FAO/GIEWS - Food Outlook No.1 - February 2002 p. 11

Fertilizers

International Urea spot prices remained stable through December 2001, but there was a peak in early January. With the spring season approaching, demand in Europe and Latin America is increasing, but purchases have been postponed in anticipation of price reduction. Mexico is supplying Colombia, Ecuador and Peru. Production in Venezuela is full scale. Turkey has entered the market for 25 000 tonnes. China announced that the 1.3 million tonnes imported urea would be subject to 4 percent tariff as per WTO agreement with VAT equalized with local production at 6.5 percent (formerly 13 percent). Chinese importers may re-export urea if prices outside the country are better than the local ones. Viet Nam is entering the market and mainly concentrating on buying from Indonesia. The domestic demand in Indonesia is declining and exports are expected to increase. Export prices from the Black Sea region rose in the first week of January, but are now decreasing. In the Baltic Sea region availability is restricted until the second half of

February due to logistic constraints and production outage in Romania. Egypt is supplying a large proportion of its production to the domestic market, leaving the situation for exports tight. Arab Gulf producers have competition from Pakistan, Indonesia and the Islamic Republic of Iran. They have commitments in Australia, the United States and South Korea. The domestic market in the United States is weak and prices for export are not competitive.

Ammonia prices have decreased by 6 percent from November 2001 to January 2002. Russian Federation product remains on offer at the bottom of the range, putting pressure on the Ukrainian government to reduce its minimum price. Indonesia had to shut down a few plants due to technical problems. Markets in Europe are quiet. Low United States gas prices contributed to the fall in ammonia trade, as United States producers preferred to make ammonia instead of importing it.

International spot market prices of ammonium sulphate were some 12 - 14 percent higher in the western Europe and US Gulf markets in January compared to the same period in 2001. In eastern Europe, there was a decrease at around 9 percent.

Diammonium phosphate (DAP) prices showed a slight decrease in the beginning of 2002 compared to a year earlier. In Mexico production has stopped until May and its domestic demand will be sourced from the United States. The season in the United States is expected to start and demand will be high in March-May. It is possible that prices will rise. The Russian Federation is reportedly supplying Latin America, while Jordan is supplying Malaysia. However, the impact of the crisis in Argentina on the demand in Latin America is unknown. Demand from Viet Nam and Pakistan is low in the presence of substantial stocks. India has not entered the market. The planting season in China begins in February/March and then Chinese spot buying may materialize. For North African and CIS producers European markets remain slow.

Prices for triple superphosphate (TSP) in January were between 1 percent and 6 percent less than a year earlier but remained stable from year end to January. TSP from the United States has been sold to Australia. Small quantities of Bulgarian and North African TSP are entering Europe. European demand is expected to increase in March/April. Bangladesh will enter the market, but there will be strong competition as China intends to increase its market share in Bangladesh.

Latest prices for muriate of potash (MOP) have decreased between 1 percent and 4 percent compared to the same period in 2001. Demand is starting again in Europe and the United States in the coming weeks for spring season planting. MOP demand in Latin America is increasing. In Turkey MOP prices are slowly recovering. In China the stocks are reportedly still high and local prices of imported material remain under pressure. China's WTO obligations include a 3 percent import duty on MOP. MOP prices in Malaysia continue to sink. Although palm oil prices have been increasing, there is not yet a larger demand. Several imports are scheduled in Indonesia, Japan and Taiwan.

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

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