The latest purchasing inquiry by India’s IPL for 78,000t of urea for shipment by mid-May saw limited participation, with offers received at significantly lower levels from just four companies. The relatively short shipment window and small volume sought will have limited the number of participants in the tender.
Indeed, the offers were lower than many producers had been hoping for ahead of the tender. L1 offers for both coasts were submitted by OQ Trading at $716.50pt cfr east coast, and $750pt cfr west coast. Offers from other participants for the east coast ranged from $787.90-819.50pt cfr, while west coast offers were from $787.90-870.00pt cfr. State purchasing agency IPL now looks set to issue LOIs to OQ Trading as early as tomorrow.
Today’s tender, the first notable business in the east for some time, was eagerly anticipated by many as an indication of future market prices. The outbreak of war in Ukraine in late February resulted in urea fob values rapidly ascending throughout March, with buyers willing to pay increasingly higher levels in order to secure material. However, with most buyers since opting to defer purchases, activity has ground to a halt.
In the US Gulf, urea barges traded at $938ps ton fob Nola in late March, an all-time high in the region. But values have since slumped nearly $300ps ton in the past four weeks. A similar situation has been witnessed across most fob regions.
Indeed, after weeks of limited activity across the global urea market, this tender has brought a further marked depreciation in fob values. The west coast offer reflects the mid-$720s pt fob Middle East after freight and costs, around $200pt fob lower than business that took place a month ago for April/May shipments. While, regional reports suggest that a cargo from China (re-export) is possible for the east coast.
Latest reports suggest a further purchasing tender could be announced by India for major volumes later this week. This could offer producers and traders some respite, following a lengthy period that has been devoid of any significant buying interest.
By Neha Popat, Nitrogen Market Reporter