Ammonia market prices, sentiment split by Suez canal

Author: Richard Ewing

2020/06/26

LONDON (ICIS)--The global ammonia market remains clearly divided along continental lines, with prices stable to soft west of the Suez canal, but firmer in the Middle East and Asia Pacific.

Length in the former was illustrated by a fall in the monthly Tampa contract to $205/tonne CFR (cost and freight) for July loadings of the nitrogen fertilizer and the sale of up to 100,000 tonnes of Trinidad spot volume.

Yara and Mosaic's decision to settled the contract at $13/tonne discount surprised most market players, who had been expecting a single-digit drop.

Trammo was involved in some Caribbean spot sales, and also secured a combined 60,000 tonnes from several suppliers in the Black Sea for loading at Yuzhny over the next few weeks.

With natural gas prices climbing in some regions, producers’ profit margins are being squeezed and plants could soon be shut down.

Canadian major Nutrien has yet to announce a restart date for a 600,000 tonne/year Trinidad unit forced offline in H1 June, but appears in no rush, given the softer pricing.

In contrast, the market is far tighter east of Suez, with Saudi major SABIC securing a $10/tonne premium on last business with a spot sale to Trammo.

The trader will lift 10,000 tonnes priced at $230/tonne FOB (free on board) from Al-Jubail in mid-July for discharge in east coast India.

Compatriot Ma’aden rejected spot approaches from Turkey and Asia Pacific due to a lack of material, while contract netbacks at Qatar’s Muntajat increased.

Contract prices firmed in South Korea, and an uptick in ammonia demand from chemicals producers in northeast Asia should see that upward momentum continue, at least in the short term.

Among the other significant spot deals, Yara and Trammo acquired 15,000 tonnes each in southeast Asia on a FOB basis from Mitsui and Mitsubishi, respectively.

German chemicals giant BASF sold around 25,000 tonnes to Turkey’s Gemlik on a CFR basis as reduced demand at Antwerp for caprolactam production meant a Trinidad cargo is no longer required.

Gemlik also sourced 25,000 tonnes from Yara involving another Caribbean cargo, while Trinidadian material is also heading to South Africa for at least one customer of Trammo, with the trader also appearing to have sent spot volume to Brazil.

ICIS Editorial Chart goes hereFocus article by Richard Ewing