For the Quarter Ending September 2024
North America
The third quarter of 2024 saw a significant increase in Urea prices in North America, driven by several critical factors. Supply constraints arose from production cuts at multiple Urea plants, exacerbated by adverse weather conditions that disrupted logistics and transportation networks.
In August 2024, a critical shortage became apparent in the North American market, largely due to reduced imports of essential feedstock Ammonia from Trinidad, a key supplier to the United States. As the quarter progressed, the North American fertilizer industry adopted a cautious approach in response to ongoing adverse weather conditions, including hurricanes and thunderstorms. Although Hurricane Francine affected southern Louisiana, market reports indicated that most of the state’s fertilizer sector managed to weather the storm without significant disruption. However, the industry remained vigilant in anticipation of another tropical storm, raising concerns about potential further disruptions.
By the end of the quarter, the price for Urea FOB Illinois in the USA reached USD 345/MT, reinforcing the prevailing positive pricing environment.
APAC
The third quarter of 2024 has been marked by a significant decline in Urea prices across the Asia-Pacific region, particularly in China and Japan, which experienced the most pronounced price fluctuations. Several factors have contributed to this downward trend, including subdued demand due to adverse weather conditions, reduced export opportunities, and persistent global trade uncertainties. In the Chinese market, the narrowing disparity between demand and supply emerged as a critical factor behind the price dip. The ongoing prohibition on Urea exports from China remains firmly in place, allowing only a limited number of shipments under government-to-government (G2G) agreements. This restriction has resulted in stockpiled inventories of Urea within the Chinese market, while fading seasonal demand further supported the downward price trajectory. Similarly, Japan faced challenges during this quarter due to typhoons and storms that adversely impacted already planted crops, leading consumers to adopt a cautious approach toward further purchases. As a result of these dynamics, the latest quarter-ending price for Granular Urea CFR Tokyo stood at USD 339/MT, underscoring the prevailing downward pricing environment in the region. This trend reflects the complex interplay of supply constraints and reduced demand amid significant weather-related disruptions.
Europe
In Q3 2024, the European Urea market exhibited stable pricing, reflecting a neutral sentiment shaped by various influencing factors. Increased demand from both international and domestic markets, spurred by improved weather conditions and the absence of Chinese exports, played a pivotal role in supporting market prices. This surge in demand created a favorable environment for traders to capitalize on the limited supply, contributing to a gradual upward trajectory in prices. Russia experienced the most significant price fluctuations within the region, aligning with the overall market trends observed during the quarter. Despite the stable pricing environment, it is noteworthy that the quarter recorded a 16% decrease in prices compared to the same period last year, indicating a shift in market dynamics. Ultimately, the quarter-ending price of USD 312/MT for Granular FON Yuzhunyy in Russia encapsulates the stability and equilibrium observed throughout the region. This pricing reflects the delicate balance between supply and demand amid evolving market conditions, highlighting the ongoing challenges and opportunities within the European Urea market.
South America
Throughout Q3 2024, the South American Urea market exhibited a mixed pricing trend, with Brazil being the most significantly affected region. In the first month of the quarter, Urea prices surged by USD 13/MT, driven by elevated freight charges in the global market and a shortage of supplies. However, as the quarter progressed, prices began to decline. The reduction in demand from the domestic fertilizer market, coupled with seasonal fluctuations, further contributed to the downward pricing trend. As the harvesting of summer-planted crops approached completion, overall conditions were favorable in most regions. However, the southeastern part of Brazil faced challenges due to earlier hot and dry weather, adversely impacting crop yields. This seasonal lull in fertilizer demand is typical following major planting and harvesting cycles, leading to decreased purchasing activity among farmers. Additionally, severe weather, including storms in parts of Rio Grande do Sul and Santa Catarina, disrupted agricultural operations, further influencing demand dynamics. By the end of the quarter, the price for Granular Urea CFR Manaus in Brazil stood at USD 345/MT, reflecting a consistent downward trend in pricing throughout Q3 2024. This trend underscores the ongoing challenges faced by the market amid shifting agricultural conditions and fluctuating demand.
MEA
Middle Eastern Urea prices demonstrated varied trends throughout Q3. Prices increased during the initial and final months of the quarter, supported by moderate international demand, particularly from India. The absence of China from the global Urea export market significantly impacted demand dynamics in the Middle East, prompting international buyers to secure Urea supplies in preparation for the upcoming planting season, thereby driving prices higher. Additionally, demand from Australia, Africa, and Nepal was notable, along with increased interest in short covering and inquiries from Latin America. Supply constraints were influenced by Ma’aden, a major Ammonia producer, extending its maintenance turnaround until the second-to-last week of September 2024, resulting in temporary shortages of raw materials. Moreover, ongoing military and political conflicts in the region further hindered production activities, intensifying supply challenges. Despite these disruptions, Urea prices declined on a month-on-month basis in August 2024. By the end of the quarter, the price of Urea FOB Al Jubail was recorded at USD 335 per metric ton.
