Fertilizer Prices Report

22. Feb. 2010

PRILLED UREA

FSU prices have eased to $280-285pt fob Black Sea this week with only Turkey active. The $50pt gap with granular implies that the fall is almost over and there have been efforts to book March tonnage long at sub $280pt. Producers have rejected these approaches.

Prilled urea has been the bad apple in the nitrogen barrel again over the past week. Price weakness has been evident in the FSU as traders have looked to liquidate February positions. Ukrainian producers are offering at $285pt fob while in Central America a major buyer is being offered a prompt cargo at $270pt fob Baltic equivalent and bidding lower.

Returning to the West, the drop in FSU prices does not appear to be anything more than a correction. Lower prices should generate prilled demand in Turkey, Europe and Latin America in late February/March. Indeed, it does appear that some February demand has been pushed back into March as prices were too steamy in late January/early February. If, as expected, this demand solidifies, a new price rebound could occur. Further supporting this view, if urea were to keep falling, parity with AN might be evident. This would be exceptional.

GRANULAR

Egyptian granular prices have eased, but only by $2pt & have held over $330pt fob this week, but only small volumes have sold. With European demand stalled traders are putting high-priced Egyptian granular into store, hoping for a price boost when cold weather eases. Middle East prices are stable with producers heavily committed for March with contract business.

In the US barge prices are put at $315-320ps ton with one or two sellers losing their nerve and opting to discount prompt material.

In the Middle East, spot granular prices have also adjusted slightly. However, a sale at $315pt fob to Thailand compares favourably with other recent deals as those were to nearby destinations. Further, the price obtained for Thailand provides evidence that the Middle East suppliers are comfortable through March at least and that there is no pressure to cut prices to chase spot business.

As regards granular, bad weather has delayed activity in the US and Europe. However, this does not mean spring has been cancelled and, in both cases, major demand is anticipated in March/April. European nitrate prices are high and availability likely to be insufficient to cover nitrogen demand. Healthy buying of granular urea is expected in which could/should underpin Egyptian granular prices at higher levels than those currently reflected by the US Gulf.

UAN

Egypt achieved $222pt fob this week for a relatively prompt cargo. This could head to the US. Baltic tonnage has also been committed to the US east coast, landing around $245-250pt cfr. US prices have yet to reach these heights but are moving up.

Source: Argaam, Profercy report, Fertilizer-Index.