Profercy World Nitrogen Index

Week 25 – Index hits 23-week low as vessel movements via the Strait increase

The Profercy Nitrogen Index lost 21.76 points to 201.66, its lowest level since mid-January as supply side-pressure emerges in the east.

The US-Iran deal has seen more than 400,000t of urea trapped within the Strait of Hormuz since end-February move, encompassing around one third of the volume previously believed to be stuck.

Middle East producers, who have all built up inventory during the effective closure of the Strait, have made moves to place fresh cargoes. However, with many vessel owners still reluctant to enter the region, fresh business has been limited to two cargoes, which are reported to have been nominated for India. Sanctions waivers for Iran are also impacting discussions for Iranian product.  

At the same time as the greater supply from the Middle East, China’s export appetite remains ambiguous given the evolving export policy since its return to market in late-May. The revision of minimum price floors for non-India markets by some $50pt to $430pt fob for prills and $440pt fob for granular has encouraged some business this week. However, with Indian business effectively restricted, much of the more than 2m. tonnes of export quotas issued remain unused.

Prices for other nitrogen products have also been pulled down alongside urea, with UAN prices in the Baltic and Black Sea marking significant declines of over $150pt as prices reset ahead of summer pricing in the USA.

While urea affordability has returned to levels seen prior to the Middle East conflict, many markets have been reluctant to engage. Europe and the USA are in the offseason, while Brazilian buyers have been in no rush to step in for product. Poor monsoon rains are also casting doubt over the extent of demand in India for Q3.