For the Quarter Ending June 2024
North America
The North American urea market exhibited a mixed trend throughout Q2 2024. Prices declined during the initial two months of the quarter, followed by an increase in the final month. This downturn in prices can be attributed to several key factors. Primarily, there was restrained demand from major downstream fertilizer markets, compounded by extreme weather conditions such as heatwaves and geomagnetic storms, which disrupted agricultural activities and reduced consumer purchasing power.
Additionally, an oversupply of urea contributed to the price decline, as manufacturing units continued to operate at full capacity and maintain ample stock levels despite weakened demand. The international market also played a role, with muted demand from Europe due to adverse weather conditions further contributing to the downward pressure on prices. However, a notable turnaround occurred in the final month of the quarter. Urea prices increased by 2.3% on a month-to-month basis, driven by the approaching peak planting season which stimulated renewed demand from the downstream fertilizer market.
Furthermore, China's ongoing absence from the fertilizer export market led to increased activity from Asian buyers in North America, enhancing regional demand for urea. This resurgence in demand, combined with shifting market dynamics, contributed to the price increase observed at the end of the quarter.
APAC
During the second quarter of 2024, the Urea market in the Asia-Pacific (APAC) region witnessed a notable decline of 1.8% in prices during the first month. This decrease was driven by several key factors that influenced market dynamics. One of the primary contributors to the price reduction was the easing of freight charges, which, coupled with an abundant supply of materials, exerted downward pressure on prices. Additionally, export restrictions imposed by major suppliers further limited market activity, creating an environment where supply outstripped demand. This situation was exacerbated by subdued demand from the downstream fertilizer market, as peak seasonal requirements had already been met, leading to reduced procurement activity. Moreover, the demand for Urea ammonium nitrate and other derivatives was also lower, contributing to the continued decline in prices. Adverse weather conditions, including heavy rainfall and snowstorms across various regions, negatively impacted agricultural activity, further reducing the need for fertilizers. Among the APAC countries, Japan experienced the most significant price changes during this period. Despite these challenges, Urea prices stabilized during the last two months of the quarter. The demand from the downstream market remained consistent, with only a few inquiries from the fruit-growing industry observed. Concurrently, Urea production began to recover at a healthy rate, resulting in a more balanced supply and demand dynamic by the end of the quarter.
Europe
During Q2 2024, the European Urea market experienced a marked downturn in prices, reflecting a broader trend of decreasing valuations across the region. Unfavourable weather conditions, including harsh windstorms and floods, significantly dampened agricultural demand, particularly in the fertilizer sector. This decline in demand was compounded by an oversupply of Urea, driven by ample inventories and smooth cargo inflows despite ongoing geopolitical uncertainties. Market participants reported a notable decline in fertilizer sales across Europe, a major factor driving this stagnancy. The adverse weather conditions disrupted agricultural activities, further reducing the need for fertilizers. Consequently, the Urea market faced substantial challenges, resulting in decreased prices and an overall bearish market sentiment throughout the quarter. Additionally, the ongoing geopolitical uncertainties contributed to market instability, as concerns about supply chain disruptions and potential trade barriers remained prevalent. Despite these uncertainties, cargo inflows remained smooth, exacerbating the oversupply situation. The industrial sector, which is a significant consumer of Urea for various applications, also showed reduced activity. This reduction in industrial demand, along with the subdued agricultural sector, led to a decreased overall uptake from downstream sectors.
MEA
The Middle Eastern Urea market experienced divergent trend during Q2. The prices declined during the first two months of the quarter and increased during the last month. The prices declined by 10% in April 2024 and 7% from the previous month owing lower netbacks on contractual shipments to North African and Asian markets over the past few weeks. This decrease in netbacks has further contributed to the downward pressure Urea prices in the region. As the quarter progressed Urea has witnessed a significant surge in Urea prices across the Middle Eastern and African (MEA) region, driven by a confluence of factors that have reshaped market dynamics. Key among these influences is the notable increase in production costs, primarily due to the rising price of essential feedstock natural gas Geopolitical shifts, particularly China's strategic decision to halt fertilizer exports to India, have intensified demand pressures as Indian buyers seek alternative sources within the MEA region. Additionally, limited spot availability and constrained supply chains have compounded the upward price trajectory. These elements collectively underscore an environment of heightened market volatility and reduced supply elasticity, contributing to the pronounced price escalation observed this quarter.
