Major European producers have begun issuing new season prices for ammonium nitrate and CAN in Europe, with first offers well above those in 2020. Both CF Industries in the UK, and Yara, who supply across western Europe, are price-leaders in their respective markets. Producers are confident given the strength of the global urea market, which remains firm with prices currently at multi-year highs.
Yara moved first in France and announced the new season price for AN 33.5%N at €305pt cpt bulk. The price was down €40pt on the last list price of the current 2020-2021 season. It is also €75pt above the new season price of last season. In late April 2020 (when last year’s new season price was announced), Egyptian granular urea values were on average in the high-$220s pt fob. The announcement for this year’s new season price came later, on 10 May. Egyptian granular urea prices during the first two weeks of May averaged in the mid-$350s pt fob, nearly $130pt above the point at which new season nitrate prices were announced last year.
Shortly after Yara, other smaller producers, Borealis and Eurochem, announced AN prices in France €2pt and €10pt above Yara’s list price. The Yara list price was roughly in line with expectations of around €300pt cpt bulk.
With global urea prices firming and fob values rallying, less than two weeks later, on 21 May, Yara announced new season prices for CAN 27%N in Germany and the Benelux region at €255pt cif bulk, down only €15pt on the last list price of the 2020-2021 season. It was €80pt higher than the new season price for 2020-2021 at €175pt cif bulk.
At the same time, Yara also lifted the AN price in France by €20pt to €325pt cpt bulk. Between the first and second price announcements by Yara, the Egyptian granular urea price had surged $30pt and averaged $385pt fob. Of note, Egyptian producers have now sold granular urea up to $408pt fob for August shipment.
Earlier this week (24 May) and only days after the second Yara price announcement, CF Industries issued a new season price for its Nitram 34.5%N at £274pt delivered merchant. The price was down just £11pt on the current season price and £79pt above the new season price in 2020 which was also announced in late May of that year. Only a few days after announcing the new season price, CF withdrew offers. Expectations are that the price will be lifted higher.
The price was far higher than the $245-255pt delivered merchant range anticipated and is understood to have been announced at this level primarily on the back of firm North African urea values.
This approach will likely come as a surprise to many buyers given that new season prices have traditionally been lowest levels in the market until April/May of the following year. Historically, new season prices are set at low levels to encourage buyers to stock up before prices are incrementally increased as the season approaches. For producers, the approach has been used to fill order books and reduce storage in warehouses in the offseason.
For this year’s new season prices to be sustained into next year, producers are clearly confident that global urea values can be sustained at current levels on average from now until around January. At that point, end user demand will dictate market prices. Urea, however, is volatile and while values may continue to gain or reserve and decline, they will almost certainly not be stable.
By Michael Samueli, Head of Nitrates and Sulphates