As Europe freezes over, potash producers turn up the heat in southeast Asia

02 March 2018 11:13 Source:ICIS News

LONDON (ICIS)--As winter weather continues to suppress European market activity, muriate of potash (MOP) pricing elsewhere in the world has registered a slight uptick, with granular MOP trading at or above $300/tonne CFR (cost & freight) in both Brazil and Southeast Asia.

Fertilizer applications across Europe are lagging behind, thanks to abysmal conditions which have first washed-out, and then subsequently frozen, fields across the continent.

There are concerns that the resulting demand season will be either extremely short and hectic, or drawn out - possibly leading to a bottleneck in supply later in the year.

Warehouse stocks remain high, and granular MOP prices are fluctuating across Europe, with €270/tonne DEL (delivered) CIF (cost, insurance, freight) and slightly higher heard in Spain and the Netherlands, while Germany and other northwest Europe nations are seeing prices up to €280/tonne DEL CIF.

Freight costs in the Baltic are also understood to be climbing, as thick ice in ports leads producers to require either specialized bulkers, or icebreaker tugboats to make it to the open ocean.

Meanwhile, far from the cold, potash activity in Southeast Asia continues apace, with news this week of Belarus Potash (BPC) securing sales totalling 50,000 tonnes of granular MOP at $305/tonne CFR, shipping in March.

The $305/tonne CFR price tag is a new high for granular MOP in the region, although sources claim buyers in other nations will likely be slow to accept the price.

In fact, in Vietnam, a producer is facing stiff resistance after targeting $305/tonne CFR for granular shipments loading in April.

As part of the same negotiations, the producer is offering at $275-280/tonne CFR for standard-grade material - a $10/tonne increase on the majority of business in the region.

However, it’s not all plain sailing for producers, as in the Philippines, domestic MOP stocks are high, and buyers are not expected to return to the market for at least the next two months.

Similarly, Taiwanese potash inventories are strong, and there is little expectation of fresh requirements until late May or early June at the earliest.

Finally, in Brazil, the $300/tonne CFR level has also been breached, after Russian major Uralkali concluded March business at a minimum of $300/tonne CFR for granular material.

The exact volume of material sold by the producer is unconfirmed, but is understood to be tens of thousands of tonnes.

Cargoes at $290/tonne CFR Brazil are no longer available, according to market players - with one particularly bullish producer adding that it is currently negotiating business for April at $310/tonne CFR - but is yet to confirm any new business at this level.

By Andy Hemphill