Fertilizer Prices Are Falling in the Global Market Due to Weak Demand
- 02-Aug-2022 4:10 PM
- Journalist: Jung Hoon
For the last week of July 2022, Fertiliser prices remained largely down, according to ChemAnalyst. This lower push has now persisted for seven consecutive weeks. Comparing this, urea levels were 10% lower. The average cost per tonne of nitrogen fertilizer was $861. DAP cost $1,030 per tonne, MAP $1,052 per tonne, 10-34-0 $904 per tonne, anhydrous $1,449 per tonne, UAN28 $606 per tonne, and UAN28 $701 per tonne.
Urea prices in the United States have been falling since last month as upstream nitrogen values in the country have plummeted. According to sources, nitrogen values have dropped by 30% in the international market. Prices have also fallen in the domestic market due to lower demand and fewer offtakes. Furthermore, the situation between Russia and Ukraine is far from over, and the global fertilizer business will continue to be impacted by the worldwide supply chain gap.
On Thursday, U.S. natural gas futures fell below $6 per million Btu after an inventory report revealed a larger-than-anticipated storage build, igniting concerns about an oversupplied market. Henry Hub futures saw a 16.53 percent loss to close at $5.42 per million BTUs. The contract experienced its worst month since December 2018 in June, when prices fell by 33%.
The price of Urea in the Saudi Arabian market plummeted during July as demand from the downstream fertilizer industry shrank in recent weeks. The western hemisphere's fertilizer supplies appear adequate, and downstream fertilizer costs have stabilized or even declined modestly. Current nitrogen prices indicate that nitrogen fertilizer costs may decrease even if urea prices have steadily fallen. The expected price for urea FOB Al Jubail was USD 716/M.T., down 2.5% from the previous week.
Urea remained affordable in the United States, a major importer of all vital crop nutrients, leading farmers to choose less expensive crop nutrients this year. This will ease the strain on food spending that has increased consumer prices. Gas prices in Europe, a significant factor in determining the fertilizer cost for farmers, plunged in July by about 10% in the USA.
As per ChemAnalyst, "Even though gas prices in Europe are three times higher than last year, the drop in gas prices has increased confidence that fertilizer prices will also drop. The global supply of Urea is anticipated to increase to aid the fertilizer market."