This week’s review of the international urea market:

Influenced by Asian demand, spring demand in the United States and some European purchases, international urea prices rose this week. Urea factories in the Middle East and Egypt sell at nearly 270 US dollars per ton FOB, equivalent to 300 US dollars per ton CFR in the United States. Brazil’s market is an exception. Influenced by Iranian urea supply and payment problems, there is a gap between Brazilian urea prices and the mainstream international market.

The large demand in the urea market in India will support the international market in May and even June.

Second, this week’s international market focus:

1, India

The early announcement of urea import tenders and the extension of the window period indicate that India needs to buy a large amount of urea, and the current limited market supply may also affect its purchasing volume, prompting it to issue another round of tenders at the end of May.

2. Shortage of supply

Urea factories are increasingly digesting May supplies, and unplanned shutdowns of some urea plants in Qatar and Indonesia have also reduced market supply this month.

3. Relocation of Traders

Traders are filling short positions and have begun to turn long.

III. Trends in China’s Urea Import and Export Market

This week, urea prices in China first restrained and then rose. After the end of agricultural fertilizer use in spring, the demand for agricultural fertilizer in China was weak, and the market demand was still dominated by industry. Urea factories had to take part of orders in advance to cope with the 5.1 mini-long vacation next week. However, due to the impact of labeling and rising international urea prices, low-end domestic urea prices began to rebound on Thursday.

It is reported that a Beijing trader purchased 6,000 tons of large granular urea from a factory in Inner Mongolia at a price of US$291-293 per ton FOB. The ship was shipped to Korea in May and departed from Jinzhou Port.

According to uncertain information, a ship of 50,000 tons of Iranian urea has arrived at Zhenjiang Port and will be put into the warehouse of tax declaration for transshipment.

IV. Other urea market trends

India:

In India, MMTC issued a new round of urea import bidding, which opened on May 1 and is scheduled to ship until June 24. It is expected that MMTC will purchase at least 1 million tons of urea this time.

In fiscal year 2018-2019 (April 2018-March 2019), domestic urea sales in India reached 31.7 million tons, an increase of about 1.4 million tons compared with fiscal year 2017-2018; in fiscal year 2018-2019, domestic urea production in India reached 23.9 million tons, a decrease of about 125,000 tons compared with fiscal year 2017-2018; and in fiscal year 2018-2019, Indian urea imports amounted to about 7.45 million tons, an increase of about 1.5 million tons compared with fiscal year 2017-2018.

Egypt:

In Egypt, several new sales have taken place in the past week, as follows:

Abu Qir sold 25,000 tons of large granular urea on April 24 at a price of US$270 per ton FOB and loaded in late May.

Prior to that, Alexfert sold 10,000 tons of large granular urea at a price of $265 per ton FOB, due in May.

Last weekend, Helwan Fertilizer sold 5,000 tons of large granular urea at a price of $263 per ton FOB for May shipment.

Delta Fertilizers sells 50,000 tons of small granular urea to Midgulf and 30,000 tons of urea to ETG at a price of about $250 per ton FOB. The goods are shipped to India.

In the Middle East:

In the Middle East, the non-U.S. urea prices for May and June sold by urea factories this week ranged from $263 to $270 per ton FOB. Urea supply in Saudi Arabia and Qatar was tight. Neither Sabic nor Muntajat had any urea available in stock, nor did they plan to offer it to India for tender.

Market analysis:

Influenced by the printing standards, the international urea price has risen in an all-round way, and the situation of the market in short supply has gradually emerged. Demand in Asia and the United States is strong. At the same time, some buyers in Europe have also entered the market to purchase urea. On the supply level, the supply of urea in the Middle East is limited, and China still has no time to export urea. Despite the intention of purchasing at least 1 million tons of urea in the next round of Indian urea imports, it is expected that the procurement will be relatively difficult under the current situation of tight supply of urea in the Middle East and other regions. The international urea market will remain strong in May, supported by India’s large demand. At present, the FOB price of China’s Urea Export is still far higher than that of other regions in the world. Therefore, China’s Urea Export is still difficult. Although China’s current export is of little significance, the rising international urea price will continue to boost China’s urea market confidence.

