containers of 1,000-3,000 tonnes, which changed hands at $290-292/tonne CFR (cost and freight).

A source at one European producer, describing his customers’ enquiries, said: “One tonne, one container, one bucket – [buyers] would take anything.”

Larger-volume spot standard-grade business in Indonesia was concluded at $287-306/tonne CFR equivalent, although the precise volume of the cargoes is not clear.

Indeed, Indonesian buyers were enquiring for everything from a half-hold combo cargo to single containers, and were pushing for the prices posted in the first half of the year to roll over into the second half.

Producers, meanwhile, are attempting to negotiate higher rates on tight supply and high freight costs, which remain around $55-58/tonne.

This bullish momentum looks set to stay, especially with Indonesian importer Sinar Mas’ 100,000-tonne MOP import tender expected to be awarded within the next two weeks.

The Indonesian arm of rival producer Cargill is also understood to be considering a purchase tender for up to 55,000 tonnes of standard-grade MOP – although this is unconfirmed, and no closing date has yet been seen set.

A producer discussed its intention to offer at $310-315/tonne CFR, should the importer come to market.

Meanwhile, in nearby Malaysia, Canadian MOP exporter Canpotex is heard to be notably bullish, offering above the established range to some plantations.

Buyers are countering with bids only marginally higher than the low end of the range, although a local distributor representing a European major discussed a Baltic netback of $276/tonne CFR as a minimum for spot retail business, pushing up the low end of the range this week.

Granular-grade MOP pricing is under similar pressure in the region, although a lack of confirmed business has kept the ICIS benchmark stable this week.

In Thailand, Belarus Potash (BPC) is understood to be offering granular MOP at $310/tonne CFR, but is yet to conclude any business at this level.

Rival Canpotex has sold granular MOP for May shipment to Thailand at $310/tonne CFR, according to some sources, but this is similarly unconfirmed.

Meanwhile, in China, port MOP stocks were last heard around 2.5m tonnes – but as the nation’s planting season begins, warehouses will empty fast.

This will mean that the key importer’s buyers will need to open negotiations for the next annual contract price sooner rather than later.

Focus article by Andy Hemphilll