Global UAN Market Remains Sluggish as Demand Plunge Amidst Inadequate Weather Conditions

Rotterdam (The Netherlands): Global Urea Ammonium Nitrate (UAN) market continued its downward trajectory during February 2024, mirroring the trend from the previous month. The ongoing decrease in the price of vital raw materials, namely Ammonium Nitrate and Ammonia, has led to reduced production costs, thereby exerting downward pressure on UAN prices. Moreover, diminished demand for the material from prominent end-user fertilizer markets, along with trade uncertainties and unfavourable weather conditions, are significant factors contributing to the downturn in UAN prices.

During February 2024, the UAN market in the western region showed a decline in prices, largely driven by pessimistic sentiments attributed to muted demand for fertilizers following the conclusion of the peak planting season. This period typically sees a decrease in demand as agricultural activities slow down post-planting. Moreover, demand from Brazil, a major importing nation of UAN, was limited during this time due to the Carnival celebrations. Traditionally, Carnival leads to a temporary slowdown in agricultural activities as workers participate in festivities, resulting in reduced demand for fertilizers.

Additionally, inadequate weather conditions in the European region contributed to muted demand for fertilizers, including UAN. In the European Union (EU), diverse weather patterns prevailed, with northern regions experiencing a cold spell, central parts facing excessive rainfall, and dryness prevailing along the Mediterranean. The United Kingdom (UK) also witnessed mixed conditions characterized by excessive rainfall.

Conversely, in the Russian Federation, conditions were generally favourable, with improved soil moisture due to ample precipitation supporting agricultural activities. However, dry conditions persisted in parts of the Caucasus region. These varying weather conditions across Europe have influenced agricultural activities and subsequently impacted fertilizer demand. The combination of muted demand post-planting season and reduced activity due to Carnival celebrations in Brazil, along with adverse weather conditions in Europe, contributed to the decline in UAN prices in the western market during February 2024.

Similarly, throughout February 2024, the Chinese market for UAN followed a downward trajectory, mirroring the trend observed in the previous month. A primary factor driving this decline was the reduction in the price of the essential raw material, Ammonium Nitrate, within the country. This led to decreased production rates, thereby exerting downward pressure on UAN prices. At the onset of the month, demand remained subdued in the domestic market due to the ongoing Lunar New Year festivities in China. However, after the festivities, there was a notable increase in activity in downstream industries.

 Despite this increase, demand for fertilizers, including UAN, only began to recover in anticipation of the upcoming planting season. Nevertheless, the demand recovery was lower than expected and had minimal impact on Urea Ammonium Nitrate prices. Furthermore, there were anticipations that China would lift its export restrictions on fertilizers after the New Year festivities. However, this did not come to fruition, resulting in continued restrictions on international demand. Consequently, the combination of subdued domestic demand and ongoing export restrictions contributed to the sustained decline in UAN prices in the Chinese market.

As per ChemAnalyst, the UAN market is expected to continue its downward trajectory in the forthcoming months amidst declining Ammonia prices and faded seasonal demand.