Amsul markets have eased for the first time since October. Throughout that time, capro amsul prices have been on an uninterrupted price run, increasing from under $110pt fob China to the low/mid-$150s pt fob.
The decline comes as Chinese compactors face significant price pressure. Producers sold compacted amsul forward late last year basis standard capro amsul prices of below $120pt fob China. As a result, demand from compactors for feedstock capro amsul has waned. Several traders/offtakers have faced, at times, significant delays to planned shipments of compacted amsul to Brazil.
However, much like the last price decline in October, this week’s price drop is not expected to be a change in market direction. In October, the downward change in direction last 1-2 weeks before the latest rally.
Market fundamentals remain tight for standard grade amsul. SE Asian demand continues to be firm even without Gresik Indonesia, the single biggest buyer of capro amsul in Asia. Gresik is expected back in the market from April onwards and this will add further support to capro prices. In Brazil too, the expected decrease in supply due to vessel delays will tighten compacted amsul supply from China.
In addition, compactors will need to secure feedstock to continue production, absorbing losses or renegotiating contracts where possible. Therefore, the current drop off in demand from compactors is expected to be short lived.
As such, amsul prices in Q2 are unlikely to decrease even if the general trend for urea and wider nitrogen values to ease from Q1 to Q2 plays out this year.
By Michael Samueli, Nitrogen Market Reporter