Houston (USA): This week, Urea prices have experienced a significant drop as suppliers saw some balance in the demand-supply after the piling up of unsold loading inventory in late December 2022. Urea prices remained subdued in the recent week due to sluggish demand in the major producing countries. Producers in Southeast Asia sold multiple lots of commodities to the maritime market for about 460 USD/tonne on a FOB basis.

In South America, it was heard that the Mexican importers stepped in and bought three batches totaling 30,000 tonnes of granular Urea for the West Coast. Thus, the price in Brazil eased to 544 USD/tonne on a CFR basis, averaged for December 2022, because of the replenished Brazilian inventories.

European economic activities generally slow down during the Christmas holidays, and traders usually schedule their imports for January. Thus, as a consecutive effect, a significant drop in offtakes was observed, while traders were trying to sell their existing inventories and quoting cargoes only for mid of January 2023. However, the anticipation related to the rise in energy needs during January and February is already hovering around the manufacturers’ heads, as it will affect the production cost.

The North American Urea price continued to decline in the wake of unfavorable trading fundamentals and muted demand.  In the US market, Urea prices declined by around 22% right after the winter holidays, entering January 2023, and settled at USD 608/MT FOB Illinois in the United States, characterized by weakness in the feedstock Ammonia market due to continued struggling demand in the post-harvest period.

The EU has postponed imposing import duties on Urea till June 2023 for all countries except Russia and Belarus, which could encourage the import of additional Urea from unconventional sources and lower the price paid by North African manufacturers.

As per ChemAnalyst, the market is currently experiencing the issue of oversupply due to piled-up inventories and a lackluster demand situation. However, the overall outlook for demand seems optimistic and the prices are expected to rebound and climb up in the coming weeks.