Throughout January 2023, the global Urea Ammonium Nitrate (UAN) market experienced a notable increase in prices. This upward trend can be attributed to several factors converging, including heightened shipping costs due to ongoing uncertainties in the global trade landscape, a deficit in essential feedstock Ammonia, and a resurgence in demand from major downstream fertilizer markets.

In the North American region, there was a significant month-on-month increase of USD 20 per metric ton in the price of UAN. At the outset of the month, there was a moderate uptick in demand observed for UAN in both the North American and South American fertilizer markets. This rise in demand was attributed to improved weather conditions and the alleviation of drought conditions in these respective regions. During this period, there was a consistent demand for fertilizers, including UAN, in the South American market, driven by the current planting season for crops such as Corn, Cotton, and Sorghum.

The relief from prolonged drought conditions in Rio de Janeiro, brought about by torrential rain, was seen as a positive development in the region. However, as the month progressed, a reduction in production activities became evident due to severe winter conditions, including freezing temperatures and snowstorms. These conditions led to the closure of notable facilities such as the U.S. Nitrogen LLC plant in Tennessee and the Yara/BASF JV plant in Texas, raising concerns about broader impacts on the supply chain. Additionally, a disruption in the Ammonia gas pipeline at the Bethpage ice rink, caused by a compressor malfunction, resulted in a shortage of Ammonia in the region. This shortage of a critical raw material exerted upward pressure on downstream derivatives, notably affecting UAN prices. Furthermore, ongoing trade uncertainties persisted amid Houthi-Yemen rebel attacks in the Red Sea. The decision by Maersk to reroute vessels away from Red Sea routes, instead choosing navigation around Africa's Cape of Good Hope due to the rebel attacks, led to a significant increase in tonne-miles. These strategic changes posed a multifaceted challenge for global trade, resulting in heightened transportation costs.

Similarly, in the Asian market, prices experienced a persistent surge throughout January 2024. The primary driver behind this upward price trajectory was the scarcity of UAN in the Chinese market. Information collected from various market sources indicated a decrease in UAN emissions from major factories in the Shandong region, coupled with equipment maintenance issues, which further strengthened the supply side. Additionally, the uncertainty surrounding the pre-Chinese New Year cargo rush contributed to the surge in prices. Moreover, the Red Sea continued to be a significant concern for shippers and exporters in Asia, as freight rates continued to rise due to a constrained availability of container vessels. Just two and a half weeks prior to the Lunar New Year, carriers began diverting away from the Red Sea actively adjusted sailing speeds and added extra vessels to accommodate longer routes, resulting in disruptions in ocean freight and increased costs. On the demand side, domestic demand for UAN from the fertilizer market in China remained moderate as consumers began stocking up for the upcoming barley and wheat planting season.

As projected by ChemAnalyst, the UAN market is poised to witness a rising trend in the global market. A notable surge in global UAN prices is anticipated in the upcoming months due to a shortage of essential feedstock.