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Arab Gulf granular urea values consolidated over $245pt fob this week with producers and traders committing major volumes to India. Following the 3 April purchasing tender, producer reluctance to accept the initial MMTC counter in the low-$240s pt fob saw the purchasing agency raise counter levels in order to secure 150,000t from Arab Gulf producers.
A further 225,000t were secured from traders with just 30,000t booked via Agricommodities for the west coast at $251.40pt cfr, while MidGulf and Swiss Singapore accepted awards for the east coast at $262.40pt cfr. Shipment is required by 17 May.
Prior to the tender, MMTC was believed to be targeting a purchase of 500-600,000t, implying the volume secured in the latest tender was a disappointment. India secured over 6.3m. tonnes via import in 2018 with around two thirds of this via tender and the balance via the Omifco Oman jv contract.
The limited volume secured in the latest tender in part highlights India’s increasing reliance on Arab Gulf producers for imported urea. US sanctions have prevented major volumes of urea from Iran making their way directly into India, while the well documented decline in Chinese export volumes has cut off another former major supplier.
Several sources in the market expect a further inquiry in May. Indeed, in two of the past three years India has held tenders in both April and May with combined purchases ranging from 1.2 to 2m. tonnes of urea. 2018 was the exception with India remaining out of the market until August following the purchase of 1m. tonnes in April. However, the announcement of sanctions against Iran by the US in May 2018 no doubt played a role in the delay.
Chinese imports ramp up
Elsewhere in the east, Chinese domestic demand and high local prices has led to the purchase of several import cargoes, with most booked prior to the latest Indian inquiry. Prilled urea has been secured from Indonesia with granular committed from the Middle East and Malaysia. In total, as much as 150,000t are believed to have been booked in recent weeks.
Domestic prices have been firm for several weeks and peaked last week over Rmb 2,150pt ex-works for prills in some regions before retreating by as much as Rmb 100pt this past week. While further inquiry may now be limited, China has proved a valuable short term outlet for eastern producers at a time of limited demand in several other markets, including Thailand, Australia, Brazil and Europe.
By Chris Yearsley, Nitrogen Market Editor
E: chris.yearsley@profercy.com
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