Traders eye East to West opportunities amid North African supply squeeze
The Nitrogen Index and the analysis below draws on the prices and insight provided in the Weekly Profercy Nitrogen Report, published through the Profercy Nitrogen Service. For more information and a free trial, please click here and provide your details. The Service includes, daily news and updates, comprehensive weekly analysis and prices, as well as monthly price forecast reports.
In a slow week for global urea markets, Profercy’s Nitrogen Index slipped to 171.50, down a modest 0.81. This represents the smallest fall in the Index since the price correction began with a 3.43 drop on 25 September.
Over the last week, the global urea price correction has affected markets in the East and West to varying degrees. The correction began mid-September with a fall in Chinese granular urea prices. The following weeks have seen falling cfr prices in both Latin America and the US, as well as muted European demand. Netbacks for Middle East granular urea are now 12-15% below their peak.
Of the core elements of the Nitrogen Index, the greatest fall this week was for Egyptian granular urea, with average values for Yuzhnyy prilled urea and Middle East granular urea flat or down. As noted in earlier blog entries, the fall in nitrogen values has eased and this is reflected in the Nitrogen Index (as charted below).
Values of other nitrogen products remain largely unchanged. This said, it is worth noting that ammonia prices remain high compared to urea and indeed saw gains in the West this week. Where it has been possible, the price gap has led to some producers focusing production on ammonia over urea.
Where next for urea?
Q4 and the demand build up into Q1 traditionally brings higher urea prices. For the moment though, this is not evident and clearly many buyers, particularly in the West, are holding back. While the Q3 run-up in price was supply-driven, it is the timing of demand that seems set to determine the markets fortunes in Q4. This theme is briefly discussed here and in detail in our latest 7-page Forecast, published through the Profercy Nitrogen Service.
[tabs] [tab title=”Profercy Nitrogen Index – Year to date”]
Profercy’s World Nitrogen Index drops for fourth week. However, a modest drop of 0.81 reaffirms the view that the pace of decline has slowed.
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Profercy’s World Nitrogen Index drops for fourth week. However, a modest drop of 0.81 reaffirms the view that the pace of decline has slowed.
[/tab][tab title=”Profercy Nitrogen Index – 2009 Onwards”]
Profercy’s World Nitrogen Index drops for fourth week. However, a modest drop of 0.81 reaffirms the view that the pace of decline has slowed.
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Profercy World Nitrogen Index: Methodology
The Profercy World Nitrogen Index is published every week and is based on price ranges provided by the Profercy Nitrogen Service. This includes prilled and granular urea, UAN, AN, ammonium sulphate and ammonia. A full methodology can be found here.
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Profercy’s Nitrogen Service includes daily news, weekly analysis and monthly forecast reports. For more detailed information on specific products and individual markets, please sign up for a free trial or for more information on the Profercy Nitrogen Service, please click here.
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