Urea Prices (Q1 2022)
Throughout the first quarter of 2022, urea prices in Asia-Pacific remained high. Because of the increasing Ukraine situation and Russia's blockade of supply lines, the cost of fertiliser shipments had skyrocketed. However, as a result of increased production from present production units, India's domestic urea output increased. Since the development of tensions between Russia and Ukraine in late February 2022, India has faced significant supply difficulties. Russia, which produces roughly 13% of the world's fertilisers, is a key provider of a variety of fertilisers to countries such as India. It temporarily halted fertiliser exports earlier in March, raising fertiliser prices that were already high. Following the growth of the Zhengzhou Commodity Exchange (ZCE) in Henan, China, the Chinese government aimed to limit market inflation in order to assure orders and maintain price stability among Chinese urea producers. The price of urea has risen significantly as a result of rising coal prices and maintenance turnarounds at some urea plants. Furthermore, because India relies heavily on Chinese imports of Urea, a critical product, China's domestic market stockpiles have declined to keep up with export levels. In the first quarter of 2022, urea FOB Qingdao prices remained unchanged at 443 USD/MT.
Urea prices in Germany increased steadily over the first quarter of 2022. In the German market, the price of upstream ammonia jumped by 6% during the month of March. Fertilizer prices are growing mostly as a result of rising inflation in European countries. In addition, with the recovery of the economy, demand for urea in the fertiliser and agrochemical industries has remained strong. The increased price is mostly due to the heightened Russia-Ukraine conflict, which has resulted in a significant increase in energy and natural gas prices, which has a negative impact on production costs. The raw materials nitrogen and ammonia experienced a considerable shortage in the European market. Throughout the first quarter of 2022, FOB Yuzhnyy (Black Sea) prices stayed in the 748-805 USD/MT range. Meanwhile, due to the rise in natural gas prices, Yara, one of the world's major fertiliser producers, reduced ammonia and urea output in Italy and France.
In the first quarter of 2022, urea prices in North America fluctuated. They initially fell, but eventually recovered. Fertilizer wholesale prices in the United States fell dramatically in January, bringing comfort to downstream users such as farmers planning spring planting. Urea prices in the corn belt decreased 8.2% in January to 675 USD/MT, the lowest since the fourth quarter of 2021. Soaring natural gas prices pushed up the fertilizer prices as the conflict scenario worsened. As the situation aggravated, rising inflation led to higher costs in the region. During the Chinese New Year, the volume of urea imports in the region decreased. As freight charges increased during the war, it had an influence on the region's supply.
Urea Prices (Q4 2021)
The price increased in the fourth quarter of 2021, primarily to strong upstream prices of Zhengzhou Commodity Exchange urea futures, which increased by a significant percentage. Operational and production rates increased, resulting in an increasing demand from downstream agriculture and industrial users of Melamine. According to industry data, soaring coal prices in South Asia prompted numerous regions to ration electricity and fertiliser firms to reduce output. In December, the FOB Qingdao price jumped to 419 USD/MT, while CFR JNPT rates were quoted at 566.95 USD/MT.
Fertilizer rates in Europe improved significantly in the third quarter of 2021.
Increase in the price of the feedstock ammonia, rising input costs as a result of the energy shortage, and rising natural gas prices, a critical component in the synthesis of fertilisers, increased the price of the compound in European markets. Additionally, increased freight costs and a container shortage wreaked havoc on its pricing this quarter. Throughout Q4, there were insufficient supplies and a high demand for nitrogen fertilisers on a global scale.
In the fourth quarter of 2021, the price climbed significantly in the North American region due to a considerable rise in the value of raw materials. Prices for nitrogen fertiliser hit unprecedented highs as a result of the global scarcity, leading producers in America to delay purchases. US prices surpassed 728 USD/MT FOB Cornbelt for the first time in December. Local manufacturers and downstream consumers were impacted by higher Ammonia feedstock costs as a result of soaring natural gas prices. Supply restrictions in the United States towards the end of the quarter also aided price hikes.
Due to historically high urea prices, scarce availability, and a poor barter rate for farmers, Brazilian importers would likely purchase fewer volumes in early 2022 and on a regular basis throughout the year to meet domestic demand while minimising financial risks. Prices will stay high in the first half of 2022 as a result of poor availability from the previous year. Brazil's demand for inputs, as a major grain and oilseed producer, could have an impact on worldwide availability. Soaring prices may have an influence on Brazil's greatest corn crop, which will be seeded after the soybean harvest in January 2022.
Urea Prices (Q1-Q3 2021)
The price increased regularly across the Asian market, owing to a robust increase in demand from both the domestic and international fertilisers market. During Q1 2021, the price in China spiked unexpectedly due to lockdowns in response to an increase in daily COVID-19 instances. While this had little effect on the domestic production, road transit and exports began to suffer. Meanwhile, demand increased in the Indian market compared to the previous quarter, and limited supply sustained its pricing.
Additionally, sentiments were bolstered following the Indian government's approval of a USD 13.44 million grant to sustain BVFCL's (Brahmaputra Valley Fertilizers Corporation Limited) plant operations, which had a urea production capacity of 390,000 MT/year, in order to ensure timely urea availability for India's farming sector. In the Asian market, strong emotions for the compound were recorded in the second quarter, driven by robust demand fundamentals. Seasonal demand from both domestic and global markets pushed up the price in India.
Additionally, China had growing interest for urea from both the domestic and foreign markets during this quarter. During Q3 2021, the Asian market saw a considerable increase in its price. The Chinese domestic economy demonstrated consistent demand for urea, but the market also acknowledged material scarcity. In India, a fertiliser shortage loomed as a result of high worldwide prices, the repercussions of which may be noticed during the upcoming rabi season.
