Profercy World Nitrogen Index

Week 24 – Urea prices decline amid emergence of US-Iran initial peace deal

The Profercy Nitrogen Index lost 7.84 points to 223.42, less than three points above levels seen in late-February prior to the start of the Middle East conflict.

The Memorandum of Understanding (MoU) agreed by the US and Iran on 14 June and formally signed by both parties on 17 June has set the stage for the reopening of the Strait of Hormuz. The progression of the deal would eventually allow for the more than 1m. tonnes of urea stuck in the water on the Strait to eventually move as well as volumes held in storage by producers. However, at this initial stage, resumption of vessel movement has been limited with the market closely watching how the situation develops with further negotiations.

The initial peace deal has weighed heavily on price discussions, with its emergence likely also prompting greater participation in the latest Indian tender than was evident last week. National Fertilizers Limited (NFL) has secured a little over the 1.7m. tonnes it sought for shipment by 20 July, with LOIs in the 8 June tender issued on 18 June.

Some participants are expected to have confirmed business in anticipation of cargoes currently stuck behind the Strait being made available, or in anticipation of revisions to China’s export policy.

Minimum price floors in China of $480-490pt fob and above are still in effect though unworkable. However, domestic suppliers are confident these levels will be revised lower with some already offering into the low-$400s pt fob.

Outside of India, liquidity has been poor in eastern cfr markets. In the west, last week's round of North African sales were short-lived with European buyers having retreated, while offseason Nola values were established sub-$360ps ton this week. Values in Brazil were majorly under pressure with offers moving from the mid-$400s pt cfr late last week down to the low-$400s pt cfr by 18 June.