US urea strengthens as barge buying increases

Source: ICIS News

2018/08/10

HOUSTON (ICIS)--The US urea market, following a stretch of thin liquidity and low demand, strengthened with renewed barge buying propelled by the ongoing uptick in the international market.

While there was some August trading, participants have turned their focus primarily towards September deliveries.

Sentiment has grown that more buying needs to be concluded before the river closure. Imports arriving later this month and into September will help ease supply tightness.

New Orleans (Nola) barge values climbed higher week on week as volumes traded between $250-269/short ton FOB.

The updraft also continued on Friday, with at least three additional barges concluded between $275-280/short ton FOB Nola for all-September delivery.

ICIS Editorial Chart goes here

Beyond international strength, further lift came from producer CF, who raised its price steadily over the week.

This intensified the market from mid-week forward, given the company's position and capacity.

One participant said that “the market is completely nuts right now” as barge values quickly jumped with each new trade.

For some the jump was a tad surprising.

“Guys had been hesitant up to now to buy at these new levels as in the past $260 was the high water mark,” a trader said.

Another buyer said: “We’re definitely following international enthusiasm, and in a weird time because the imports we have coming aren’t priced until the index is set when they land, and so they aren’t on offer yet for the few folks who do need barges now.”

Others felt the lingering need to resupply before winter sets, and Nola would need to shake out of its stagnant course and start moving forward.

A traded said: “With this now, Nola likely going higher. Next week I presume that urea Nola index will settle north of $260 for the first time since 2015. But there is also the possibility that this runs of steam as the US tends to overdo things at times.”

The imports will be a key factor, with the first expected from Yara by month’s end. EuroChem and SABIC are anticipated to have vessels arriving in September.

The market sees this volumes as a measure of relief.

One trader said: “Given the supply in the market, these volumes will get eaten up because you have to have the tons for river closure, so there is still a fair amount of buying that still needs to be done.”

Focus article by Mark Milam