Fertilizers prices to remain high, urea to fall on expansions – Fitch
Jonathan Lopez
06-Dec-2022
MADRID (ICIS)–Most fertilizers prices are to remain high by historical standards but urea values will end 2022 lower than previously expected on the back of capacity expansions, US credit rating agency Fitch said on Tuesday.
Fitch now expects urea prices to average $630/tonne in 2022.
ICIS’ latest urea price assessments also showed declining prices on the back of poor demand.
“Our reduced 2022 assumption for urea reflects lower year-to-date prices, which we do not expect to recover for the rest of the year,” said Fitch.
“We have kept all other assumptions unchanged as we maintain our view that new capacity additions will offset lost exports from China and supply disruptions due to the Russia-Ukraine war.”
According to Fitch estimates, 3.8m tonnes/year of new urea production capacity will be added globally, excluding China, in 2022.
In 2023, a further 3.2m tonnes/year will come on stream, and 2.2m tonnes/year will follow suit in 2024, said Fitch.
LOWER, BUT STILL HIGH
The credit rating agency said it still expects
most fertilizer prices to fall in 2023,
although they are set to remain above mid-cycle
levels on the back of high crop price, gas
input costs and “still restricted, although
improving, supply”.
Ammonia prices will ease next year on the back of easing supply constraints as new capacity in the Middle East comes on stream, falling feedstock gas prices, and the restart of some European plants turned idled when gas prices were at highs.
Fitch added ammonia demand is set to be supported by improving affordability and strong crop prices.
It kept its assumptions for diammonium phosphate (DAP) prices unchanged, although they are set to be lower than in 2022.
Fitch said it expects DAP exports out of China to rise in the coming two years but stabilised in 2024 at 2m tonnes lower levels than the average for the 2016-2021 period.
“Phosphate demand will partially recover in 2023, returning to the 2021 levels by 2024 as application rates will rise into the next year. European demand is affected by a regional price premium,” said Fitch.
“Our assumptions for phosphate rock continue to reflect limited export volumes from Morocco, but other producers, such as Jordan, Syria, Tunisia and South Africa are gradually increasing their market shares.”
The agency said it expects about 7m tonnes/year of new capacity to come on stream in 2023, most in Russia, Egypt, China, and the US.
Its price assumptions for potash in 2023 also remain unchanged although, once again, they are expected to be sharply lower than in 2022.
It said it expects Canadian producer to ramp up idle capacities in coming months, while Russian exports should also help balance the market.
“[Potash] Price declines in the medium term will be driven by continued improvements in supply availability. Demand will be constrained by farmers prioritising nitrogen and phosphate applications over potassium,” said Fitch.
“This will put pressure on potash prices over the next two years.”
Fitch fertilizers prices forecast
2022 | 2023 | 2024 | 2025 | 2026 | Long-term | |||||||
In $/tonne | Old forecast | New forecast | Old | New | Old | New | Old | New | Old | New | Old | New |
Ammonia (FOB Middle East) | 1,000 | 1,000 | 750 | 750 | 450 | 450 | 300 | 300 | 280 | 280 | 280 | 280 |
Urea (FOB Middle East, granular) | 650 | 630 | 500 | 500 | 350 | 350 | 270 | 270 | 260 | 260 | 260 | 260 |
Phosphate rock (FOB Morocco) | 270 | 270 | 160 | 160 | 90 | 90 | 90 | 90 | 90 | 90 | 90 | 90 |
DAP (FOB US Gulf Export) | 900 | 900 | 550 | 550 | 380 | 380 | 360 | 360 | 360 | 360 | 360 | 360 |
Potash (FOB Vancouver) | 600 | 600 | 460 | 460 | 350 | 350 | 230 | 230 | 230 | 230 | 230 | 230 |
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.
Want to learn about how we can work together to bring you actionable insight and support your business decisions?
Need Help?