|Global Market Analysis|
Urea spot prices continue to be substantially higher than the average prices recorded one year ago and prices are expected to remain firm. A review of stock availability, production capacity and demand during the forthcoming winter season in India has resulted in substantial import requirements. Facilities located close to ports in all major export regions continue to operate at full capacity. Local urea prices in China and Viet Nam have been increasing. Urea availability for export from China remains limited. In the United States’ production and inventories are higher than a year ago in anticipation of planting in the fall. In Japan, Pakistan and the Republic of Korea urea application declined in the first half of 2008 compared with last year. There is little supply available from the Russian Federation and supply capacity from the Baltic might be further temporarily reduced. The price firmness is expectedto remain unchanged in the near horizon.
Ammonia prices in Asia and the Middle East continued to decline while they are stable in the Black Sea region due to a temporary reduction in supply. In the Ukraine, supply capacity was temporarily taken out of production. Europe is expected to augment ammonia imports from various sources in addition to the supplies secured from the Middle East.
Diammonium phosphate (DAP) prices showed an increase and reached an unprecedented level not observed in ten years. High crop prices are likely to result in expanded grain planting and associated DAP demand. DAP demand has been particularly strong from India and Pakistan to secure adequate supply for the winter season. In Pakistan domestic supply capacity has been expanded by the deferral of earlier scheduled temporary maintenance. In the United States’ demand will also increase to meet winter planting requirements while reduced demand in Argentina and Brazil will slow down imports. Production in the United States shows little change compared with a year ago, but exports, however, have been considerably lower. Earlier DAP imports in Brazil showed significant growth in response to increased demand. China’s exports showed an expansion that is unlikely to be substantial in the near future due to the imposition of an export tax and the need to meet seasonal domestic requirements to recover from adverse weather conditions. The Near East and North Africa supply is scheduled to reach Europe.The slightly upward trend in international spot prices is somewhat offset by lower demand. DAP prices are foreseen to remain high and stable in the short term.
Muriate of potash (MOP) prices in Europe are much higher than registered one year ago and now command a premium over the North American counterpart quotation. Price increases in the domestic markets of Brazil and Southeast Asia have been more dramatic. Demand in Europe remains strong. In India discussions are ongoing to accord fertilizer subsidies by fertilizer nutrient rather than fertilizer product. This may eventually lead to a wider product range available to the Indian farming community. MOP prices are reportedly expected to show a slight increase.
Fertilizer spot price ranges (bulk f.o.b., USD/tonne)
Source: Compiled from Fertilizer Week and Fertilizer Market Bulletin.
1 From mid-point of given ranges.
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