PWNI falls further as India heavily influences most fob values
India’s state purchasing agency MMTC has today announced the widely anticipated urea tender for shipment by 6 January 2021. The tender closes on 1 December.
Demand for urea has been especially high this year in India, with a reverse migration of labour owing to the Covid-19 pandemic, together with a good monsoon, resulting in a surge in demand.
This is the ninth inquiry in the current campaign which has seen over 7.67m. tonnes booked since April, with the majority, 4.85m. tonnes, secured since the 10 August through three tenders.
Furthermore, with good rainfall in the north of the country last week, India’s agricultural ministry suggests that the acreage for winter crops has risen to 8.25 million hectares from 6.45 million hectares last year, further increasing demand for urea amongst the country’s farming community.
Urea prices have firmed globally during the past few weeks in anticipation of India’s return to the market, with many traders taking positions ahead of the announcement.
Egyptian granular urea values have increased by nearly $40pt fob in the space of a fortnight, with supply significantly tightening from the region for December shipments, and producers now extending their order books for January and February shipments.
In the US Gulf, barge values have also continued to ascend, with November barges climbing from around $220ps ton fob Nola two weeks ago, up to the low-$240s late last week.
In the east, supply is tight owing to recent production cutbacks in Southeast Asia, as well as China’s firm price stance.
With the Chinese domestic market firm and producers comfortable into December, most participants expect China to remain mostly inactive in the international market in the coming weeks. Buyers in Asia requiring small volumes have been forced to pay high levels in order to draw product away from the Chinese domestic market.
Higher prices in China have also benefited Middle East producers, with large volumes committed for December by one producer at improved levels last week.
India is expected to target close to 1.5m. tonnes of urea, although in order to achieve this Chinese participation would be crucial. If China does not participate in this tender then future purchasing inquiries are almost certain to take place if the world’s largest urea importer is to meet demand to the end of the fiscal year.
By Neha Popat, Nitrogen Market Reporter
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