FAO/GIEWS - Food Outlook No.4 - September 1999 p. 12

FERTILIZERS

Urea spot prices in international markets remained stable over recent months, and are between 11 and 25 percent lower than one year ago. Urea supplies in the Russian Federation are tight due to production disruption and fuel shortage that cause delivery delays. Heavy flooding in the Philippines has impeded seasonal demand for urea. The government of Pakistan is exploring the feasibility of reducing urea imports by imposing import duties to reduce the price differential between urea and phosphate fertilizers in an effort to foster more efficient fertilizer application. Additional urea imports of approximately 125 000 tonnes in India will meet seasonal demand and compensate for lower domestic ammonia production. In Indonesia export licences have been issued for the third quarter for up to 180 000 tonnes. Domestic stocks in Viet Nam are adequate and imports from CIS countries will arrive in September. Imports in many Latin American countries are high. Imports in Mexico, however, are low in anticipation of an anti-dumping decision on CIS urea imports. Credit restrictions in Brazil continue to impede urea imports after the devaluation of the Real in 1998. Urea demand in the United States remains low until the autumn planting season. Anti-dumping measures on urea imports from CIS countries are expected in August. Many plants are running at 50 percent capacity and urea prices are not likely increase in the short term.

Ammonia prices increased world wide due to a shortage of the product in the Ukraine and North and Latin America. Algerian production capacity is temporarily lower for technical reasons. India will increase ammonia imports from various sources to meet demand resulting from an expansion in urea production. Demand from Asia, the Middle East and the United States is strong.

International spot market prices for ammonium sulphate in the U.S. Gulf are considerably lower than in 1998. Prices are about 23 percent higher in eastern and western Europe compared to one year ago. Prices in the last few months have been stable.

Diammonium phosphate (DAP) prices fell slightly in July and were on average about 10 percent lower than in mid-1998. The downward trend in international spot prices may continue until China enters the market in the fourth quarter. High inventories are delaying issuance of import quotas. Pakistan estimates its seasonal Rabi planting requirements at 600 000 tonnes which will largely be met from carryover stocks and domestic production, with any shortfall to be covered by imports. Near East and North African suppliers have scheduled exports to Brazil, China, Malaysia and the Philippines. There are concerns in India over possible oversupply as demand declined due to weak rains in parts. Russian and Mexican suppliers are at present fully committed to export DAP to New Zealand, India and some Latin American countries. The DAP market in the United States is calm, inventory levels are high and the demand in the autumn is weak.

AVERAGE FERTILIZER SPOT PRICES (bulk, f.o.b.)

Prices for triple superphosphate (TSP) fell by 12 percent compared to 1998. Morocco exports a large volume of TSP to the Islamic Republic of Iran. Prices for North African TSP are unlikely to increase in view of reduced demand in Brazil. France and Italy are expected to enter the market in August/ September. In the USA, exports were down by 2 percent compared to 1998 due to decreased demand from Latin America.

Muriate of potash (MOP) prices in eastern Europe and North America are higher than one year ago, but in western Europe spot prices are at the same level. Potash producers continue with mine shutdowns to maintain supply/demand balance. Import quotas in China are around 4.2 million tonnes for the second half of 1999. Demand in Brazil, Europe and USA is weak. The Philippines, Indonesia, and Sri Lanka will enter the market to meet seasonal import requirements.