The urea market has ended the year on a much stronger note than anticipated. India stepped in and took out the surplus prills available in China and good domestic demand has been helping to underpin the market. The only worrying fact remains the huge volumes that are potentially available for export from China. Latest figures show that over two million tonnes were exported in November with India by far taking the lion’s share of 1.2 million. With a flat tax of Rmb 80/t now in place for the whole of 2015, the market is reliant on strong domestic demand to limit the volumes that are exported out of China in the first quarter. If the volumes are significant then prices will come down and, as happened earlier this year, they will have to drift to a level where several suppliers from China will turn away from the export market.
Also as a negative, Turkey is usually showing a lot of interest in December / January tonnes but the huge stocks already sitting in the ports from very competitively priced arrivals from China and Iran could reduce this interest that usually helps to support the Yuzhnyy line up at the beginning of the year.
Prilled prices in China are firm but they could still undercut Yuzhnyy in the New Year if they choose to join in the hunt for any Latin business.
A combination of continued interest east and west will be needed in the New Year to keep the market firm and possibly slightly stronger and of course, strong Chinese domestic demand will be needed to ensure export availability in the quarter does not depress the market.
Analysis of urea prices in 1995 – 2014 years