Mexican government officially confirms temporary removal of amsul import tariffs
India has once again returned to the international market with MMTC due to close a tender 17 July for urea for shipment by 20 August. This will be the fourth import tender of the current campaign, which began in April, and has been announced only a matter of weeks after the conclusion of the earlier RCF tender through which 628,000t were secured.
Indian urea sales move at a fast pace
Domestic demand in India for urea has been healthy of late, bolstered by an above-average monsoon, and strong planting. Urea sales have begun July at a fast pace that would point to 4.1m. tonnes for the month versus 3.9m. tonnes in July 2019. June sales finished at 3.36m. tonnes versus 1.98m. tonnes in June 2019.
Basis production projections, earlier imports and final deliveries under the Omifco offtake agreement, Profercy analysis suggests that July would see a notable net deficit of urea of around 1m. tonnes. With August set to be another solid month for sales, India will need to secure more than the 600-800,000t secured in successive tenders to date this year. Further, the loss of direct access to Omifco Oman product will have to be made up from August onwards.
Will China make up the shortfall?
To secure significant volumes, the new inquiry will need to attract tonnes from China. Owing to earlier domestic demand, and low international prices, Chinese suppliers have been reluctant to engage in Indian business. Indeed, the most recent inquiry saw only 140,000t of urea confirmed from China, much of this re-export material. For domestic product, business was concluded at around $227-230pt fob, above breakeven levels for suppliers of $224-225pt fob. With China holding back, participants in the tender were forced to look elsewhere, including Indonesia. The lion’s share of the 628,000t booked by RCF will be supplied from the Middle East and ex-Black Sea.
Looking forward to the next tender, Chinese suppliers are expected to show greater interest. The domestic market has moved into the off-season, while operating rates remain high, around 70%. However, port stocks are still low and logistics can limit the volumes producers can supply direct from inland locations and production points.
With the shipment windows between the latest and previous tender overlapping, these logistics constraints could once again limit participation. The earlier RCF tender requires shipment by 28 July, with this latest inquiry offering only an additional 23 days and requiring shipment by 20 August. This will also limit availability from other origins to first half August shipments, especially given that urea producers worldwide have healthy order books for July.
The above suggests that it will be difficult for India to secure more than 1m. tonnes and would imply that tenders will be a regular market event throughout Q3 and Q4.
MMTC closes the latest tender 17 July. All the latest news and analysis will be provided direct to subscribers of the Profercy Nitrogen Service. You can register for a free trial here.
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