25/12/19
Viewpoint: Amsul to steer Brazil’s N imports in 2026
Viewpoint: Amsul to steer Brazil’s N imports in 2026
London, 19 December (Argus) — Ammonium sulphate imports will continue to match
urea imports in Brazil next year, as high urea prices and increased availability
of amsul have been steadily leading farmers away from the former and towards the
latter. Brazil's urea imports have historically been 2mn-3mn t/yr higher than
its amsul imports, but urea's lead has eroded as amsul has become more
affordable for farmers. Amsul is also more easily available and has less
volatile pricing. Brazil's amsul imports almost tripled over 2018-24, rising to
more than 6mn t/yr, while urea imports increased by almost 2mn t/yr to around
8mn t/yr over the same period. Argus- assessed amsul prices averaged $178/t cfr
over August-November, which is when Brazil does its lion's share of its amsul
buying, in line with the same period last year. Amsul prices averaged $244/t cfr
over August-November 2020-24. Brazil imported nearly equal volumes of urea and
amsul in January-November this year, at around 6.7mn t of each product, trade
data show. Going into 2026, Brazil will maintain its position as the only market
capable of absorbing leftover amsul in the market, but Chinese output will
probably fall next year, which could compensate for some Chinese supplies being
redirected to Brazil and away from other regions. Mexico re-imposed an $181/t
import duty on Chinese amsul on 25 November. The onset of the EU's carbon border
adjustment mechanism from 1 January may keep European buyers away from Chinese
imports, at least in the first quarter. Depending on the specifics of the
regulation, some Chinese amsul producers may be rendered uncompetitive in the
European market. Meanwhile, the Chinese caprolactam-grade amsul industry is
likely to adopt a more "self-disciplined" strategy next year, keeping operating
rates below 80pc and being more cautious to commit to contracts of
affreightment. Most compacted amsul shipments from China to Brazil are covered
by contracts of affreightment, which can lead to a build-up of unsold amsul in
Brazil during the peak season, which may pressure equivalent urea purchases or
offers. Buyers usually expect the price per nitrogen unit to be lower in amsul
than urea, as amsul requires additional logistical and operational costs to
bring the fertilizer to the fields and to apply. Twice the volume of amsul is
required compared with urea for an equivalent amount of nitrogen. Affordability
has been a key concern globally this year, with record highs for urea prices.
Brazil is no exception, with the Argus nitrogen affordability index for Brazil
averaging 0.87 over January-November, compared with 1.05 in the past four years.
The lower the index, the worse fertilizer affordability is for farmers against
their crop sales, making lower-cost nitrogen sources such as amsul more
attractive. Weather conditions also affect urea-amsul substitution. Amsul is
less volatile than urea, with the latter losing its nitrogen content easily
during heatwaves or period of heavy rainfall, reducing the amount of nutrient
available for the crop. Amsul can be stored more easily for long periods in
warehouses compared with urea, which is more sensitive to heat. Availability and
pricing are important considerations but there are a few barriers to amsul
increasing its market share against urea. Corn is the main crop that can
substitute urea with amsul. But falling corn prices are discouraging farmers
from investing in the crop. Using more amsul over a long period can change the
acid-to-alkaline balance of the soil, hampering yields, market participants
said. The extent to which amsul can be successfully substituted depends on the
region, the soil specifications in each field and which other fertilizers are
being combined with it in NPK blends. Brazil can successfully swap amsul for
urea as a raw material for most blends, but not those with single super
phosphate, as the combined sulphur content would be too high. The availability
of suitable trucks has also been a concern this year, preventing inland amsul
transport. Record grain exports will continue to compete with fertilizer imports
for trucks at Brazilian ports in 2026, meaning urea will be easier to transport
as half as much is needed compared with amsul. Lastly, Brazil's fertilizer
storage capacity is small and fertilizers compete with agricultural products for
warehouse space, preventing large volumes being imported. By Upasruti Biswas,
Gisele Augusto and Bruno Castro Brazil's amsul vs. urea imports mn t Send
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