LONDON (ICIS)--Urea fertilizer producers in the Arab Gulf have increases prices for granular urea by $5-10/tonne over the last few days on the back of Asian demand.
A surprise rally in New Orleans, where barges touched eight-month lows early last week, took prices to jump up $20/short ton FOB (free on board) Nola on 18 May.
Subsequent, quick price increases in North Africa have also helped.
“Buyers are trying to pick the bottom,” said a southeast Asia-based trader.
SABIC sold a combination of prilled and granular urea cargo this week to South Korea for June shipment, with the price in the mid-$230s/tonne FOB for the granular lot, and mid-$240s/tonne for the prills.
Qatar’s Muntajat said on Wednesday it had sold 15,000 tonnes of prilled urea in the high $240s/tonne FOB to Asia without disclosing the exact destination.
Sources have said it could be heading to Sri Lanka.
These businesses are at a significant jump from last week, when Omani producer Sohar International Urea & Chemical Industries (SIUCI) sold two granular cargoes in the mid-$220s/tonne FOB for Asia as demand in other markets looked bleak.
The cargoes are heading to Thailand and China, according to sources.
The strength in the US, coupled with continued demand from Asia, has helped Arab Gulf producers place significant tonnes for June.
Another producer in the Arab Gulf rejected a bid from Brazil, which typically offers the lowest netbacks, at $225/tonne FOB.
The producer is looking for above $230/tonne FOB from Brazil.
This sudden interest would mean most of the availability for June might soon be committed in the Arab Gulf, with producers having little to spare for the next Indian tender.
China has been on an import spree once again as domestic prices dropped significantly over the last few weeks and local prices continued to edge higher.
Chinese imports may slow again if international prices continue to increase.
The future of this price rally is uncertain, with several market participants even terming this a temporary phenomenon.
However, another positive cue such as India announcing a fresh import tender may lend more strength to this urea price uptick.
Focus article by Deepika Thapliyal