The overall supply and demand of potassium sulfate in China has not been significantly improved. The supply of potassium sulfate is relatively sufficient. Mannheim’s 50% powder is generally shipped, but the grain and 52% water-soluble potassium sulfate are in good condition. The price is relatively high. The quotation of potassium sulfate is more than 2900-3000 yuan/ton. The turnover is mainly based on the order quantity, and the supply of potassium sulfate in most factories is slightly tight.

Resource-based potassium sulfate plant production is normal. The price of 52% Rok powder is more than 2700-2800 yuan/ton. The price span is large, and the price is mostly negotiated according to the order quantity.

Qinghai water and salt are stable for the time being. The arrival price of 50% powder is between 2550 yuan and 2580 yuan per ton. There are certain spot sales in various regions, and the supply is still acceptable.

The market for potassium sulfate has steadily advanced. Before the single implementation of potassium sulfate fertilizer in spring tillage, the purchasing link of new fertilizer became weaker. Local environmental safety inspection is normalized, and now the start-up of the Mannheim plant in Hebei is conservative; 50% of the mainstream powder from Hebei enterprises quoted 2850 yuan/ton, 52% of the powder/particle from the factory quoted 2950-3000 yuan/ton, with a single transaction as the main consideration.

Recently, urea quotation in Shandong and Hebei, the main producing areas, has been declining continuously. At present, the price of urea storage in Linyi, Shandong Province, varies from 2030 to 2050 yuan (ton price, the same below). Enterprises have yet to issue orders to implement. However, in recent years, there is less demand for Industry and agriculture, heavy downstream wait-and-see mentality, low purchasing intention, and the enthusiasm of traders to take goods again in the near future is relatively low, and more inventory is cleared.

Recently urea has been “out of gas”, but the price of Monoammonium is still rising. At present, the actual acceptance of 55% of powdered ammonium in Hubei has increased from 2000-2030 yuan to 2050-2100 yuan in the early period, while the actual acceptance of 58% of powdered ammonium in small factories has risen slightly to 1980-1990 yuan, from 2100 yuan in the early period to 2130 yuan in Hubei large factories, and has continued to rise to 2150 yuan in the near future, with an overall increase of 20-50 yuan. Anhui large plant 55% ammonium powder recently suspended orders, 55% ammonium powder factory quoted price in 2150 yuan, Sichuan large plant 55% ammonium powder factory quoted price after rising stability in 2050 yuan, not to accept orders for the time being.

Some insiders are confident that ammonium will continue to rise. Some insiders believe that although the price of Monoammonium is still rising, it is still too early for high phosphorus fertilizer. With the gradual decrease of demand, the market of Monoammonium is not expected. The following is a brief analysis of the favorable factors and the negative factors.

Good factors:

Restrictions on orders are pending. Recently, ammonium enterprises have not only consumed their stocks, but also received some orders. It is known that the pending orders can probably be executed until mid-early May. Recently, there is a shortage of shipments. In the active shipment of enterprises, some large factories in Hubei have issued pending orders and suspended receiving orders. Large factories in Sichuan, Anhui and other places have not yet received orders.

Start-up low, low inventory. At present, the overall start-up rate of Monoammonium is still around 50%, and only 50% of Monoammonium in the main producing area of Hubei Province. Large factories in Hubei, Sichuan and other places limit production mainly. Individual start-ups have not reached half-open. Henan and other enterprises stop production for various reasons, and some have to wait until the end of May to resume production. The overall inventory of enterprises is low, and some enterprises have basically consumed their inventory. At present, they sell with production.

Prices of raw materials have risen. Recently, the price of liquid ammonia has risen sharply. The reduction of liquid ammonia in Anhui, Henan and Yunnan has led to the shortage and price increase in Hubei and other places. At present, the acceptance of liquid ammonia in Hubei is about 3250 yuan. It is known that the price of phosphate ore may also rise, mainly due to the good demand for ammonium in the near future.

Short-term demand remains. Recently, the actual transaction of Monoammonium continues to rise slightly. Although the new price transaction is temporarily less, the demand still exists in the short term, the new single transaction of enterprises is still acceptable, and some downstream compound fertilizer enterprises still have a small amount of purchasing monoammonium plan.

