The global Urea Ammonium Nitrate (UAN) market witnessed a significant price surge during the first half of October 2024, with marked upward momentum in key Western regions, particularly in North America and France. This surge is largely driven by a reduced supply of UAN, exacerbated by production constraints and material shortages in major exporting countries. Additionally, a modest revival in demand from the downstream fertilizer sector has contributed to the upward pressure on prices. This combination of limited availability and increasing demand has intensified supply chain challenges, further amplifying the price escalation in these regions.

In the North American market, UAN prices surged during the first half of October, primarily due to a significant shortage of material from major exporting countries. Trinidad, a critical supplier of both Ammonia and UAN to the U.S., is currently experiencing a material shortfall, further tightening supply. This shortage was compounded by Nutrien’s recent announcement of the indefinite closure of one of its four ammonia plants in Trinidad, a key development that has curtailed ammonia production, a vital raw material for UAN. As a result, UAN production rates have been adversely impacted, restricting supplies to the U.S. market and exerting upward pressure on prices. Despite these supply challenges, there was a slight increase in UAN purchases in anticipation of the upcoming planting season for wheat, barley, and rice. However, overall demand remained weaker than expected, largely due to persistent heavy rainfall and hurricanes across key agricultural regions. These adverse weather conditions have made consumers cautious about committing to bulk purchases, contributing to the tempered demand even in the face of rising prices.

In the French market, UAN prices surged, fuelled by strong demand across the distribution chain, particularly from agricultural sectors in the eastern and northern parts of Europe. As farmers geared up for seasonal planting and fertilization needs, the demand for UAN increased significantly, placing additional pressure on an already strained supply chain. This surge in demand coincided with ongoing supply challenges, particularly a shortage of critical raw materials such as Ammonia and Natural Gas, both of which are essential for UAN production. Further exacerbating the situation, geopolitical tensions intensified following a fresh military offensive by Israel against Hezbollah in Lebanon, raising the risk of supply disruptions through the Strait of Hormuz. As a vital corridor for global LNG and oil shipments, any threat to the security of this passage creates significant concerns for energy supplies. These risks have compounded the supply challenges in Europe, as the reduced availability of key energy inputs, such as Natural Gas, has disrupted the production of downstream derivatives like Ammonia and UAN. The combination of heightened demand, raw material shortages, and geopolitical uncertainties has led to a widening imbalance between supply and demand, driving UAN prices higher and amplifying uncertainty in the European market.

According to ChemAnalyst, the price of UAN is expected to rise in the global market, driven by increasing demand for fertilizers ahead of the upcoming winter planting season.