Profercy World Nitrogen Index

Week 33 – Granular urea values supported by inquiry in Brazil and Europe

Following the conclusion of the latest Indian urea tender, in which some 1.3-1.5m. tonnes of prills are expected to be supplied from China, the market appears to have found liquidity with global granular urea supply still tight and an improvement in demand from both Brazil and Europe.

Well over 50,000t of granular urea has been placed at the producer level from Egypt and Algeria, after several weeks of inactivity with traders looking to cover shorts and European buyers responding to firming regional gas prices.

Inquiry in Latin America firmed early this week, particularly from Brazil where granular urea cfr values have ticked up on average by $6-7pt. Supply options for Brazil have been constrained this year by ongoing disruptions caused by the Middle East conflict.

While liquidity has improved, several producers have yet to commit significant volumes for September shipment. Competition from China has ensured Russian prills are still available with values dropping $16pt on average, with Baltic granular increasingly focused on the Brazilian market.

The market is now assessing to what extent demand in Brazil, and to a lesser extent Europe and elsewhere, can support the urea market. Many suppliers remain optimistic that continued disruption to vessel movement through the Strait of Hormuz will outweigh the pressure caused by Chinese participation in the export market.

The Nitrogen Index has dropped 3.06 points on the week to 197.65. The last time the index stood close to that level was six weeks ago, following which there was an uptick in prices.