Iran was already struggling to find markets willing to accept its product even before the formal reintroduction of sanctions by the US on 5 November but now with sanctions officially in place, the small grouping of markets has narrowed further.
Last week, Turkey emerged as an open destination following comments by President Tayyip Erdogan openly stating that Turkey will not abide with the renewed US sanctions on Iran.
Indeed, Turkish imports of urea have been lagging according to import official statistics data making a cheaper supplier, even if sanctioned, attractive. January-September imports were 8% behind year on year at under 2m. tonnes.
However, with most companies and banks dealing in Turkey with US interests a clear payment mechanism is yet to be established. There is a possibility that some sort of barter system could be established between the two countries.
Turkey has typically imported granular urea from Egypt with over half of the year to date imports coming from the north African country. However, with Iranian material on offer at a significant discount to other markets due to sanctions, Turkish buying activity is could now focus on Iranian product at the expense of Egypt.
Indeed, there is evidence Turkish buyers have already turned to Iran for product. In September, Iran supplied half of Turkey’s 142,000t of urea imports. Egypt exported only 50,000t.
By Michael Samueli, Nitrogen Market Reporter