FAO/GIEWS - Food Outlook No.4 - October 2001 p. 15

Fertilizers

Urea spot prices in international markets remained stable over the past few months. Prices are between 15 and 20 percent lower than a year ago. However, there are some regional urea supply shortages and in those parts prices remain firm. Production in the Arab Gulf, Argentina and Venezuela is low due to plant turnarounds. The domestic market in Indonesia is very tight and exports may resume only in December. Demand in Latin America is strong. Producers from the Baltic Sea region and the Black Sea region are

supplying Latin America. The government of India is reportedly planning to approve an import allocation of 300 000 to 400 000 tonnes of new purchases. Viet Nam has entered the market for large quantities of urea from various sources. China will become a full member of WTO in January 2002 and permit fertilizer imports by state and non-state purchasers. A more market driven fertilizer sector should emerge within the next five years. At present urea exports from China are low, however, exports could increase in the fourth quarter of the year. The Arab Gulf producers are expected to meet demand from India, Viet Nam and Sri Lanka. The United States increased domestic production due to lower gas prices.

Ammonia prices decreased slightly in the Caribbean and the Near East, while prices increased by about 20 percent in eastern European countries over the past few months although they are between 10 and 30 percent lower than last year. India is in the market for a tender of 15 000 to 20 000 tonnes. The European fertilizer season is imminent and European buyers envisage purchasing not only from the Black Sea but also from Trinidad. Jordan is supplying considerable quantities of ammonia to fertilizer producers in Turkey and South Africa. The United States has taken up production again, which affects ammonia imports.

International spot market prices for ammonium sulphate in the last few months have been stable. Prices are, however, up 20 to 28 percent compared to a year ago.

Diammonium phosphate (DAP) prices remained stable from August to September. DAP prices are between 15 and 20 percent lower when compared to prices in the same period in 2000. Buyers in India will reportedly enter the market only in the fourth quarter as imports reached some 1 million tonnes in the first half of 2001. Pakistan imported 400 000 tonnes DAP,

which is sufficient to cover the expected demand in the Rabi season and importers focus on the sale of existing stocks. DAP now also attracts a 15 percent sales tax on all locally produced and imported fertilizers. China established a DAP import quota of 700 000 tonnes DAP for the second half of 2001. The United States maintains low production levels in view of adequate existing stocks. Near East and North African suppliers have scheduled exports to France, Pakistan and Turkey. CIS producers supply the European market, but demand in Europe is slow and demand in Latin America is decreasing.

Prices for triple superphosphate (TSP) are stable and remain 8 to 12 percent lower in comparison with prices in 2000. Tunisia exports TSP to France. Italy is importing 20 000 tonnes more than last year.

Muriate of potash (MOP) prices have remained relatively stable over the past few months, although there is a slight decline compared to a year ago. Unofficial Chinese sources report a MOP import quota of about 2.1 million tonnes. Although Brazil has reportedly been purchasing large quantities, shipments will slow down to avoid having large stocks at the year-end. Japan has negotiated MOP supply with producers from Canada; imports will be at the same level as last year. Demand in Indonesia and Malaysia started to increase since the recovery of palm oil prices mid 2001, when the palm oil prices rebounded, however, MOP demand fell.

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

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