FAO/GIEWS - Food Outlook No. 5 - Rome, December 2001 p. 14

Fertilizers

Urea spot prices in international markets remained mostly stable in October and November. Average November prices were between 3 and 10 percent lower than a year ago. China has entered the market for substantial quantities. A Value added tax of 13 percent will be charged on imports of urea (half of this to be refunded) and the import duty will be 4 percent. The urea market was already tight before this event and prices are expected to go up in the Baltic and Black Sea regions as a result. Producers in the Arab Gulf are foreseen to benefit from this price increase. Arab Gulf producers will supply 5 000 tonnes to the Islamic Republic of Iran, but from December through March will supply about 4 000 tonnes a month to the domestic market. South Korea will reportedly replace domestic production next year by imports. In Viet Nam domestic demand for urea is expected to strengthen in November/early December as the season in the North starts early February. The EC has published definitive anti-dumping duties for urea exports from nine countries showing increases in the provisional duties announced in July. Turkey has cancelled its plans for export as bids were low compared to prices in the domestic market. In Latin America, there is demand for large quantities of urea, but some sales may not materialize due to the tight situation in the Baltic and Black Sea regions. Urea demand from farmers in the United States is modest, and Canada is targeting the Mid-West for its excess inventories (380 percent up compared to last year).

Ammonia prices remained stable among eastern European countries over the past few months, but decreased slightly in the Caribbean and the Near East. On average the prices are 30 percent lower than last year. The December market looks weak. Price corrections are taking place in the US, the Caribbean and South East Asia. India is purchasing large quantities.

International spot market prices for ammonium sulphate fell slightly in eastern Europe in the last few months while they have been stable in the US Gulf and western Europe. Prices are, however, up 4 to 26 percent compared to a year ago. Turkey is in the market for 12 000 tonnes.

Average Fertilizer Spot Prices (bulk, f.o.b.)

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

Diammonium phosphate (DAP) prices remained stable from September to November. DAP prices are, on average, between 8 and 14 percent lower than a year ago. China will be officially a member of the WTO in December 2001. Its quota for DAP in 2002 is indicated at 5.4 million tonnes. The Chinese government will impose tariff rates (4 percent within quota and 50 percent on imports above quota) anticipating an increase in private sector buying. Pakistan is purchasing large quantities to catch the end of the Rabi season. Pakistan will probably come back into the market by January for the Kharif season. In India subsidy on domestic DAP has been reduced, while that on imported DAP has been increased. The government is planning to link their pricing to import parity from April 2002 onwards, thus natural gas prices are likely to double from that date. Morocco is supplying China, Iran, Pakistan and New Zealand. Suppliers in the Russian Federation have scheduled exports to Ethiopia. Their DAP exports are 20 percent lower than in 2000. The planting season in Iatin America is over, but Mexico ,may still be in the market as following a hurricane it's DAP plant is not operational. The demand in Europe is weak. The domestic market for DAP in the United States has been relatively quiet, but the US might export to Australia.

Prices for triple superphosphate (TSP) in November are down by 2 to 6 percent compared to 2000. Tunisia exports TSP to Bangladesh, but due to lower demand in Brazil and Iran, exports fell by 16 percent during the period of January to October.

Muriate of potash (MOP) prices in November are about 3 to 4 percent lower world-wide than a year ago, and remained stable in the last few months. During most of 2001 demand was reduced, but prices have remained stable as producers cut back their supplies. Germany is supplying India. Malaysia has prepared tenders, but the quantity to be imported is not clear yet. Production in Europe will be lower than in 2000 due to the winding down of the mine in France and a dip in production in Spain and the UK. Imports in Brazil are estimated to be about 12 percent lower than in 2000.