Urea The world is experiencing an unparalleled rise in all fertilizer prices. While increases in phosphate and potash are eclipsing nitrogen, this week has still seen some spectacularly high prices for urea, AN and UAN: • Yuzhny urea has risen to $360/tonne FOB as traders have gone long for December. This is based on anticipated demand for 150-200,000 tonnes from Turkey, a similar quantity from Brazil and the increasing likelihood that India will have to turn to Yuzhny to cover its requirements for December • Granular prices have skyrocketed. Egyptian producers have sold at $405-410/tonne FOB for December. The production loss in Venezuela seems set to reach 100,000 tonnes and one of the main Chinese granular plants has shutdown due to interrupted gas supply. • There is a buying frenzy in the US market, which has driven granular urea prices up to $415-420/short ton FOB Nola. • Prices for other nitrogen fertilizers are keeping pace. Russian and Ukrainian ammonium nitrate has sold at $250-255/tonne FOB netbacks in Turkey. A trader has bought UAN 32 from Romania at over $300/tonne FOB for December.
North America In the US, granular urea has jumped in price over the past week. Prompt barges have traded up from $400/short ton FOB Nola at the beginning of the week to $415-420/short ton by presstime. First quarter barges of non-Chinese urea have moved up to $425-430/short ton FOB. The buying frenzy has enabled traders to take profits on position tonnage, but everyone is wondering how much further prices can run up once fall demand is met. There are several factors behind the jump in prices. Buyers outnumber sellers. The loss of Venezuelan supply has forced Koch out to cover in urea, with its attention now turning to Q1. The outage at the Fudao plant in China may cut supply to the US in Q4. The rise in the Euro against the dollar has made Europe an attractive market relative to the US, forcing US companies to bid up for offshore tonnage. The completion of the harvest means that farmers will soon begin to apply urea in the southern US. International prices are high.
DAP Prices for DAP have moved above $500/tonne FOB for the first time in history. PhosChem and PhosAgro both sold DAP cargoes at $510-511/tonne FOB this week for December shipment. Prices in some end-user markets are now close to $600/tonne CFR.
In fact, the rate of price increase is such that deals concluded last week at new highs now look cheap compared to latest sales. For example, DAP sold at $555/tonne CFR in Argentina last week against new sales at $590/tonne CFR. Producers are continuing to move prices up with each new sale and further increases will take place in the short term. So far, buyers are more concerned to secure DAP and MAP than to argue about price. The US domestic market has sprung back to life. Some DAP is needed for prompt usage on wheat, but much of the trading has been for Q1 2008. Buyers have paid up to $465/short FOB Nola for DAP for Q1 delivery, with spot barges rising to $445-450/short ton. The European market also continues to amaze. Buyers are paying $565/tonne FOB Terneuzen for DAP and one trader has bought Russian DAP, dutiable at 6.5%, at $510/tonne FOB St Petersburg for December shipment to northwest Europe. This implies a minimum of $600/tonne FOB Terneuzen for January. Few doubt that the price will reach that level. A lack of Chinese DAP or MAP for export in Q4 is helping other producers move prices up. Domestic demand in China is strong and this situation should continue into Q1. Proposed increases in phosphate rock and phosphoric acid prices as from January 2008 will help cement the latest rises in DAP/MAP prices. There are rumours that North African producers, who are facing increases in sulphur costs of more than $100/tonne, will aim to raise phosacid prices by at least $200/tonne in Q1. Rock exporters have also said that they will aim to move prices up above $100/tonne FOB for 2008. North America In the US, prices have continued to skyrocket this week, rising several dollars with each sale. • Late last week, PhosChem sold 25,000 tonnes of DAP for Uruguay/Argentina at $490/tonne FOB • Early this week, it sold 6,000 tonnes of DAP to Central America at $500/tonne FOB
• Subsequently, it sold 25,000 tonnes of DAP to west coast South America at a netback of $511/tonne FOB for December shipment from Tampa In the domestic market, traders have sold prompt DAP barges up from $435-440/short ton to $445-450/short ton FOB Nola this week. The rush to buy has also affected the forward market and barges of DAP have traded up from $445 to $465/short ton FOB for January- March. On 7 November, PCS Sales raised its Central Florida DAP price by $30/short ton with immediate effect to $440/short ton FOB. It raised its price for superphosphoric acid (SPA) by $60/short ton with effect from 1 January. The former price for SPA for January was $725/short ton FOB Aurora. The new price will be $785/short ton. After January, the normal $10 per month price increases will resume.
