Nitrogen fertilizer trader Fertiglobe sees Q1 bottom line pinched by falling prices
A large fall in the Tampa contract for May loadings and spot sale into Morocco from the Middle East at a hefty discount to last business underlined the ammonia market’s increasingly bearish tone as prices finally started to correct.
Prices have cooled amid softening demand from industrial users in several countries, delayed orders from the US agricultural sector amid bad weather and decent supply side dynamics despite the disruption to supply chains from the loss of Russian output.
The headline news was Yara and Mosaic’s $200pt reduction in the Tampa contract for next month, with that downward trend poised to be repeated elsewhere as buyers finally start to gain the upper hand in negotiations.
Indeed, SABIC’s sale to Morocco’s OCP at $1,330pt cfr Jorf Lasfar in a sale concluded several weeks ago already seems high, amid talk of a deal by the same buyer for a Caribbean cargo at a $200pt discount to that 1H April loading.
The only other confirmed sale in a quiet week both sides of Suez saw Petronas sell 15,000t to South Korea’s LFC under formula, with around half that cargo originating in China rather than Malaysia.
With buyers in no rush to enter a falling market, it was no surprise to see Kaltim’s sales tender scrapped due to no-one meeting the Indonesian major’s price target of $1,125pt fob Bontang.
Unconfirmed bids of up to $300pt below that figure were heard for late May cargo and it remains to be seen what price will be achieved via a direct sale.
Trammo appears to have sold into Belgium and Trafigura into north Africa, but details of both deals are elusive.
A similar bearish tone is also seen in other nitrogen markets. In the urea segment, the slowdown in European and US import demand encouraged buyers worldwide to defer in anticipation of lower fob values.
However, a rebound may yet be on the cards as the long-awaited purchasing tender from India’s RCF for 1.5m. tonnes should offer producers a valuable outlet for June and July shipments of urea and could encourage buyers elsewhere to step in.
By Richard Ewing, Head of Ammonia
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