After a declining period in August, the production materials and world urea fertilizer price continued to increase. Fertilizers prices continue to reach record prices. Adverse factors come rushing to the production and circulation of this category around the world.
Many factories producing ammonia (NH3) in Europe have stopped working.
NH3 market last week recorded much unexpected news when a series of factories in Europe had to close due to high production costs because of the lack of gas. The Norwegian company Yara announced a 40% reduction in capacity across Europe, and the German company BASF closed its NH3 plants in Antwerp and Ludwigshafen because of the new gas price. The production price reached nearly $ 950 / ton while imports to Europe are $ 670-700 / ton CFR. NH3 is the primary raw material for nitrogenous fertilizers such as Urea, DAP, NPK…, so it directly affects the price of fertilizers, especially Urea.
World urea price highest since 2009
According to news reports by Argus and Fertecon (reputable international market analysis and forecasting companies), the worldwide supply of Urea is increasingly scarce, and prices continue to rise in all markets. At the end of September, the world urea market witnessed many records set in regions after maintaining a continuous increase in the past 3 weeks. In the United States, prices have risen above $650/ton FOB NOLA, setting a new record price in the past 10 years. In Egypt, after increasing by 75 USD/ton last week, urea price increased by 80 USD/ton and reached a record level of 700 USD/ton FOB for December 2021 delivery. Urea prices rose sharply in a state of tight supply in Europe when high gas prices forced many factories to suspend production and supply threatened by China's export restriction policy—released on September 27th. Rising prices, limited supply, and increasing demand in all markets due to the preparation for the production season, typically tenders in India, West Africa.. will be the continuing factors. to support the urea market in the coming time.
On October 1, 2021, RCF India Company opened a bid to buy 1.5 million tons of Urea, suppliers must deliver in October and November 2021. Bidding results showed that Amber Company had the lowest offer price of 665.5 USD/ton CFR but only supplied 65,000 tons. The remaining quantity has an offer price ranging from 720 USD – 790 USD/ton CFR. Thus, this new price has set a record in the past 10 years. Compared with the previous bid package to buy Urea at the end of July 2021, the unit price has increased by 150 USD/ton. If the average import price in India is 730USD/ton CFR, the import cost after packing 50kg at the port is equivalent to 17,000 VND/kg.
Southeast Asia region will be in shortage of Urea when only 3 countries can actively supply Urea for the domestic market, namely Vietnam, Indonesia, and Malaysia, while the remaining countries have to import 100% of Urea. Since there is no production plant, the two largest importers are Thailand (importing 2.5 million tons) and the Philippines (1 million tons/year).
With the above increase in world prices and market rules, domestic urea prices will inevitably fluctuate and increase.