South America
The South American Urea market experienced mixed sentiments throughout the second quarter of 2024. Prices declined significantly during the first two months of the quarter but rebounded slightly in the final month. Overall, demand for Urea remained somewhat restricted. In Brazil, the harvesting of spring-planted crops, which constitute a smaller season, is currently underway. However, yields in the Southeast region have been significantly reduced due to earlier drought conditions and high temperatures. The larger summer-planted crop is also facing challenges, with irregular rainfall and high temperatures affecting certain areas. These adverse conditions have dampened farmers' enthusiasm for purchasing fertilizers. Various surveys indicated that sales were approximately 30% below expectations by the end of April. Farmers have been prioritizing the repayment of debts incurred from planting soybeans and off-season corn over acquiring fertilizers for the next planting cycle, further constraining Urea demand. Prices surged slightly in the final month of the quarter, but demand remained limited. A key factor behind the earlier price decline was a shortage of imported material in the Brazilian market. Statistical data from market participants revealed a significant decrease in the export of agricultural products via road transport during the last week of June 2024, with a 20% decline compared to the previous month. This highlights subdued demand and low trade activity in the sector, with approximately 188,000 tons of agricultural products exported across borders by the end of June 2024.
For the Quarter Ending March 2024
North America
Throughout the quarter, the North American Urea market exhibited a consistent bullish trend, albeit amid fluctuations driven by varying cost pressures on essential raw material Ammonia. These fluctuations, in turn, somewhat restrained Urea prices. Market sentiments were significantly influenced by factors such as international demand, freight charges, and prevailing trade uncertainties.
The absence of China from the fertilizer export market heightened activity among Asian buyers, particularly Indian buyers, in North America. This surge in demand was fuelled by preparations for the upcoming Kharif planting season within India. However, domestic fertilizer demand fluctuated as consumers stocked up for the impending spring planting season, dampened by inadequate planting conditions. Several plant shutdowns, including those of Agrium Inc. in Borger, Texas; Nutrien in Geismar, Louisiana; Koch Industries Inc. in Fort Dodge, Louisiana; CF Industries Inc. in Donaldsonville, Louisiana; and Nutrien in Borger, Texas, were reported during the quarter. Freezing weather primarily caused these shutdowns, exacerbating material supply shortages within the North American market. Furthermore, logistical disruptions along the Mississippi River impeded barge resupply until mid-March, resulting in delayed shipments and necessitating alternative routes at higher shipping costs. In response to these challenges and in a bid to safeguard profit margins, traders adjusted prices across various commodities, including Urea.
APAC
The pricing of Urea in the APAC region during Q1 2024 saw significant volatility, influenced by various market dynamics. Prices declined in the initial two months due to ample material availability and subdued seasonal demand. Favourable weather conditions and increased domestic production contributed to enhanced supplies, while sluggish demand from the fertilizer industry post-peak planting season further impacted prices. Moreover, international demand, especially from Asia, was constrained by Chinese government restrictions on fertilizer exports until 2024. By late February 2024, shortages of Urea emerged in the Chinese market, driven by equipment malfunctions and sales stoppages at production facilities, particularly in northern China. Operational challenges disrupted manufacturing processes and delayed Urea delivery, exacerbating supply shortages. Additionally, environmental regulations in Shandong province imposed further constraints on production, reducing Urea output. Despite supply challenges, domestic demand experienced a modest uptick as preparations for the upcoming wheat and barley planting season commenced. Henceforth a potential price surge, resulting in a marginal 1.1% increase in prices in March 2024.
Europe
Throughout the quarter, the European Urea market witnessed notable fluctuations in prices, characterized by initial spike followed by subsequent declines. The price surge of 8% during January 2024 in Russia was driven by a significant imbalance between demand and supply. International demand for Urea remained robust during this period, exerting further influence on market dynamics. Production activities within the European region encountered disruptions at the onset of the quarter due to freezing temperatures, resulting in a shortage of supplies in the market. However, as the month progressed, manufacturing units gradually resumed operations, albeit at a slower pace. In February 2024, prices embarked on a downward trend, persisting in decline throughout the quarter. This decline was predominantly attributed to broader trends indicating a waning demand, despite certain localized exceptions, particularly in the northern regions of Europe. A pivotal factor contributing to this demand shift was the prolonged and pronounced impact of heavy rainfall experienced in these areas. This extended period of precipitation effectively prolonged the ongoing season, consequently delaying the application of fertilizers, including Urea, and impacting market demand dynamics across the region.
