Downward price pressure on ammonia remains for June loadings

LONDON (ICIS)–A fresh fall in the monthly Tampa contract price set a bearish tone in the global ammonia market heading into June.

The $17/tonne slide to $218/tonne CFR (cost and freight) in the figure agreed by Mosaic and Yara was expected, given the current overcapacity west of Suez, but industry players say the situation is tightening east of Suez.

Similar downward price movement was seen in the Black Sea, as Trammo acquired a combined 30,000 tonnes from four producers at a discount to May business.

The trader says the deals for Ukrainian and Russian material were agreed in the low-$180s/tonne FOB (free on board) Yuzhny, down $15-20/tonne from previous sales.

Despite the length in the west, only Nutrien, to date, has announced capacity cuts in response to the significant surplus volume.

The Canadian major’s decision to remove 50,000 tonnes/month of export volume from Trinidad came shortly before Ukrainian producers switched their attention to foreign sales amid cheaper natural gas prices.

With national holidays again impacting spot activity, most business was concluded on a formula-priced CFR basis, with cargoes sold into Turkey, Greece, South Korea and Jordan.

Trammo sold 22,000 tonnes to Turkey’s Gemlik, 23,500 tonnes to Qatar’s Muntajat for discharge in Jordan, and around 5,000 tonnes to Greece’s Hellagrolip.

In Asia-Pacific, the only confirmed spot deal saw Yara acquire 20,000 tonnes of Indonesian material from Mitsubishi for imminent discharge at South Korean chemicals giant Namhae under contract.

In addition to its FOB deals in Yuzhny, Trammo agreed to purchase 10,000 tonnes from Argentina’s Profertil for mid-June loading at Bahia Blanca for discharge elsewhere in Latin America.

Indian spot buyers were conspicuous by their absence, with no new deals confirmed on either coast for late Q2/early Q3 arrival.

Traders noted Saudi giants SABIC and Saudi Arabian Mining Company (Ma’aden) appear to be sold out for June and July, although no plant turnarounds or fresh spot sales were disclosed by the pair.

Focus article by Richard Ewing