June 2024: Urea Market Remains Pessimistic in USA Amidst Dwindling Demand

During the second half of June 2024, the global Urea market exhibited divergent trend. Prices remained stable in the Chinese market but significantly declined in the North American market. The declining cost of essential feedstock material, ammonia, during the same period, led to reduced production expenses, thereby exerting downward pressure on Urea prices. Further, demand from the downstream fertilizer market remained stable, with modest inquiries noted. Despite favourable weather conditions for crop planting, the North American Urea market exhibited a bearish trend.

During the second half of June 2024, the Chinese Urea market exhibited a phase of stagnation following a continuous decline in the preceding weeks. Despite the decreasing prices of essential feedstock material ammonia during this period, the cost pressure on Urea prices remained limited. Insights gathered from various market participants suggest that Urea demand has been low this week, as the primary application season has concluded. Production of Urea remained robust throughout this period. Statistical data from multiple market sources indicate that, as of June 19th, port stocks of prilled and granular Urea totalled approximately 160,000 tons, unchanged from the previous week. This consistent inventory level, coupled with steady production, contributed to the stabilization of Urea prices in the Chinese market. The intricate interplay of these factors, including the seasonal decline in demand, steady production rates, and stable inventory levels, has resulted in stable Urea prices despite the fluctuations in ammonia costs.

In contrast, the North American Urea market experienced a significant decline during the latter half of June 2024. The falling prices of essential feedstocks such as ammonia and upstream natural gas, despite forecasts predicting hotter weather and increase demand, led to reduced production costs, thereby exerting downward pressure on Urea prices. Additionally, there was an oversupply of domestically produced Urea in the Indian market. According to various market participants, while U.S. manufacturing activity contracted throughout June, however output in the chemicals sector was robust. However, demand from both domestic and international fertilizer markets remained limited. In recent weeks, active weather patterns have brought rounds of heavy rain and thunderstorms to parts of the Western Corn Belt, creating favourable conditions for corn planting. This is in stark contrast to the adverse weather conditions experienced in June of the previous year. The Drought Monitor released on June 20th indicated no areas of drought in southern Minnesota and northwest Iowa. Despite these favourable conditions, farmers in the region have surprisingly adopted a wait-and-see approach to securing fertilizers, including Urea, as they anticipate further price declines. As a result, the FOB price of Urea at Illinois port was hovering at USD 310 per metric ton on June 28th.