After a historic spike in March following the invasion of Ukraine, nitrogen fertilizer prices have been falling since early April due to the resumption of production in Europe and a drop in international demand. But Russia appears to be withdrawing from the export market and India is returning to buying, which could change the situation.
Global urea prices rose in March due to Russian export restrictions and slow production in Europe. (©AdobeStock) After strong growth in March Fertilizer prices have fallen in recent weeks in France and internationally.
That World prices for urea increased dramatically in March “because of the Russian export restrictionsthe supply affected, and rising natural gas priceswhich has reduced production in Europe,” explained Marc Zribi, head of the grain and sugar unit at FranceAgriMer, in mid-April.
The same goes for the Ammonia of course. As for DAP (di-ammonium phosphate), “through a combination of factors, prices reached new records in March”, the expert specifies: strong Demand from India and South American countries and a ban on exports of phosphates from China, in addition to supply problems from the Black Sea.
Marc Zribi particularly emphasized the strong demand for fertilizers from Brazil. As of April 6, its annual imports amounted to 10.43 Mt, an increase of 27% compared to the same period last year.
“Sharp downward correction” in April
Change of tone in April, marked by a “significant downward correction” from the second week onwards fertilizer market, in the words of our analyst Marius Garrigue. It’s partly related to that Resumption of European production of ammonium nitrate“particularly motivated by the gradual decline in gas prices” and “releasing the intense pressure on prices handled at the factory gate”.
Another key explanation for this price drop: Global demand for nitrogen fertilizers is declining. Indeed, South American countries have entered their usual seasonal bottom, and in the United States, inclement weather is delaying requisitions and restocking.
Above all, many operators are waiting to switch to purchasing that has been suspended for several weeks India tender for deliveries expected mid-May. “The market does not know whether India will turn to Russia to meet its needs, which would lead to a rapid relaxation of the fertilizer market,” specifies Marius Garrigue.
He also points out that high urea prices have deterred buyers: “Exporters could only process very little business these last few weeks”. So much so that Egypt and Algeria in particular have decided to lower their tariffs.
Price of urea for a year. (© Terre-net Media)
The Indian tender raises many questions
The long-awaited Indian tender finally fell out on April 28th and will run until May 11th. According to analysts from the CRU group, it is “too late to stop the price drop” and raises many questions: “Will Russia have the right to participate? Will China relax its Export Restrictions ? Will global producers seize the opportunity to liquidate their positions ahead of the lull? ‘ tweeted Josh Linville, fertilizer specialist at StoneX.
Global #Urea Prices continued their fall from record highs, a decline caused by a lack of demand from India, the world’s largest importer. The long-awaited tender, the first out of India since February 7, finally appeared on April 28, but not soon enough to halt the decline pic.twitter.com/1NCkb97qZ3
— Fertilizer Week (@FertilizerWeek1) April 29, 2022
On the Russian side Fertilizer export quotas could well be extended to mid-2023, rather than the end of May 2022. The aim is to maintain availability and accessible prices on the domestic market, Russian officials said.
For Mike Nash, analyst at Argus Media, “an export offer that is well below the previous year” is a “sign of this.” Russia withdraws from international markets “. Enough to raise prices in the coming weeks?
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