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.
Q3 Fertilizer Review
DAP prices remain firm and uncorrelated with Urea
and MOP price declines
Urea prices were stable ending the quarter up 1.4% on a bounce from the latest Indian tender.
DAP remained firm increasing 11% for the quarter and 35% year over year on limited supply.
MOP drifted weaker and is forming a bottom.
The Thai Government’s 29.5 billion Baht rice program was put on hold and will be studied further before implementation.
Thai Baht strengthened 11% from 36.8 to 32.8 THB/USD in the 3rd quarter. This will help reduce import prices in the fourth quarter.
The flooding in Chiang Rai, Lampang and Phitsanulok in the North; Nong Khai and Nakhon Phanom in the Northeast; and Ayutthaya in the Central Plain has curtailed fertilizer demand.
The conflict in the Middle East and Ukraine continues to add uncertainty to the supply chain.
Global container freight rates have eased a bit from the second quarter and bulk freight rates have been relatively stable,
China continued to restrict Urea exports and did not export in the 3rd quarter.
Natural Gas disruptions in Egypt have stabilized from the 2nd quarter.
Agricultural commodities posted a strong recovery from July and August weakness. Palm Oil prices are at roughly $950 USD/ton, a level not seen since April.
The regional Asian fertilizer conference is being held 8-10 October in Hong Kong
UREA
Urea ended the quarter around the $385 CFR level up 1.4% for the quarter and down 2.5% year over year. Local wholesale prices ended the quarter at 12,900-13,100 Baht per metric ton in bulk ex-warehouse.
Urea prices drifted lower in July and August on lackluster demand as the market waited for another Indian tender. On 29 August, NLF tendered for 1.13m tons of urea for shipment ending October. Winning offers were $340 CFR West Coast and $349.88 East Coast representing an average decline of $14 per ton from the tender in July.
A subsequent tender was issued 19 September with shipments by 20th November. Price and quantities will be announced on 3 October and could set the price direction in the fourth quarter. India’s expected demand is 2-2.5m tons as inventories are seasonally low and good rains in the monsoon season have kept demand firm.
Thailand urea imports from Malaysia were down 39% on increased supply from Brunei, Indonesia and Oman. China did not export urea in the 3rd quarter instead keeping for domestic consumption and is unlikely to export in the 4th quarter.
DAP
DAP prices increased in the 2nd quarter 11% to $635-640 CFR. Year over year, DAP prices have increased 35%. Local wholesale prices traded around 22,500-23,000 Baht per metric ton at the end of the quarter.
DAP began the quarter at $575 CFR and continued firm on tight supply and limited demand from India. India bought at $550 CFR in first half July and ended the quarter buying in the $630’s CFR level. India delayed purchases in the hopes of price declines as the current subsidy makes buying at these levels unprofitable for importers. Production of DAP (down 15%), import (48%) and sales (11%) were all down in the second quarter respectively. India, Pakistan and Bangladesh eventually were forced to buy at higher price levels as their inventories drew down.
CIQ inspections in China are now taking up to 4 weeks for export approval. DAP prices are expected to remain stable to firm even as demand is typically weak in the fourth quarter in SE Asia.
MOP
Granular MOP prices were mostly stable around the $320-$330 CFR level. Year over year, MOP prices were down 13%. Local wholesale prices ended the quarter at 12,100 – 12,300 Baht per metric ton down about 800 Baht per ton for the quarter. ICL increased their standard grade contract price with an India importer $6 pmt to $285 CFR. This may indicate a market bottom.
Uralkali appears set to enter the Thai market directly and sell both wholesale and retail in their brand. Along with MOP from Laos, this will put further pressure on retail MOP prices.
There is still a large disconnect between SOP and MOP prices. With SOP exports restricted from China, supply of granular is very tight in S.E. Asia. SOP has come down $20-30, but still trades around $650 - $660 CFR from Vietnam/Taiwan.
MOP prices should remain stable as dealers try to maintain their current prices and the CPO price remains strong.
A fun look at inflation
Are today’s inflation-adjusted prices affordable?
Tickets to the 1975 World Series Game – Game 6: Price $7.50
This game is always mentioned as one of the greatest games in World Series History.
Four-Day Pass to the 1985 Masters: Price $75
Bernhard Langer won and all Top 10 finishers are in the PGA Hall of Fame.
Tickets to the 1991 World Series: Price: $45.
Most Braves fans prefer to remember 1995.
Standard Grade Muriate of Potash (MOP), FOB Vancouver in USD.
February Price Levels:
1988 ($88pmt)
1998 ($125pmt)
2008 ($375pmt)
2018 ($230pmt)
2024 ($240pmt)
Source: Argus Media.
Excluding the extreme events in 2008, Covid-19 and the geopolitical disruptions in 2021-2022, MOP has increased about 3.5% per year, generally in line with inflation. If all the other events above had a similar 3.5% inflationary increase, prices might still be very reasonable for the average fan:
A World Series ticket at Fenway Park today would cost approximately : $52
A Four-Day Pass to the 2024 Masters : $287
A World Series ticket to see the Braves win in 2024 : $140
Conclusion: Potash at $240 seems quite affordable.