State purchasing agency MMTC closed a purchasing tender today for urea, receiving lowest offers marginally above the earlier RCF inquiry. While over 2m. tonnes were offered, the lowest offers on the east coast are likely to present challenges for the state agency in securing more than the 630-750,000t booked via recent tenders.
The lowest offers in today’s tender were $240.50pt cfr east coast and $242.50pt cfr west coast. Notably, next best offers were $4-5pt higher for both coasts.
West coast offers will most likely be palatable to suppliers ex-Middle East, with netbacks broadly in line with last done spot business. Indeed, returns from India over $230pt fob are higher than present returns from Latin America and the offseason US market.
Yet, the implied east coast netbacks will be a disappointment to producers in China and SE Asia. In China, lower domestic demand has led to greater export interest in recent weeks. However, producers had been hopeful India would offer returns at or above $230pt fob. Implied netbacks for east coast India imply returns $3-5pt lower, undermining hopes from local traders that 0.5m. tonnes, or even higher, could be supplied from China.
MMTC has issued counters in the latest tender with volumes to be confirmed over the coming week. Shipment is required by 20 August.
For detailed analysis of the latest tender, as well as news on developments over the coming week, complimentary trials of the Profercy Nitrogen Service are available here.