Profercy World Nitrogen Index

Week 27 – Index broadly steady as urea values rise in west, soft in east

The Profercy Nitrogen Index has held broadly steady on the week, edging just 0.70 points higher to 197.61. While this is the first week that the index has not posted losses since mid-April, it still marks the third lowest value so far this year and some 23.10 points below the level seen in late-February prior to the start of the Middle East conflict.

A round of short covering in North Africa by traders for earlier granular urea sales to Europe boosted values a little over $50pt in a matter of days. While some believed this boost to values would be short-lived earlier in the week, the latest developments in the Middle East saw North African prices rally further midweek with traders closing out shorts and securing modest positions.

However, prior to the flare-up in conflict in the Middle East, prices, particularly in the east, were under pressure by the movement of material previously trapped in the Strait of Hormuz as well as of fresh shipments. In Oman, spot business was concluded sub-$380pt fob before bid interest improved midweek as concerns began to build again over vessel movement through the Strait of Hormuz.

Still, eastern markets have overall been more subdued, largely owing to potential availability from China. Beyond the up to five cargoes committed to India, sales from China have been limited to small volumes, leaving the country with a large chunk of its export quotas yet unused.

Western demand markets have shown some engagement, with import values improving in Brazil. Urea imports lag those of last year, and some suppliers are optimistic given the level of demand in recent weeks. Amsul values have also firmed. The offseason Nola market also gapped up with barge values in the low-$400s ps ton on 9 July technically at a premium to Brazil.

The market is once again watching developments around the Strait of Hormuz closely, albeit with the belief that China could soften the blow should vessel movements fall sharply and competition for tonnes emerges.