World urea prices are falling in line with gas prices

Prices for urea (the main nitrogen group fertilizer) have started to fall after several weeks of growth. From the end of April to the middle of June, they increased by 26% to $313/t and continued to rise slowly. But during July 11-18, quotations on FOB Baltic fell by 2% to $323/t against the background of reduced demand and significant reserves in some countries, as well as following gas prices.

 

According to the MMI agency, the urea market remains stable, but in some countries there is a decrease in demand. Thus, at the last tender in India, only 430,000 tons of fertilizer were purchased instead of the 1-1.5 million tons expected by the market. The next tender should be held in August. In Europe, it is the peak of the low season, and in the US, demand is being pressured by falling grain prices and weather conditions. In addition, significant reserves have accumulated in the main fertilizer importing countries.

 

Urea prices were not supported even by a sharp reduction in its exports by China, which reduced supplies by 86% compared to last year in order to stabilize domestic prices.

 

Until recently, the factor supporting urea prices was the reduction of supplies from Egypt, where a gas shortage occurred at the beginning of June. However, the country has now resolved the situation by buying liquefied natural gas, so it will soon increase exports of fertilizers, which will lead to lower prices.

 

According to MMI, since mid-June prices for ammonium nitrate on FOB Baltic have increased by 7.3% to $220/t. Saltpeter prices are vulnerable to fluctuations in demand, experts note. The market is currently awaiting the Indian urea tender to determine further price trends.

 

U.S. natural gas prices fell to near 4-year lows amid significant inventories. As of July 19, US gas inventories were 8.2% higher than a year ago and 16.4% above the 5-year average.

 

In Europe, gas storages were 80% full on July 8, while the 5-year average for this period is 70%.

 

Prices at the gas hub TTF (Netherlands) for the month fell by 8.7% to €31.75/MWh or $362/1000 m3, which is 11% higher than last year's level.