Firm urea and potash prices heading into IFA conference

Reduced supply and strong demand has seen Asian urea values strengthened as the IFA Crossroads conference approaches.

Buying activity in Sri Lanka, Bangladesh, Pakistan and India will likely consume much of the available tonnes from various supply origins over the coming weeks, including the Mideast Gulf and China.

India is expected to tender again in November requiring in the region of 1mn t to cover its kharif seasonal demand.

This strong south Asian demand has coincided with reduced supply from southeast Asia and a revival of buying in Vietnam.

Regional producers Petronas, Pupuk Kaltim and PVFCCo have turnarounds either underway or upcoming, which is cutting regional supply.

Vietnam at the same time has started importing urea as it prepares for the Mekong Delta region fertilizer season to commence, probably at the end of October or early November, after a delay because of heavy rainfall and flooding.

The net result is rising urea prices in Asia and a reversal is not expected in the short term looking at the regional supply-demand outlook.

Asian potash prices are similarly firm on the eve of the regional conference, which is being staged in Singapore this year.

As yet there has been no tangible impact from the additional MOP supply coming from Russia and Canada, as spot prices have trended steadily higher over recent months.

Bolstered by the $60/t increase secured in the annual China contract, MOP suppliers are looking to build on the momentum during the southeast Asian plantation tenders.

The current round of tenders has just been called in Malaysia, requesting MOP for delivery during the first half of 2019. Suppliers are targeting substantially higher sales prices, with offers in excess of $310/t cfr for standard MOP on a local currency equivalent basis.

In Indonesia, awards are pending under Petrokimia Gresik's tender requesting an unspecified quantity of standard MOP (probably around 400,000t) for delivery on November-April, and Sinar Mas' tender for 85,000t of MOP for shipment through to the end of January. Higher prices are widely anticipated by market participants when awards start to be issued as there are a lack of lower-priced alternatives.

The Asian phosphates market is more finely poised and lacking a clear price direction.

The fourth-quarter phosphoric acid contract agreement in India saw a modest increase, which could theoretically boost DAP imports. But India has largely covered its seasonal demand for now.

Chinese producers are well committed and more focused domestically for the time being.

Australia is slowly moving into season, pulling in Chinese and Jordanian tonnes. Further discussions will take place this week, as importers look to ensure arrivals for the first quarter.

The market trend is overall stable to slightly weaker amid relative inactivity.