During Q1 2021, the European market enjoyed stable domestic and global demand. International demand was sparked by lower feedstock supply, specifically ammonia, in the US market as a result of disrupted production and limited trading activity in the later part of the quarter, which aided in the region's price increase. Container shortages and rising freight costs also had a substantial impact on its value across a number of trading routes. Europe experienced strong demand for urea in the second quarter, owing to significant seasonal offtakes and an increase in the price of other fertilisers.
Demand remained strong enough to maintain the region's general price trend, aided by the high value of the feedstock Ammonia. However, India exerted control over the overall price dynamics of urea, as it was a significant exporter. Additionally, logistical challenges at major ports compounded the region's overall price trend. Fertilizer prices surged significantly in the European region in Q3 2021. Due to the fact that natural gas is a critical raw material in the manufacture of nitrogen fertilisers such as ammonia, urea, and nitrates, among others, increasing natural gas prices resulted in the closing of many fertiliser facilities in Q3. European gas price climbed to record highs associated with multi-year low storage levels and supply fears, resulting in an increase in regional prices.
While demand for urea increased in the USA during the first quarter, prices remained high due to a chemical feedstock constraint. As a result of the winter storm, numerous feedstock ammonia factories stayed idle, as did several other industrial units along the gulf coast. Prices were reported to be approximately 415 USD/MT, a rise of 20 USD/MT every month. Following a prolonged winter storm and trade interruptions, the prices were anticipated to stabilise through the end of the quarter, while production around the US Gulf progressed toward supply restoration.
The price climbed significantly during Q2 2021, owing to seasonal demand for many fertilisers. Production remained elevated in anticipation of solid offtakes, which unexpectedly decreased due to transportation constraints. Domestic Urea queries in the United States of America were impacted badly as buyers preferred to purchase it from other nations such as India due to its price competitiveness. However, price continued to rise due to strong demand for products such as corn and soybeans. Thus, the retail price in the United States of America was estimated to be 540 USD/MT during the final week of June.
In the third quarter of 2021, the entire fertilisers market exhibited conflicting sentiments. Q3 saw unfavourable emotions for urea in the United States, where the fertiliser industry experienced a dip in demand levels following the spring season. Prices were estimated in late August to be between 424 and 450 USD/MT FOB. However, as Q3 drew to a close, the market received a boost as feedstock Ammonia’s price began to increase due to the increasing price of natural gas, resulting in a significant increase in the pricing towards the quarter's end.
Due to increased urea prices in 2021 due to supply constraints, freight increases, and high exchange rates, the crop/fertilizer ratio at the end of the year was significantly less favourable than it was a year before. Concerns over the supply of inputs for Brazil's crops had grown as a result of the geopolitical and economic crises, which coincided with the energy crisis. The fertiliser industry became concerned when China put a ban on exports in response to rising natural gas costs, which jeopardised domestic production and supplies. Russia, Brazil's biggest fertiliser supplier, followed China's lead and stated that exports of its main fertilisers would be restricted as well.
Urea Prices Overview 2020
Urea exports from China increased significantly in the first quarter as the country sought cash by catering to regional demand due to the product's scarcity in the domestic market. With the start of the Rabi season in India, the demand increased significantly. In October, a major fertiliser business in India purchased roughly 2.18 million tonnes of Urea cargoes. India imported urea from all major sources, including Indonesia and Vietnam, where producers received higher net returns than in the US or Brazil. Planned and unplanned maintenance was reported at Malaysian and Indonesian companies. However, none of these occurrences resulted in significant supply disruptions across the region.
Rabi season in India also had an effect on the dynamics of its demand in Europe, as substantial amounts were diverted to India from various countries. There were no instances of force majeure or shutdowns, as European companies maintained uninterrupted production and were able to fulfill domestic demand. Due to insufficient harvesting, market uncertainties, and financial concerns, October's increase in the use for this compound fell short of market expectations. November saw a slow start to the month, but demand perked up toward the end.
In the third quarter of 2020, fertiliser prices in Europe significantly improved. Higher feedstock ammonia prices, rising input costs as a result of the energy crisis, and rising natural gas prices, a key component in fertiliser manufacture, had all driven the prices higher in European markets. Moreover, increased freight costs and a scarcity of shipping containers played havoc on its prices in the third quarter. Nitrogen fertilisers were in short supply and in high demand all across the world in Q4.
Supply remained abundant in Q4 due to a decline in demand towards the end of the US crop season. Demand declined consistently as harvesting progressed, though prices remained favourable to farmers. Winter's early arrival and progression caused an abrupt end to extra fertiliser in fields. Additionally, barge traffic in New Orleans (Nola) remained steady, making the market less appealing for imports.
Brazil imports 80% of its fertiliser, with the imported volume hitting 38.3 million tonnes from January to November. Prices in Brazil rose steadily throughout the year, from 932.80 BRL/MT to 1.42K BRL/MT. as a result of the worldwide energy crisis.
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Urea is known to be a nitrogenous compound with a carbonyl group attached to amine groups with osmotic diuretic activity. Urea is formed in the liver via the urea cycle from ammonia and is also the product of protein metabolism. The administration of Urea elevates blood plasma.
Chemical Formula of Urea:
Urea Production via Bosch-Meiser Urea Process; and via Phosgene
Bosch-Meiser Urea process involves two equilibrium reactions, where the first reaction is known as carbamate formation and the second one is known as urea conversion, which are exothermic and endothermic respectively.
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The displayed pricing data is derived through weighted average purchase price, including contract and spot transactions at the specified locations unless otherwise stated. The information provided comes from the compilation and processing of commercial data officially reported for each nation (i.e. government agencies, external trade bodies, and industry publications).
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