A distinct pattern was observed in the global Urea Ammonium Nitrate (UAN) market during the first half of July 2024. In the Chinese market, prices decreased while they increased little in North America. The primary cause of the price increase in the North American market is the region's material shortages and the forced shutdown of some equipment, which resulted in lower production activity because of Hurricane Beryl. However, since demand in the downstream sector decreased, China's UAN market crashed during this time.

The market for UAN in North America had a notable resurgence throughout the examined period. The primary cause of this price increase is the growing disparity between supply and demand. Supply chains and operations have been severely interrupted by massive flooding and the breakdown of transportation infrastructure caused by tropical storms. Hurricane Beryl's power outages persisted in impeding output across the region. Together with these challenges, earlier this week saw the announcement of a force majeure by YARA/BASF and OCI, Texas's two biggest producers of ammonia raw materials, with monthly production capacities of roughly 42,452 and 18,742 tons, respectively. The lack of raw materials resulted in fewer operations, which worsened the North American market's UAN supply situation. Meanwhile, demand for UAN in domestic and international markets has increased in recent weeks. High demand for UAN is attributed to favorable weather conditions, especially in the Western Corn Belt, where heavy rains and thunderstorms have created ideal conditions for corn growing.

The Chinese market for UAN exhibited signs of decline during the week ending July 26th. By the end of the week, requests for UAN from domestic sources were noticeably low, indicating a period of reduced demand. This subdued domestic interest was further exacerbated by a lack of demand in the restricted international market, which has been affected by significant delivery delays primarily due to ongoing port congestion. The temporary increase in fertilizer demand including UAN was from fruit growers. However, this rise was not sufficient to create a sustained increase in overall demand within the local agricultural sector. The challenges in the global fertilizer industry, marked by ongoing backlogs at major ports, have hindered supply chain movement, preventing any meaningful expansion in international demand. As a result, the potential growth in the domestic market driven by agricultural needs has not translated into a corresponding expansion in the global market. The continued logistical bottlenecks have constrained the ability of the supply chain to adapt to changing demand dynamics, underscoring the ongoing challenges faced by the industry.

The UAN market is expected to shrink in the coming months, according to ChemAnalyst estimates. This forecast is primarily driven by seasonal weak demand for fertilizers, including UAN, and falling feedstock prices.