US Urea Prices Strengthen amidst reviving demand and Short Supply, Asia Witness Major Slump

Shanghai (China): During the first half of March 2024, the global Urea market witnessed diverging trends. In North America, there was a modest increase in Urea prices despite a decline in the cost of essential feedstock, Ammonia. However, the downward pressure on Urea prices was somewhat mitigated due to the restricted impact of Ammonia costs. The primary driver behind this price surge was a moderate resurgence in demand for Urea from prominent downstream fertilizer markets, particularly in anticipation of the forthcoming planting season, compounded by material shortages. Conversely, the Chinese Urea market remained bearish during the same period, experiencing a decline in prices.

During the initial half of March 2024, the North American Urea market sustained an optimistic outlook, following a trend observed in the previous month. Despite cost pressures from essential feedstock Ammonia, the impact on Urea prices remained limited. Throughout this period, producers reported strong domestic demand alongside disruptions in delivery within the country due to weather-related plant outages in the US Gulf.

These factors have significantly contributed to the upward movement in prices. As the peak planting season approaches, demand from the downstream fertilizer market has started to pick up. Additionally, with China absent from the fertilizer export market, Asian buyers have turned to North America, intensifying demand for Urea in the region. This increased activity from Asian buyers, combined with robust domestic demand and delivery disruptions, has widened the gap between demand and supply, further supporting the price increase.

On the contrary, the Chinese Urea market has shown bearish sentiments during the initial half of March 2024. The decline in the price of essential feedstock material, ammonia, during this period has contributed to reduced production costs within the country, thereby exerting downward pressure on Urea prices. Further, the supply situation of Urea within the Chinese market has remained stable, with ample inventories available to meet the needs of end-users.

Information gathered from various market participants indicates a reduction in domestic Urea daily output, despite high operational rates. Some plants in Shanxi and Yunnan have resumed or increased production, while others in Shandong and Ningxia have reduced or ceased production. Simultaneously, demand from the international fertilizer market has remained subdued as the Chinese government continues to uphold its decision to suspend fertilizer exports, particularly DAP and Urea, until the conclusion of the domestic planting season. This has led to an increase in inventories within the domestic market. However, demand from the domestic fertilizer market has begun to pick up as consumers prepare for the upcoming wheat planting season. Nevertheless, the demand has been slower than anticipated and has limited bearing over Urea prices.