Ammonia saw a month of firming sentiment in the U.S. market, following gains in global ammonia pricing during a period of slow demand typical for late summer.
On a basis of price per short ton (t) FOB (free-on-board, or sales price per ton of product without transportation costs included), U.S. ammonia prices rose nearly $200/t during the month, following lower price levels during earlier fourth-quarter prepay sales. August prices ended approaching the $600/t FOB mark in the Corn Belt, higher from early August price indications of around $400/t FOB.
U.S. sellers were also steadily raising offers ahead of the end of summer at ammonia production sites, with asking levels reaching $475-$500/t ex-works (EXW: a shipping arrangement in which a seller makes a product available at a specific location, but the buyer has to pay the transport costs) at Oklahoma area plants, up from $300/t EXW just after summer fill.
Several U.S. nitrogen plant turnarounds were also motivating the price increases, as buyers looking for prompt tons had fewer options available, mirroring fundamentals observed in the global ammonia market. Both the U.S. and global markets appear set to see rising prices for the foreseeable future, supported by another expected increase in the Tampa ammonia contract for October.
International: Yara and Mosaic, at the end of August, agreed on a price for September ammonia deliveries at Tampa of $390 per metric ton (mt) CFR (cost-and-freight, or sales price per ton of product with freight costs included). It was up $95/mt on the $295/mt CFR the parties previously agreed for August and came in the wake of a reduction in ammonia output in Trinidad & Tobago caused by a major natural gas supply curtailment.
The wider global ammonia market saw similar price increases in August, as elevated natural gas costs in Europe continued to incentivize more import buying to the region rather than increasing domestic production. The extended outage of Ma'aden's ammonia production facilities in Saudi Arabia, with a nameplate capacity well over 1 million metric tons (mmt) per year, provided additional support for higher prices.
Black Sea ammonia prices were nominally assessed from $315-$320/mt FOB at the end of last month, up from end-of-July levels of $270-$275/mt FOB alongside increases in the rest of the world. Caribbean FOB prices increased by nearly $100/mt to $340-$350, up compared to $245-$255/mt FOB at the end of July.
August ended with strong support for ammonia prices across the globe on account of the fewer tons available for export from major suppliers.
UREA
Domestic: Urea prices were somewhat stable in the second half of August as the high-summer lull in U.S. fertilizer market activity spanned the month. Earlier in the month, an India purchase tender brought some volatility, but the result of the announcement ended up bringing a softer tone to the market.
New Orleans, Louisiana, (NOLA) urea barges at the end of August were assessed at $340-$376/t FOB, trading higher from $375-$445/t FOB in the week ended Aug. 3. Prompt shipping barges continued to catch the higher end of our range, while September volumes traded toward the lower end. There were relatively few catalysts for trading during the month aside from the previously mentioned moves in the global market.
Offers at Mississippi River terminal hubs reached $450-$475/t FOB at the end of the month, rising higher alongside NOLA barge values to a range of $440-$475/t FOB in July.
U.S. urea imports looked on track to match July and August 2022 levels at the end of the month, and with a relatively even trade balance expected to continue, urea prices were expected to continue following trends in the global market.
International: Global urea markets were under pressure in August as sellers were hard-pressed to find much demand. Chinese prices remained stable, given less pressure to sell following the Aug. 9 India purchase tender. China prices also remained at a discount to sales prices from Indonesia, while North African sellers maintained their quiet hold on prices as the bid-to-ask spread remained wide.
Egyptian urea prices still ended lower in August at $380-$400/mt FOB compared to the range of $422-$440/mt FOB assessed at the end of July, partly on account of the lack of activity over last month following the India tender in the first half of August.
Brazil urea prices, meanwhile, closed August at $345-$350/mt CFR, down from $410-$420 in the previous month as a lull in farmer demand and building stocks in the country put pressure on prices.
Higher freights continued to push delivered prices higher for suppliers, cutting away at netbacks. Sellers will need to find new markets where none are coming to the fold. Demand was expected to remain weak before a surprise India tender was announced in September. The results are expected to set the stage for price movement until the end of the third quarter.
Source: iowacorn.org
Photo Credit: pexels-deep-malik
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