Global Urea Market Faces Challenges Amidst Dwindling Purchases, April 2024

During the inaugural week of April 2024, concluding on April 5th, the global Urea market demonstrated a downturn. This decline primarily stems from the diminished costs of essential raw materials, notably Ammonia. The decrease in Ammonia prices has markedly reduced production expenses, consequently exerting downward pressure on market prices. Moreover, a decrease in demand from prominent downstream fertilizer markets, coupled with diminished planting activities, has further contributed to the overarching decline in prices.

The North American Urea market saw a 3.6% decline in the first week of April 2024. Insights from market participants attribute this to decreased netbacks on contractual shipments to North African and Asian markets in recent weeks, putting pressure on Urea prices. Additionally, supply chain disruptions occurred due to the collapse of the Baltimore bridge, impacting Urea availability in the US market. Despite these challenges, broader economic indicators in the US showed positive trends. Manufacturing production expanded significantly in March, reaching a two-year high, indicating overall economic growth. However, there were nuances, with job creation rates accelerating while new order growth softened. This complex landscape suggests a cautious optimism among market participants as they navigate a dynamic environment influenced by sector-specific and broader economic factors.

Similarly in the European market, Urea prices stood on a bearish note amidst poor demand due to inadequate weather conditions within the country. Various surveys conducted indicate drying up of demand, albeit with some exceptions noted in specific pockets, particularly in the northern part of the region. A significant contributing factor to this shift in demand patterns was the prolonged and pronounced impact of high rainfall experienced in the northern regions of Europe over the past few weeks. This extended period of precipitation effectively extended the ongoing season, resulting in delays in the application of fertilizers, including Urea.

In like manner, The Chinese Urea market experienced a downward trajectory during the current week, diverging from the trend observed in the preceding week. The prices declined by 3.7% driven by a narrowed gap between demand and supply, facilitated by a surplus availability of material within the Chinese market. This surplus was accentuated by the resumption of operations at major Urea plants, coupled with diminished demand for Urea and its essential downstream derivatives, including Urea Ammonium Nitrate. Insights obtained from multiple market participants reveal that Urea production within the country has been operating at exceptionally high levels, with reported output ranging between 150,000 to 200,000 tons per day. This production rate stands as the highest recorded in the past five years. Simultaneously, demand for Urea from the prominent downstream fertilizer industry began to recover in anticipation of the forthcoming Barley and Oats planting season within the country. However, this revival was lower than expected due to inadequate weather conditions and rainstorms, thereby mitigating any significant impact on Urea prices.