The negative factors:

The demand for high phosphorus fertilizer is still early. The demand for high phosphorus fertilizer in autumn should wait until July and August, because ammonium enterprises consume stocks, resulting in large purchasing volume in the near future and early consumption of demand in compound fertilizer enterprises. This may slow down the demand for ammonium in May and June. The industry believes that the specific situation depends on the market situation at the end of May and the beginning of June, but at present, the demand in the later period should slow down.

Raw material sulfur callback. At the beginning of April, the price of sulphur rose to more than 1000 yuan, but recently due to the influence of external market and the slowdown of domestic demand, the price of sulphur dropped to less than 1000 yuan. At present, the price of granular sulphur in Yangtze River Port and Fangcheng Port has been lowered to around 985 yuan. The price of Puguang Sulfur Wanzhou Port and Dazhou Factory has also been revised back to 980 yuan and 860 yuan, respectively.

Transportation was blocked in some areas. The construction of roads in Guangyuan area of Sichuan has led to obstruction of transportation. The areas affected include Henan, Hebei, Shanxi, Shandong, Shaanxi and other areas in Northwest China. The freight of ammonium monoxide has increased. For example, the freight of Yuncheng City in Sichuan Province increased from 120 yuan in the early period to 165 yuan in the near future, and the freight of Shijiazhuang City in Sichuan Province increased from 180 yuan to 220 yuan in the near future. If the price of Shijiazhuang Railway Station remains unchanged, the freight will rise. The price of ammonium has been reduced in disguised form, which has restrained the price increase of monoammonium.

To sum up, in the short term, the demand for ammonium is released ahead of schedule, and the demand is slowing down gradually in the near future. It is expected that ammonium may have a risk of callback in May and June. However, depending on the market situation at the end of May and the beginning of June, it is not excluded that the price of ammonium will continue to rise.

Goldman Sachs and Barclays warned investors that sanctions would not have a significant impact on oil prices in the long run, as international oil prices jumped as the United States declared an end to its exemption from Iranian crude oil.

In its latest research, Goldman Sachs said that although the U.S. waiver ended much more abruptly than expected, it would not have a significant impact on oil prices in the long run. Goldman Sachs pointed out in its research paper that Iran’s oil production would be reduced by 900,000 barrels a day, while the global available idle capacity of 2 million barrels would be increased further later this year.

It believes that oil prices will continue to fall in 2020 as the supply situation of crude oil market improves next year and there are doubts whether OPEC and non-OPEC organizations will continue to comply with the cut-off agreement after June. It maintained the basic range of Brent crude oil prices for the second quarter of 2019 at a price target of $70-75 per barrel.

Barclays also expressed a similar view that Saudi Arabia and other major oil producers would fill the supply shortage. But it predicts that Saudi Arabia’s adjustment reaction may be slower than last year.

On Monday, April 22, the White House officially issued a statement saying Trump decided not to update Iran’s crude oil exemption policy, which expired in May, in order to reduce Iran’s crude oil exports to zero. The statement mentioned that the three major energy producers, the United States, Saudi Arabia and the United Arab Emirates, have agreed to take timely action to ensure global crude oil demand as Iran’s oil withdraws from the market.

Saudi energy minister Falkh said in a statement after the announcement of a major White House decision that Saudi Arabia would coordinate with other oil producers to ensure adequate supply of crude oil to consumers, while ensuring that the global crude oil market would not be imbalanced:

“In the next few weeks, Saudi Arabia will closely communicate with other oil producers and core oil consumers to ensure a fully balanced and stable crude oil market, for the common interests of both oil producers and consumers, and for the stability of the global economy.”

Saudi Arabia will assess the impact of U.S. decision-making on the oil market before increasing production, while Saudi Arabia and the United Arab Emirates can rapidly increase production by 1.5 million barrels a day in a “short time”, Bloomberg quoted people familiar with the matter who asked for anonymity as saying.

The data show that Saudi Arabia, as OPEC’s largest oil producer, could produce 982,000 barrels per day in March and increase production by another 1 million barrels per day; the UAE could increase production from the current 3.45 million barrels per day to 3.5 million barrels per day. According to Bloomberg, Iran’s crude oil exports in the first two weeks of April were 1.1 million barrels a day, making up for Iran’s oil losses on behalf of Saudi Arabia and the United Arab Emirates.