FAO/GIEWS - Food Outlook 97/01

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Urea prices declined in December 1996 reflecting a slowdown in import demand, and the fall in prices appears to have continued in early 1997. In China, urea imports have decreased following uncertainties regarding import duties and value added tax. Demand from India is also lower. Domestic production in India was up during the third quarter of 1996 and the demand for the winter planting season could easily be met from the ample available stocks. Demand from Vietnam is lacking, as private sector dealers encounter difficulties in arranging finance for imports, and the considerable stocks carried forward are considered adequate to meet immediate needs. To avoid inventory build up, Indonesian traders exported urea to various countries in Asia and inventories are low. Exports to Thailand, China, Vietnam and the Philippines are scheduled before the end of the first quarter in 1997. Export allocations are as yet to be determined. Markets in the United States and Argentina are expected to become active after February. Current fertilizer stocks in Argentina are reportedly high. In Romania, urea production has been adversely affected by reduced natural gas supplies from Russia and factories have been operating at half capacity.

Ammonia prices recovered during the second half of 1996 to over U.S. $ 225 per ton, a level similar to one year ago. Industrial demand for ammonia, and in particular demand in the United States, has led to a strengthening of ammonia prices relative to those for urea. New capacity is becoming operational, in particular in Pakistan, India, Bangladesh and China. When construction in India is completed by the turn of the century, the country may become a less prominent ammonia/urea importer. Globally there is no trend to be distinguished in new plant size, since both large and small plants continue to be built. Ammonia prices are expected to fall further in 1997 due to ample supply and the continuation of the supply of Russian natural gas to other former USSR countries at the same price as in 1996.


1997 1996 Change from
last year 1/

January January December

( . . . . . . . . . . . . U.S.$/ton . . . . . . . . . . . . . ) ( . percentage . )

eastern Europe 168-170 193-202 170-172 - 14.4
Middle East 180-183 211-216 182-185 - 15.0
Ammonium Sulphate

eastern Europe 72-74 62-64 73-76 + 15.9
U.S. Gulf 72-75 65-73 72-75 + 6.5
western Europe 75-78 67-71 75-78 + 10.9
Far East 106-108 107-108 106-108 - 0.5
Diammonium Phosphate

Jordan 227-230 254-260 227-230 - 11.1
North Africa 219-223 255-260 220-225 - 14.2
U.S. Gulf 209-211 237-240 210-212 - 11.9
Triple Superphosphate

North Africa 180-185 168-175 181-185 + 6.4
U.S. Gulf 180-185 168-173 180-185 + 7.0
Muriate of Potash

eastern Europe 85-95 78-90 83-95 + 7.1
Vancouver 116-125 116-123 117-125 + 0.8
western Europe 101-116 102-115 106-116 -

SOURCE: Compiled from Fertilizer Week and Fertilizer Market Bulletin.
1/ From mid-point of given ranges.

Diammonium phosphate (DAP) prices continued to be rather strong and relatively stable fueled by demand from China. Although prices in the DAP market were maintained with relatively few transactions, DAP prices are now showing a slight downward trend below U.S.$ 210 per ton. Demand in the United States is expected to increase in anticipation of spring planting. No major changes are likely in the DAP until India enters the market. Phosphate fertilizer consumption and production in India has been lower when compared to the previous year and fertilizer imports may be deferred to after the arrival of considerable wheat imports to avoid possible port congestion. In Europe there is very little immediate demand at the moment for DAP.

International potash prices showed a modest decline when India and Malaysia secured their requirements towards end-1996. However, demand from China continues to be strong, while Canadian suppliers encounter logistical difficulties due to poor weather conditions.

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