Q4 Fertilizer Review

KEY HIGHLIGHTS

• Urea:   Prices increased sharply at the end of the quarter and are expected to remain firm into the new year.  

• DAP:  Tight supply from China has kept prices elevated, driven by an export ban from 1 Dec 2024, which is expected to continue through Q1 2025.     

• MOP:  Prices remain stable and affordable relative to Nitrogen and Phosphate.  Supply remains ample and prices are stable to firm with little downside risk. 

• U.S. Dollar:  Strengthened following Donald Trump’s election victory.  There are concerns in the commodity markets about potential tariffs under the new administration.   

• Natural Gas:  Dutch TTF natural gas prices ended the year at around $14.50 MMBtu, the highest level in 2024, but in line with historical averages.

• Heavy rains and flooding in Thailand curtailed demand in the 4th quarter. 

• Freight Rates:  Container shipping costs from China remained elevated in the fourth quarter ($45-$55 pmt from N. China). 

• Commodity Prices:

- Palm oil rose 18% to approximately $1,000 USD/ton

- Sunflower and rapeseed oil prices significantly increased

-   Rubber prices surged 25% to $1.90 per kg

DAP prices remain at a historically wide premium to Urea and MOP

UREA

Urea ended the quarter down 4% at the $385 CFR level, but up 8% year over year.  Local wholesale prices ended the quarter at 13,500-13,700 Baht per metric ton in bulk ex-warehouse.

There were three much anticipated Indian tenders during the quarter which supported urea prices.    West Coast India ($364.50, $362, $369.75 CFR) and East Coast ($389 CFR).  India’s inventories remain seasonally low because of strong demand and good rains.   Additional Urea buying tenders from India (19 Dec, 1.5m tons) and Ethiopia (23 Dec, 821,000 tons) helped support prices at the end of the quarter.

The 4th quarter is typically slow for spot buyers of urea in Thailand.  China continues to be absent from the urea export market.  Gas supply issues limited exports from Iran.  Regular buying in SE Asia should resume in January.

DAP

DAP prices remained stable but elevated in the 4th quarter.  The price of DAP increased 4% year over year to around the $645 CFR level.  Local wholesale prices traded around 22,500-23,000 Baht per metric ton at the end of the quarter and are anticipated to increase further on limited supply.

In 2024, DAP traded at a historically wide margin to Urea prices.   Taking out the supply disruptions from Covid-19 and the start of the Russian/Ukraine conflict, DAP prices are trading 45% above their adjusted historical average ($426 FOB).

There was steady DAP demand from India and Ethiopia.  Most of the Indian demand was filled by OCP and Ma’aden as China limited exports to India.

Hurricane Helene and Milton significantly impacted phosphate production from Mosaic and Nutrien in Florida.  Additionally, the Port of Tampa, responsible for 40% of U.S. phosphate fertilizer exports, faced closures which further tightened the phosphate market.

On 1 Dec, China announced a halt on Customs inspections (CIQ) for MAP/DAP.  The export ban is expected to last through the first quarter of 2025.  Even CIQ approved shipments in November were not permitted to clear customs.  At least two CIQ approved cargoes destined for Thailand were cancelled.  This will put further pressure on local pricing in the 1st quarter.  NPS and NPK shipments are still approved for export.

There is not much upside in the DAP market, but supply issues will keep the market firm.

MOP

Granular MOP prices were mostly stable around the $315-$320 CFR level.   MOP prices were down 12% in 2024.     Local wholesale prices ended the quarter at 11,900 Baht per metric ton for non-Laos origin and 11,200 per metric ton or Laos MOP.

Thailand imported 830,992 tons of MOP, up 24%, from Jan-Nov.  Canada, Laos and Belarus together accounted for roughly 75% market share.

Labor disputes in key Canadian ports were resolved in November.   Vancouver is Canada's busiest port and facilitates exports of potash for Southeast Asia.

Belarussian Potash Corporation (BPC) has hinted at decreasing production to increase MOP prices.  BPC is operating at 90% capacity and is fully recovered from the initial shocks of losing the port at Klaipeda and the fallout from international sanctions.  Thailand imported 147,000 tons from BPC from Jan-Sep.  Uralkali and Eurochem MOP export volumes have also fully recovered.

China standard grade MOP contracts ($270 - $273 CFR) and India ($283 CFR with 180 days credit) are expected to increase next year.  MOP prices should remain firm with very little downside.