MMTC India purchased 741,500t of urea this week with western producers willing to make up the supply shortfall in the east. In the immediate wake of the tender it was unclear if India would have been able to attract supply outside of the Arab Gulf, especially given that direct Iranian shipments have been blocked by US sanctions. Many in the market had speculated that only a modest volume could be booked, as was the case in the earlier April tender through which 375,000t were secured.
Prior to the tender, MMTC was expected to target a purchase of around 800,000t. Yet, Middle East suppliers would realistically only be able to supply around 250-350,000t for shipment by the 24 June deadline.
Only two producers offered directly, ADNOC and PIC, agreeing to supply 120,000t at $271pt fob Arab Gulf, $6-7pt below earlier fob offers. Sabic and Muntajat Qatar showed little interest and did not offer owing to earlier plant turnarounds and contract commitments. In the end, around 260,000t was booked out of the Arab Gulf, with the balance made up by traders with positions booked in the $260s pt fob.
Around 200,000t was committed out of Egypt (ex-Adabiya) via international traders with producers opting to support the business. Indian netbacks in the low to mid-$260s pt fob Egypt were below previous producer aspirations, however, the decision to back the Indian business followed volatility and declining netbacks from the USA as well as limited liquidity from Europe, Turkey and Brazil.
In addition, around 100,000t was secured out of Indonesia and at least 50,000t of Ukrainian urea booked out of the Black Sea. A second cargo out of Russia is also likely to be confirmed.
Of note was the lack of Chinese participation including potential Iranian reexport cargoes. Only one cargo was reported to have been booked for India. Domestic markets continue to offer better netbacks with Chinese producers under no significant supply pressure.
The MMTC tender prices were $279.74pt cfr for west coast India and $285.70pt cfr for east coast India with eight traders and two Arab Gulf producers supplying directly.
By Michael Samueli, Nitrogen Market Reporter