HOUSTON (ICIS)--In the US, the New Orleans (Nola) barge market continued to be fairly active. There was trading for December volumes as participants strive to add another layer of inventory into place despite overall end-user demand still wavering.
The pace of activity is viewed as positive, even as the prices are easing lower. The question is now whether the current uptick in barge business, with an estimated 50,000-60,000 short tons having moved over the last week and half, will be sustained.
For there is expectations of further price easing remaining even with those who highlight the renew movement in the market.
As one trader said, “We have had good buying for December. That is good to see solid buying coming in, but do those who are buying get satisfied with this layering and the turn towards pulling back?”
For Nola the recent rise in business carried forward as interest in additional barges for delivery this month was steady through the week. Prices did fall after barges first commenced changing hands at $275/short ton FOB (free on board).
Following trades at $271/short ton FOB, the market appeared to have halted its decline before new trading for prompt emerged at $268/short ton FOB.
As such Nola was assessed at $268-275/short ton FOB, which is a decrease of $6/short ton FOB on low end and $3/short ton FOB on high side week on week.
Later the market dipped further, as there was trades for December at $265/short ton, before climbing to $269/short ton.
On Friday there were bids for December at $270, countered by offers at $272 but no further trading was concluded.
There remains questions over how much post-harvest demand and application needs can be satisfied given the late harvest, unfavourable weather and the brief time left in the year.
Market sentiment is starting to turn towards positioning for river opening in Q1 2019 as that will be the next significant mover for market activity.
“The next big phase for this market will be buying for river opening, not how much more of a layer can be put in now,” said a seller, who added that "higher ammonia prices out there are making urea more favourable for the next wave of demand".
The US could additionally become favourable for international shipments as soon as India and especially Brazil wind down their engagement, which could weigh on the market direction if those volumes land before peak spring season needs come forth.
As market source said, “we still have international tons being shipped to India and Brazil over next 30 days; then it will close. And production still churning so where does it go?”
“Main market would be the US, and we are going to need these tons. If at spring it's fine. But if in winter, and nothing is really going on yet, it will apply pressure.”
Terminals urea was between $305-315/short ton ex-warehouse but experiencing mixed levels of activity, as those areas where weather has not be wet or wintry have seen good activity. Conversely those locations where conditions remain unfavourable continue to see diminished pull.
“We are starting to get more tire kickers and there is growing interest in dry spreading so as weather gets better we should see some pick up and it could be busy in the next weeks,” said a warehouse participant.
Focus Article by Mark Milam