Fertiglobe reports mixed Q2 sales, delays low-carbon ammonia project
After a sustained bull-run, the urea market cooled this week with softer international and Chinese derivatives values, alongside a drop in grain prices, leading to some unease. However, with urea producers worldwide sold well into July, India returning to the market and rumours circulating regarding an export tax being introduced in China, there were no signs of price erosion in the international physical market.
In China, the government has expressed concerns over rising fertilizer prices, leading to speculation in the local market that a urea export tax could be announced as soon as next week. These reports are being treated with caution, although traders have been moving product into bonded store to minimise any exposure. Partly in response to this speculation, July urea contracts on the ZCE derivatives exchange have been trading around Rmb 2,300pt, well below highs earlier this month over Rmb 2,500pt.
Should a temporary export tax be introduced, it would come at the worst possible time for India, which announced a fresh urea purchasing inquiry earlier this week. The tender by RCF will close on 24 June for shipments to 11 August.
The forthcoming inquiry is India’s fourth since March, with the world’s largest urea importer being forced to return to the market again having secured only 1.92m. tonnes in the previous three tenders. A large purchase will be sought to cover demand during the peak months of July and August. With supply tight in other regions, India will need significant volumes to be supplied from China.
With all this in mind, and with fob business light this past week, the market eagerly awaited the tender results from PIH in Indonesia as an indication on market sentiment. The results were clear with Kaltim granular urea attracting a bid of $458pt fob, far higher than last done business in Southeast Asia.
The next major test will be in India, when Chinese export interest at current multi-year high prices, will be tested.
By Profercy Nitrogen Team
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