LONDON (ICIS)--The benchmark Black Sea ammonia price for May loadings reversed some of its recent upward momentum and slipped to $500/tonne FOB (free on board) Yuzhny late on Thursday amid a softening of the global supply/demand balance of the key nitrogen fertilizer.
The $10-15/tonne fall from previous spot business, which came after several substantial increases in the first quarter, did not raise many eyebrows as stronger ammonia demand from buyers in the US and northwest Europe is being offset by an improved supply situation in North Africa and the Arabian Gulf and softening demand from industrial buyers in South Korea and Taiwan.
Yara's purchase of 25,000 tonnes for May lifting from producer NF Trading took place ahead of a decision by Ukrainian energy chiefs on the second-quarter gas price as the row with Russia's Gazprom for old supplies rumbled on against a backdrop of increasing geopolitical tension.
With Black Sea granular urea prices hovering around the $300/tonne FOB Yuzhny level for May cargoes, local producer Odessa Port Plant (OPZ) this week decided to shut down its second urea line in a move that will increase spot ammonia availability in the short term.
OPZ shut its first urea line in early April as granular urea prices fell around 10% in March at the same time as ammonia prices started to rise sharply and offer better margins.
In Algeria, the supply situation remains better than in previous months when export licensing issues hurt operations. Producers Fertial and Sorfert continue to load cargoes of up to 15,000 tonnes for buyers awarded under tender earlier this year.
Elsewhere in North Africa, ammonia cargoes are also flowing again from Libya after the Lifeco plant restarted some of its production units – but not urea – last month following a shutdown that occurred in early January when local militia blocked access to the site at Marsa el-Brega.
In Egypt, the EBIC-OCI plant continues to operate at below 35% of its capacity after it resumed operation last week following severe natural gas curtailments that forced production to a halt for several days in second half April.
East of Suez, no fresh spot business has been reported in the Arabian Gulf or Asia Pacific and contract cargoes continue to flow to agricultural and industrial buyers on both coasts of India.
However, the situation for suppliers is not so positive in South Korea and Taiwan when unfavourable market conditions for caprolactam and acrylonitrile producers and plant turnarounds mean ammonia cargoes are being postponed or diverted.
In the US, the ammonia market was relatively subdued this week following last week's settlement of the May Tampa price by Yara at a rollover of $580/tonne CFR (cost and freight).
Ammonia applications continue to make gains as the corn planting season is starting to hit its full stride and the backlog of fertilizers is slowly starting to show signs of unwinding with volumes making their way to retailers and end users.
Sentiment is ammonia prices and demand will likely peak in May before retreating over the summer as is typical when the planting season has finished and growers focus on bringing crops to harvest, although demand is expected to remain steady during the refill season.