South America
Throughout the quarter, the South American Urea market remained buoyant, notably impacting Brazil as the primary focal point. Price increases of 4.4%, 7.4%, and 1.3% were recorded in January, February, and March respectively, reflecting the prevailing optimism within the region. A significant factor contributing to this sentiment was the amelioration of prolonged drought conditions in Rio de Janeiro, facilitated by substantial rainfall. However, despite improved weather conditions, concerns persisted over the water level in the Panama Canal, which remained below the threshold level. Consequently, restrictions were placed on the size and number of vessels passing through the locks, resulting in a shortage of imported Urea cargoes in the Brazilian market. Furthermore, the commencement of harvesting for spring-planted crops, coupled with recent rainfall, spurred a resurgence in Urea demand. Favourable weather conditions also facilitated sowing for summer crops, further augmenting the demand. Despite this positive outlook, insights from market participants indicate potential reductions in the total sown area compared to the previous year, signalling a nuanced market landscape requiring careful navigation.
MEA
Throughout the first quarter of 2024, the Middle Eastern Urea market experienced notable price fluctuations, characterized by an initial spike followed by subsequent declines. The decline in prices during January was significant, attributed to weak demand both internationally and domestically, along with an oversupply of material in the market amidst trade uncertainties. The recent Red Sea attack further exacerbated the situation, driving ocean freight rates higher and raising concerns about inflation and delayed goods. To avoid potential strikes by Iran-backed Houthi militants, carriers diverted trade away from the crucial Middle East trade route, contributing to a complex global trade environment. This led Asian consumers to hesitate in making bulk purchases, resulting in increased Urea inventories within the country and a narrowed gap between demand and supply, supporting the current price dip. As the quarter progressed, prices continued to decline due to weak demand and producers ceasing to offer cargoes on a spot basis. Additionally, diminished demand from the East of Suez region and disruptions in the supply chain due to delayed shipments to the Asian market persisted amid ongoing harvesting activities and trade uncertainties. Insights from various market participants in late February reported a cargo ship's sinking in the Red Sea after being struck by an anti-ship ballistic missile, as confirmed by the US Central Command (CENTCOM).
During the first quarter of 2024, the Urea market in the Middle East and Africa region faced several factors that influenced market dynamics and prices. One of the key factors was the ongoing trade uncertainties and issues in the Red Sea region, which continued to disrupt the supply chain. This resulted in delayed shipments and higher shipping costs, narrowing the gap between demand and supply. Additionally, there were multiple shutdowns that caused disruptions in the market and led to increased prices.
Another factor that impacted the market was the subdued demand for Urea from both domestic and international markets. As the peak planting season had passed, buyers were hesitant to make bulk purchases, leading to downward pressure on prices.
In terms of country-specific analysis, the United Arab Emirates (UAE) experienced significant changes in Urea prices during the quarter. The market in the UAE followed a bearish trend, with prices declining due to diminished demand from domestic and international fertilizer markets. The ongoing issues in the Red Sea region further contributed to delayed exports and a surge in inventories at ports, exacerbating the downward pressure on prices.
However, it is important to note that there was a significant percentage change in prices compared to the same quarter of the previous year, indicating a decline in prices.
In conclusion, the Urea market in the Middle East and Africa region, particularly in the UAE, experienced a decline in prices during the first quarter of 2024. Trade uncertainties, subdued demand, and high availability of Urea were the key factors contributing to the downward pressure on prices. The quarter ending price of Granular Urea Ex-Jebel Ali in the UAE was USD 376/MT. The market also faced multiple disruptions, which led to increased prices.
For the Quarter Ending December 2023
North America
In the fourth quarter of 2023, the North American Urea market experienced a decline influenced by multiple factors.
The pricing dynamics in North America during this period were shaped by subdued Urea demand, driven by concerns about potential drought due to the El-Nino effect. This led to cautious bulk purchases from consumers. Procurement orders from major international markets, particularly India, remained low as Indian consumers focused on the Middle Eastern market.
Insufficient rainfall disrupted the supply chain in South America, contributing to market challenges. Additionally, the bottleneck in the Panama Canal caused shipment delays and inventory accumulation within the country. Despite these challenges, Urea demand remained strong from the domestic fertilizer sector. Constraints at the Panama Canal compelled certain shippers to reroute Urea exports through the Suez Canal to access Asian markets. Therefore, some shipping companies opted to bypass the Suez Canal due to concerns about potential rebel attacks, choosing alternative trade routes. Persistent Suez Canal constraints may challenge Urea exports from the U.S., potentially leading to oversupply and reduced prices. Delayed shipments resulted in accumulated Urea inventories within the country, contributing to the decline of Urea prices.
