The ICIS weekly Urea reports are covered in China, Europe and the US as well as globally in The Market report. For China, there is an extensive coverage of export, ex-works and ex-warehouse prices, and the Europe report concentrates on spot prilled and granular grades in Yuzhny, Baltic, Middle East and northwest Europe, while the US has spot quotes for the US Gulf and Arab Gulf. All these prices assessments are supported by an independent market commentary that includes details of production news, exports, regional updates, demand and supply and any other key influencing factors. This reliable market intelligence can help you to make informed commercial choices.
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Urea: Market overview
Updated to Q2 2018
Operating rates in China are expected to be above 60% as gas and coal supply improves. There could be some urea export availability as the domestic season comes to an end in China. North Africa will continue to produce at healthy rates while PIC's 1.1m tonne/year granular urea plant in Kuwait will close permanently two months later than expected, around June. Urea production in southeast Asia is expected to remain in line with the first quarter.
India will continue to step into the market as it builds urea stocks during the kharif or monsoon season. These tenders are expected to be dominated by Iranian and Arab Gulf product. Similarly for south and southeast Asian markets, any demand will be quickly met with suppliers from several origins targeting these destinations.
There are no concerns relating to the supply of urea moving into Q2 because demand has been so slow in Q1. In addition, availability from Russia is expected to start flowing again. Exports out of the country have been impacted by the severe winter and the freezing of the country's waterways.
European demand for urea is expected to improve heading into the new quarter, but much will depend on the tight timeframe farmers now have to apply the nutrient to their crops. Prices, too, will play a role. New EU legislation could also affect demand.
Q2 supply could be tight if the price slide continues to keep imports at bay.
Another factor potentially limiting the period would be if barge availability remains snug, and if navigation on the key US rivers remains difficult, with high waters persisting.
The outlook is mixed because the interior production could still meet a great deal of the short-term needs once spring weather arrives and farmers begin more of the planting activities.
This could allow for later imports to alleviate the supply squeeze. The question will all be on timing of these arrivals.
The supply situation could additionally be impacted if the seasonal delay ends up causing a switching of crop nutrients or crop sowing. While a glut of urea is not anticipated, it could cause further eroding of prices.
The outlook for demand in the second quarter is for an increase that will be coordinated with the advancement of spring plantings.
There are expectations of another large corn crop, so consumption of urea should be significant, notwithstanding any supply or pricing fluctuations.
While barge pricing has eased heading into April, terminal levels have managed to hold fairly firm, as there is sentiment that supply could stay tight.
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Urea occurs as white hygroscopic crystals, which are either odourless or have a slight smell of ammonia. Urea is not considered to be harmful at normal temperature, but the dust may irritate the skin, eyes and nose.
The major outlet for urea, accounting for nearly 90% of total consumption, is as a fertilizer. Urea is also used in the manufacture of urea-formaldehyde resins, the synthesis of melamine, in adhesives and paints, and for laminates, moulding compounds, impregnating paper and textiles.
Urea is widely traded on international fertilizer markets. There are two main hubs in urea trade – the Black Sea and Arab Gulf. These flows are said to determine the global urea prices.
Urea production involves a two step process where the ammonia and carbon dioxide react to form ammonium carbamate which is then dehydrated to urea. In the process, ammonia and carbon dioxide are fed to the synthesis reactor which operates around 180-210oC and 150 bar pressure.