Profercy World Nitrogen Index

Week 40 – Urea market softens as Indian tender levels hit over two-year low

Offers of Chinese prilled urea into the Indian purchasing tender were submitted at their lowest level in over two years. While granular supply remains constrained, the tender prices are weighing on market sentiment and testing the resolve of suppliers worldwide.

Lowest offers into the 7 October Indian Potash Limited (IPL) inquiry at $352.10-356.25pt cfr, basis anticipated shipment from China, mark the lowest levels into an Indian tender since those seen in the Q1 into early-Q3 2024 period.

The L1s, which reflect little better than $325pt fob, will test Chinese supplier appetite to back business. The netbacks are some $40pt below Chinese supplier price ideas prior to the tender, which has led to some reluctance to support the business. However, few doubt China's desire to export given high operating rates and soft domestic values.

While prilled and granular markets have been operating on differing fundamentals for some time, many are now questioning the extent of the granular premium which is still well over $100pt above that for prilled.

Global granular supply remains constrained by the disruption to Middle East flows caused by the ongoing regional conflict. However, importers of granular urea in Brazil, the demand side market driver in Q4, have adopted a hand-to-mouth approach to buying as weather and financial difficulties have led to concerns about farm-level demand. Meanwhile, poor monsoon rains have reduced overall Indian demand, while the ample availability of Chinese prills also leaves India with little need to compete for granular product.

The lack of liquidity has pushed granular values lower, with offers in the Brazilian market slipping some $25pt on the week, while producer quotes in Egypt fell some $35pt.

The Profercy Nitrogen Index fell by 8.10 points to a five-week low of 216.41.