Lacklustre Downstream Demand Slumps Urea Prices in USA and Europe

The fertilizer market had tumbled in both North American and European regions. The prices of Urea continue to show a downward trajectory in June 2023 due to surplus material availability and low buying enthusiasm from the end-user market. Further, declining feedstock Ammonia and Natural Gas prices had also been a supporting factor behind the declining price trend of Urea.

The prices of Urea have been grappling for a very long period in the Global market. Urea prices in Russia have declined by 2.1% in the month of June on a FOB basis, along with a decline of 2% in Germany on an FD basis. Further, weak economic conditions of the country due to ongoing war have also impacted the prices. Additionally, the blast in the pipeline, which was used to transport Ammonia from Russia to other countries via Ukraine, has affected the exports and, consequently, the prices of Ammonia and its derivatives severely in the region. This blast has led to the surplus availability of Urea in the market. However, the government has taken multiple steps to manage the situation, and furthermore, weakened demand from domestic and international demand contributed to the decline. Moreover, it is observed that Germany's inflation rate climbed up in June after months of deceleration.

Similarly, in the USA market, Urea prices continued to decline in the month of June. A decline of 8.4% was recorded from the previous month on a FOB basis in the USA. The product faced limited demand from both international and domestic markets during this period. Furthermore, factors such as declining energy prices and decreasing Ammonia and Natural Gas prices also contributed to the decline. Additionally, the smooth inflow of cargoes and narrowed the demand-supply gap further influenced the prevailing price trend.

Furthermore, data from the US Bureau of Labor and Statistics indicated a marginal increase of 0.1% in the country's Consumer Price Index in May 2023.

In summary, the Urea market in Europe and North America has been facing pessimistic market sentiments.

As per ChemAnalyst, future market sentiments in coming months suggest an incline in prices of Urea in both European and North American regions on the back of increasing demand from both domestic and international markets and an increase in prices of feedstock Ammonia. Further, fluctuations in Natural Gas and Crude Oil prices may affect the production rate and lead to an increase in prices. An economic rebound is also expected in the coming months, which may impact Urea prices.