Contrary to the Global Market, The US Urea Prices Rises for May 2023

As per the recent assessment, the global Urea market has experienced a bearish market sentiment for the month of May 2023. Prices of Urea in Asia, and Europe witnessed a downtrend during this period, owing to the high availability of the product in the overseas amidst low domestic consumption. However, North American consumers faced a short-term shortage of Urea in the country, prompting the product’s prices to rebound in May 2023.

Prices of Urea in China has been declined by 6% in the month of May on a FOB basis along with a decrease in Russia (FOB) by 2.4% due to the sluggish demand from the downstream consumers segment. However, the decreasing trend in Urea FOB has been observed since March 2023.

The APAC region including China upholds a major share in the demand and supply market. The current scenario depicts the pricing of Urea in China as USD 421/tonne (FOB) which exports the goods majorly to the Indian market while India exports its major share to its neighbouring countries. Chinese fertilizer production is slowly starting to recover and its shipments to the Indian market have increased which has affected the prices of Urea in the Indian market too.

Furthermore, the European Urea market is heavily driven by export from Russia whose current pricing is estimated as USD 285/ tonne. However, regional production costs have declined after the raw material Ammonia prices plummeted by 15% in the meantime all across the European region. Consequently, Urea prices saw a declining trend in Germany during this month.

The US endorses around 9.6% of Urea importing. Despite the fact that Urea prices in the global market have declined, the US market observed an upward trend in Urea prices due to a domestic shortage of the product amidst escalating inflation in the country, which has been compelling FED to keep on raising interest rates. The data shows a significant rise of around 13% was observed in the US market during May 2023.

Russia’s invasion of Ukraine has drastically affected the global market as the largest Ammonia pipeline in the world, from Russia through Ukraine’s Black Sea ports was shut down. As a result, the supply chain of feedstock ammonia was disturbed abruptly. Hence, to manage the situation, multiple steps were taken during the last year to ease the tight supply and cause fertilizer prices to fall.

On the other side, the Indian government has announced a sufficient inventory of fertilizers during seasonal farming so that an adequate amount of fertilizer would be present which in turn affects the demand for Urea.

As per the ChemAnalyst, global Urea prices are expected to sustain a downtrend till the end of June 2023, as the product’s availability is ample enough to cater to the current global demand. Further, despite the US having observed an opposite trend compared to the rest of the world, prices may come in line with the global prices, under the expectations of cheaper imports from overseas. Moreover, China could be ready to take advantage of India’s latest tender, which could affect the prices of Urea as well.