Food Outlook No.5 - December 2002 p.14

Fertilizers

Urea prices generally strengthened in November compared to October, and the monthly averages were mostly close to their levels a year ago. The recent strengthening is attributed to reduced supply rather than increased demand. Increased imports into China from the Black Sea area caused temporary urea price increases, which in turn deferred urea purchases for the European market. Increased urea exports from Indonesia to East Asian markets limited potential price increases for Near East producers. Imports into Brazil, Mexico, and Ecuador from the producers in the Baltic Sea area sustained prices from that origin. Venezuelan exports to Europe and the United States have been maintained despite temporarily reduced production capacity. Domestic urea prices in China have increased slightly in response to enhanced urea demand from domestic manufacturers. Romania's urea supply is currently directed mostly towards meeting demand from Turkey. Given a likely diversion of natural gas supplies away from urea production, the opportunity to export to other destinations will be limited. Pending spring planting in the United States and Europe, no significant changes in urea prices are expected in the short term.

Prices for Ammonia from most origins remained unchanged over the past two months and generally well above the corresponding period last year. Product from the Caribbean and the Near East was some 50 percent up, and from eastern Europe about 30 percent up, compared to November 2001. Near East producers fetched particularly high prices when meeting demand in East Asia. Exports to South Africa and Jordan are expected to sustain current prices. Demand from India is currently low and no major imports are envisaged in the short term.

Prices for ammonium sulphate from the Black Sea region and western Europe hardly changed during the past two months, and in November were about 25-50 percent lower than a year ago. Black Sea producers met ammonium sulphate requirements in Malaysia and Viet Nam.

Diammonium phosphate (DAP) prices remained stable in the U.S. Gulf over the past two months and showed only a modest increase compared to the corresponding period last year. However, average November DAP prices in North Africa and the Near East were about 15 percent higher than a year ago. Domestic demand in the United States is likely to increase towards the spring planting season, which would support current price levels. Pakistan imported DAP from producers in the Near East and the Baltic Sea region. Viet Nam joined the ranks of DAP producers thus reducing its DAP import dependency. Southern European DAP demand is being met by North African producers. China are reported to have accumulated DAP stocks of over 1 million tonnes, and price developments in the immediate future will relate in particular to eventual exports to China and other Asian countries.

Triple superphosphate (TSP) prices continued to remain stable for North Africa and the US Gulf, and about 3-4 percent above last year's levels. Demand for TSP in Europe and in the Islamic Republic of Iran is being met through imports from North Africa. Bangladesh TSP requirements were met through imports originating from China and the US.

Average spot prices of muriate of potash (MOP) hardly changed over the past two months. Compared to November 2001, however, prices were down by about 7 percent in western Europe, and down slightly also in eastern Europe and North America. China is reported to be holding some 1.5 million tonnes of MOP stocks and further imports are uncertain in the near future. Ample MOP stocks are also reported in the United States and Canada. Demand for potash in Malaysia, the Philippines, and Bangladesh may support present potash prices.

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

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