MMTC urea tender attracts global market attention – exceeds 1.7m tonnes

LONDON (ICIS)–The international urea market was almost at a standstill for much of the trading week as it waited for news of India’s Minerals and Metals Trading Corporation of India (MMTC) tender.

A total of 2.3m tonnes of urea was offered and MMTC agreed to purchase 1.7m tonnes.

MMTC Tender Sellers and Volume

Seller	‘000 tonnes
Ameropa	445
Continental	45
Dreymoor	105
Fertiglobe	285
Koch	155
Liven	95
Midgulf	50
PIC	30
Samsung	184
Swiss	225
Torbert/Amber	50
Transglobe	45
TOTAL	1,714

The tender resulted in a slight softening of prices compared with the Rashtriya Chemicals and Fertilizers Limited (RCF) tender result. In addition, netbacks to China and the Arabian Gulf shifted slightly. While the recent spate of buying in India has lent some bullish sentiment to the global urea market, most sources agreed that it is the only thing currently supporting the international market.

For MMTC, the lowest offer was from Dreymoor, at $288.89/tonne CFR (cost and freight rate) for the west coast, and Koch was lowest for the east coast, at $283.52/tonne. On a FOB (free on board) basis, PIC offered the lowest, at $280/tonne.

China is expected to have plenty of product available for export, since domestic demand has been impacted by extreme weather conditions affecting the farming community, resulting in low demand. The main problem for China now is port congestion.

The congestion at Chinese ports is due to extensive urea exports under India’s recent tenders. Huge volumes have been delivered to the ports, causing a shortage of loading machinery and labour force.

In addition, exports of urea during H1 2020 were limited, so the ports were ill-prepared for the surge in urea arrivals for export to India. The main ports feeling the impact of the high volumes to be handled include Tianjin, Yantai and Lianyungang. The situation is expected to ease in September.

Egypt returned to the market after a few weeks’ absence, with a deal from AlexFert at $280/tonne FOB. Other Egyptian sellers describe positions as comfortable moving into September. Demand is expected to emerge for Egyptian tonnes out of Europe in late October/early November.

Brazil is the next major importing hub being eyed by the international market to support urea prices. Buying for safrinha will continue into November for the main planting season in February. Slightly softer prices were discussed.

Activity was slow in the US ahead of the tropical storms, but a flurry of activity took place once the MMTC tender results were known. Barges traded in a $231-235/short ton FOB range.