APAC
The Urea market in the Asia-Pacific (APAC) region faced substantial challenges during the fourth quarter of 2023. Notably, there was a pronounced decline in prices, with China experiencing the most significant impact. Several factors contributed to this downturn, including the abundant availability of the material, persistently weak demand from the Asian region, and a decrease in feedstock prices. The cessation of fertilizer exports by China's National Development and Reform Commission (NDRC) resulted in a surplus of material in the market. Moreover, the conclusion of the autumn season diminished demand for Ammonium Nitrate in the end-user fertilizer market. Subsequently, Urea prices saw a notable increase. The escalation in the price of essential feedstock Urea led to higher production costs, exerting upward pressure on Urea prices. During this period, there was a shortage of imports from the European Urea market. The redirection of merchant ships from the Red Sea, driven by the imminent threat of attacks from Houthi militants off Yemen, resulted in a significant surge in freight charges as many shippers altered their shipping routes. However, demand from the substantial downstream fertilizer industry remained subdued, as the peak planting season had concluded.
South America
In the South America region, the Urea market witnessed a downturn in the fourth quarter of 2023 due to various contributing factors. Specifically, the Brazilian market followed a bearish trend during this period, characterized by subdued demand and a moderate to low supply. Despite the ongoing planting season for Rice, Sorghum, and Soybeans in the country, the demand for Urea from the crucial downstream fertilizer sector remained restrained due to adverse weather conditions. The northern part of Brazil experienced excessively hot and dry weather, worsening crop conditions. Simultaneously, the southern part had cooler temperatures initially, followed by a slight increase later. The divergence in weather patterns, featuring wet conditions in southern Brazil and drier conditions farther north, is primarily influenced by the persistent El Niño, expected to continue into early 2024. This has dampened the enthusiasm of fertilizer consumers for purchasing, given potential threats to crops. Despite these challenges, there was a smooth inflow of Urea shipments from the major exporting country, the USA, with no disruptions in the supply chain during this period. The interplay of these factors has resulted in a diminished gap between demand and supply, thereby contributing to the ongoing decline in prices.
Europe
The European Urea market prevailed mixed trend throughout the fourth quarter ending in December 2023. The prices increased by a slight margin of 1.1% in the initial month however declined later. The price increase in October was primarily driven by shortage of supplies in the European market. BASF, a prominent chemical producer in Europe, announced a reduction in production rates and the closure of several energy-intensive facilities, including two vital Urea plants and related fertilizer facilities. These factors have collectively resulted in shortage of supplies in the European market. However, later Urea prices declined amidst muted demand of the material from the European market and trade uncertainties. Adverse weather conditions within the region along with heavy rainfall posed to be a potential threat for the crops. This had further dampened the buying enthusiasm of Urea consumers for Spring 2024. Further, trade uncertainties amidst rebel attacks in the Red Sea had caused the traders to opt for alternative trade route. In an effort to avoid strikes by Iran-backed Houthi militants based in Yemen, carriers have already diverted trade over the past several weeks away from the crucial Middle East trade route, which, along with the Suez Canal, connects the Mediterranean Sea to the Indian Ocean. This has created a multiple-front storm for global trade, leading to a surge in European port inventories. The interplay of these factors prompted towards narrowed gap between demand and supply.
Middle East
In the Middle East and Africa (MEA) region, the pricing dynamics of Urea in the fourth quarter of 2023 were influenced by diverse factors. The Urea market initially displayed bullish sentiments for the first two months but transitioned into a downward trajectory as December approached. The price surge in the initial phase resulted from supply shortages, with a major Urea producer reducing production rates. International Urea demand increased during this period, particularly after China restricted fertilizer exports, contributing to an upward trend. In November 2023, the Middle Eastern market faced challenges due to factory device failures, partial sales stoppages, and constrained supply. However, as December arrived, demand from the Asian market declined post-peak planting season, and European market demand remained constrained due to adverse weather conditions and threats to crops from heavy rainfall. Trade uncertainties stemming from rebel attacks in the Red Sea led traders to seek alternative routes, diverting trade away from the crucial Middle East route and causing a surge in global port inventories. These factors collectively contributed to a narrowed gap between Urea demand and supply in the MEA region.
