Rising fertilizer freight rates to pressure suppliers
Fertilizer freight rates on certain routes have begun to rise following a steady slide since mid-March, adding to the pressure on some phosphates suppliers' fob levels.
Freight rates to ship phosphates posted the largest weekly increase in recent months, as fuel oil bunker prices have begun to rise since hitting lows at the end of April.
Argus has examined the cost of shipping in four key phosphate trade routes — three to Brazil from Morocco, US and Baltic ports, and one from Saudi Arabia to India. The average cost of freight rose by $1.25/t this week, Argus calculates, up from modest rises of $0.25/t in the previous two weeks.
Phosphate fertilizer suppliers' netbacks had benefited from the Covid-19 outbreak, because of the ensuing fall in trade, the collapse of energy prices and the accompanying drop in freight rates. Rates across these four routes had fallen for seven weeks in a row prior to the recent rises, from the second half of March to the end of April. The cost of shipping fell by an average of $9.50/t in those seven weeks.
But fertilizer shipments to major markets continued, despite lockdowns. Many governments designated fertilizers of strategic importance in the wake of the coronavirus outbreak, given the role they play in the food chain.
But finished phosphates freight rates began to reverse this trend at the start of May, as marine fuel prices ticked up. The price of bunker fuel, with a 0.5pc sulphur content, in Singapore — widely viewed as a benchmark of marine fuel prices (see chart) — began to pick up from the end of April, supporting freight rates.
A continued rise in freight rates could threaten suppliers' fob levels in the coming weeks, as major phosphate import markets Brazil and India seek to secure tonnage. Phosphate prices have been under pressure since the end of March, and competition is ramping up in these markets among suppliers, particularly east of Suez.
But MAP prices in Brazil increased this week to $300-308/t cfr, following a drop from the mid/high-$320s/t cfr in the second half of March. Another round of MAP purchases is expected to pick up in the coming weeks ahead of application to the safra soybean crop in September, and the window for purchases is closing. But any modest rise in cfr levels could equally be cancelled out by increasing freight rates.
Related news posts
Japan’s Mol orders dual-fuel LPG, ammonia VLGCs
Japan’s Mol orders dual-fuel LPG, ammonia VLGCs
Tokyo, 16 May (Argus) — Japanese shipping firm Mitsui OSK Lines (Mol) has ordered two dual-fuel very large gas carriers (VLGCs) to deliver LPG and ammonia, with commissioning expected in 2026. Mol has reached a deal with TotalEnergies' shipping arm CSSA Chartering and Shipping Services to charter two 88,000m³ VLGCs to deliver LPG and ammonia, although the specific time period is undisclosed. The vessel will be built by South Korean shipbuilder Hyundai Samho Heavy Industries, which has developed an engine that can use LPG and fuel oil. Japan's LPG consumption totalled 11.8mn t in the 2023-24 fiscal year ending 31 March, down by 3.2pc from a year earlier, according to the Japan LP Gas Association. Japan's trade and industry ministry expects the downwards trend will be driven further by technology innovation of high efficiency equipment. But its expects ammonia demand as a fuel to increase to 3mn t/yr by 2030 and to 30mn t/yr by 2050. Japan has set a goal of a 20pc ammonia co-firing at domestic coal-fired power plants by 2030 and above 50pc by 2050 to achieve the country's 2050 decarbonisation goal. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s IPL fertiliser sale process 'advanced'
Australia’s IPL fertiliser sale process 'advanced'
Singapore, 16 May (Argus) — Australian chemicals and fertilizer producer Incitec Pivot (IPL) said the sale of its fertilizer business, first proposed last year, is now in "advanced negotiations". The potential sale of Incitec Pivot Fertilizers (IPF) to Indonesian producer Pupuk Kalimantan Timur (PKT) is subject to agreeing and executing final binding transaction documents, although there is no certainty that any deal will be reached or that any sale will occur, IPL said its financial report for its October 2023-March 2024 half year on 16 May. While IPL considering the sale of its fertilizer unit first emerged in July 2023, it was unclear who the interested buyers were. PKT is a subsidiary of state-owned fertilizer group Pupuk Indonesia Holdings and has production capacity of 2.74mn t/yr of ammonia, 3.43mn t/yr of urea and 300,000 t/yr of NPKs. Should the deal eventuate, the Indonesian producer intends to continue supplying fertilizers to Australia, support the retention of IPF's workforce and grow IPF's business in Australia, PKT confirmed to IPL. IPL reported a 77pc year-on-year fall in its first-half earnings before interest and tax (ebit) to A$10mn ($6.7mn). This was mainly attributed to the closure of Gibson Island that was producing ammonia, urea, granular ammonium sulphate and diesel exhaust fluid AdBlue, as well as reduced manufacturing performance at Phosphate Hill in Queensland with a capacity of 1mn t/yr of DAP, MAP and specialty products. But its distribution business was supported by firm demand and a well-managed fertilizer supply chain with its first-half ebit more than doubling from a year earlier to A$27mn, which partially offset a weaker manufacturing performance. By Huijun Yao Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
More Egyptian urea sold at $286/t fob for June loading
More Egyptian urea sold at $286/t fob for June loading
Amsterdam, 14 May (Argus) — Egyptian fertilizer producer Mopco has sold a further 25,000t of granular urea at $286/t fob for loading next month to a European market. The producer is now targeting $290/t fob. The deal follows business which emerged at a similar level today, with Mopco selling a total of 20,000t at $286/t fob to two trading firms, while fellow producer Alexfert sold 5,000t of granular urea at $287/t fob for June loading. Trading firms covering short sales across mainland Europe and Turkey have been driving these latest deals out of Egypt, with purchases taking place earlier in the week in the lower $280s/t fob. By Harry Minihan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India's RCF seeks key NPS and NPK grades
India's RCF seeks key NPS and NPK grades
London, 14 May (Argus) — Indian fertilizer importer RCF has issued a tender to buy 50,000t each of 20-20-0+13S and 10-26-26, plus or minus 10pc of the respective quantities. The tender is to close on 16 May, and offers must be valid to 22 May. The tender, which requests loading by 20 June, is open only to suppliers with which RCF has long-term agreements. The minimum offer quantity is 25,000t, plus or minus 10pc. Potential suppliers can offer either or both products. RCF late last month floated a tender to buy two 50,000t lots of 20-20-0+13S. It received one offer — of 50,000t from a trading firm — at $362/t cfr duty unpaid. But the offer was around $17/t higher than the price at which Saudi producer Ma'aden recently sold the grade to another Indian importer, and RCF scrapped its tender. RCF has not received a cargo of key NPK grade 10-26-26 since early November 2023, Argus data show. By David Maher Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more