The Urea market had a calm week with very moderate trading volume, which led to price ranges mostly remaining the same as the previous week. Some industry observers claim that a temporary price cap has been established, but we believe that this is overly optimistic because the possible price downside reasons far exceed the potential upside factors.

With the exception of products from Russia and Iran that are subject to sanctions, the price of Urea in the Middle East dropped by $10/t to go close to the $300/t mark.

The US Urea pricing mini-bull run has come to an end because stronger market fundamentals did not support higher prices. US fertilizer prices ran out of steam this week due to decreasing Crude Oil prices, and an increase in US interest rates this week worries the US banking industry.

Most Urea producers have now guaranteed enough sales for April to feel secure about their stock holdings. Producers in some markets made some unsuccessful attempts to drive Urea prices back up into the $330/t range.

As contract and tender deliveries are being carried out, Urea prices will likely remain at their current levels for the next week or two. However, after that, we anticipate that downward pressure will once more start to build.

The peak Urea price and Nitrate production cost curve continue to decrease due to the rapid decline in the costs of natural gas, liquefied natural gas, and Ammonia.

Upstream gas prices in Europe dropped by over 6% over the course of the past week, trading around the $12/MMBtu mark presently. This is excellent news for the costs of EU fertilizer companies. The US Henry Hub Natural Gas price fell to $2.1/MMBtu due to milder weather, causing less drawing from strategic gas storage.

In conclusion, low demand and falling prices are plaguing the globe's fertilizer sector right now and have been for some time. The key question is when a price floor will be set.