India’s RCF closed its eagerly anticipated urea purchasing tender on Monday (30 March). A total of 1.7m. tonnes was offered via 11 participants, but full results were not announced until 3 April. The delay was widely attributed to reports of resource challenges in the wake of lockdown in India.
Since then, RCF moved quickly to send out counter offers, receiving confirmation from suppliers for 747,000t. LOIs were subsequently issued this morning. The total secured falls moderately short of an earlier target of around 1m. tonnes.
The lowest prices offered into the tender threw a curveball into the market. The L1 west coast offer from Green Field International of $251.90pt cfr was $7pt below the next lowest west coast offer level. Importantly, this offer was almost $6pt below the sharpest offer on the east coast offer, an abnormal differential in these tenders.
With the freight differential between the two coasts between $1-3pt, and with many suppliers offering basis shipment from eastern origins, most awards are for shipment to east coast ports. The volumes available to the east coast have come as little surprise to the market given availability at the trader level in the Middle East and SE Asia, as well as the willingness of Chinese suppliers to back business given the slow pace of domestic demand.
RCF only managed to line up two shipments for the west coast including one on an fob basis (Qatar).
As noted above, around 1m. tonnes were reported to be sought via the tender. Indeed, domestic sales volumes were high in Q1 and supported this view. However, without a significant participation from China this was set to be challenging due to the tight shipment window (shipment required by 5 May), narrowed further by the delay to the tender results.
Further news and analysis on the implications for the market are available via the Profercy Nitrogen Service.