Q1 Fertilizer Review
Urea, DAP and MOP prices were mixed at the close of the 1st quarter but are expected to soften until more demand comes at the start of the seasons in S.E. Asia.
Conflict in the Middle East between Israel and Hamas in the Gaza Strip continues to cause cargo delays and freight increases from the Red Sea.
Lack of sufficient rainfall due to El Niño continues to slow traffic through the Panama Canal although the situation is improving.
Conflict between Ukraine and Russia continues to affect world freight and insurance markets.
China’s decision on 9 November 2023 to halt exports has been lifted for DAP as of 15 March 2024. NPK exports are expected to resume 1 May and Urea exports in June. SOP exports remain restricted.
The Thai Baht / US Dollar exchange rate weakened ending the quarter 35.8 – 36.5 Baht / USD range.
UREA
Urea ended the quarter at $372 CFR, up 4.2% for the quarter and 10% year over year. Local wholesale prices ended the quarter at 14,300 Baht in bulk per metric ton ex-warehouse.
The quarter began with India tendering for 647,000 tons of urea at $329.40 CFR (East Coast) and $316.80 CFR (West Coast). Although lower than the 1.0 – 1.5 million tons expected to be tendered, this sparked a rally in urea sending prices as high as $415 CFR Thailand in February.
After a strong January and February, prices declined in March and have broken through key long-term support on the downside. Offers at the end of the quarter into Thailand were at the $370’s level.
The quarter ended with India issuing another tender on 27 March. 760k tons were purchased in the $339 - $348 per ton CFR range. Local production of urea in India continues to increase (2.49 million tons in March) and 31.3 million tons from April 2023 to March 2024 (up 9.8%). This is reducing the quantity and frequency of Indian urea tenders.
Pertronas’ (Malaysia) Bintulu and Gurun granular Urea plants will come online to begin the 2nd quarter after one month of maintenance.
Urea is expected to weaken into the 2nd quarter.
DAP
DAP prices declined slightly in the 1st quarter to $616 CFR. Year over year, DAP prices have increased 3%. Local wholesale prices traded at around 23,000 Baht per metric ton at the end of the quarter.
China announced on 15 March, exports could resume with a 7-day CIQ inspection. Cargo from China for April and May has mostly been booked. The supply of DAP in Thailand remains tight but should loosen in May and June with fresh cargoes from China.
Traders are shorting DAP tenders for May into India with products from Saudi Arabia, Morocco, and Russia. This, in turn, should drive down Chinese prices. DAP prices have broken through long-term support levels on the downside.
DAP is expected to weaken significantly in the 2nd quarter.
MOP
Granular MOP prices declined 8% in the 1st quarter to around the $335 CFR level and declined 40% year over year. Local wholesale prices ended the quarter at 12,900 – 13,200 Baht per metric ton.
The MOP market was quiet in the first quarter but is expected to pick up with the start of the season after the Songkran holiday 12-16 April.
Although standard MOP continues to weaken in Indonesia and Malaysia, the Thai MOP market is stable with import prices in the $320-$335 CFR level. The new Indian standard MOP contract is expected to settle in April, which should set a price floor.