After Weeks of Sluggishness, the US Urea Market Turns Bullish in Early April 2023
- 20-Apr-2023 2:53 PM
- Journalist: Shiba Teramoto
US Urea barge sales were very active this week as domestic US sales picked up after the Easter festival. This inspired North American-based traders to start purchasing cargo to fill their holdings. This buying activity bolstered prices in a few Urea-producing regions. After falling to two-year lows, the previous week, the Middle East Urea price has since risen to $300/t FOB. A $15/t price increase was also made in Brazil in response to this development. While manufacturers are happy about the surge in short-term demand, the underlying fundamentals continue to raise questions. Any remaining demand from Europe, South America, and East Asia is unlikely to be sufficient to support firmer prices once this US spring buying is satisfied.
The decision by the OPEC+ producers to reduce their daily oil production is what has led to the recovery in the price of oil. The rise in oil prices is bad news for Western economies that were just beginning to think that recession would not occur this year. Since most commodities follow the price of crude oil, higher oil prices support higher fertilizer costs.
Furthermore, US Natural Gas prices are below $2.0/MMBtu this week and presently trade at $1.99/MMBtu.
As per ChemAnalyst, this price increase will pass as it is clear from the market that certain individuals predict that Urea prices will continue to rise over the next months. The biggest concern continues to be the severe volatility of Urea prices, which historically have only very infrequently remained stable. This implies that if physical Urea prices do begin to increase again, an upturn may gain traction, particularly if manufacturing cost factors like energy continue to increase. However, the market fundamentals indicate a persistent Urea oversupply until then in the US market. The demand revival from the significant markets after the US spring demand decreases might determine the Urea price outlook in the future. In addition, China is anticipated to resume its exports.
