LONDON (ICIS)--After three weeks of insignificant or no trades in the urea market, North African urea producers placed more than 300,000 tonnes with traders in the span of a few days but this spurt of activity is yet to translate to other regions.
Prices too are yet to post a major bump up.
Most deals for larger volumes this week were concluded at a discount with only the smaller lots from Egypt sold at higher levels.
“Even with all this activity the market still feels blah. [US] Nola saw heavy trading this week too. But [the] market is stuck at [$]242-246 (/short ton FOB [free on board] Nola),” said a US-based trader.
Egypt sold over 200,000 tonnes of granular and prilled urea this week while Algeria did more than 100,000 tonnes.
While most of the buying is likely to cover short positions into Europe/Turkey, long positions are also being built in anticipation of spring demand from the continent.
However, activity in other regions is limited.
The Arab Gulf is quiet with prices largely pegged around $250/tonne FOB while Brazilian demand is likely to remain muted as the end of the safrinha harvesting season nears its end.
Demand for Baltic material is also limited with buyers in Mexico and other Latin America markets expected to retreat if prices jump up.
Buyers are still cautious as the US and India are yet to step in with significant demand while news of imports into China is also showing a slowing trend.
“We need India to tender for this market to move up. Otherwise, when AG [Arab Gulf] comes in to place February tonnes they will have to price aggressively,” said the trader.
However, with China out of the export market, southeast Asian buyers have limited supply options, as they are bound to look at other origins to meet their spring requirements, including sourcing more tonnes from the Arab Gulf and Malaysia.
US and European demand is also key. At present, there are expectations that up to 1.5-2m tonnes may be imported into the US over the next two months, subject to domestic price movements, while more quantity may still have to be booked for Europe.
Pictured: A truck being loaded with corn in Brazil, where the end of the safrinha harvesting season has reduced demand for urea
Source: Florian Kopp/imageBROKER/REX/Shutterstock
Additional reporting by Julia Meehan
Focus article by Deepika Thapliyal