Global Urea Market improves in February 2024 taking Support from Reviving Demand
Global Urea Market improves in February 2024 taking Support from Reviving Demand

Global Urea Market improves in February 2024 taking Support from Reviving Demand

  • 07-Mar-2024 3:19 PM
  • Journalist: Rene Swann

Global Urea market experienced an optimistic market sentiment throughout February 2024. This price surge is primarily attributed with shortage of supplies, reviving demand, heightened freight charges amidst persistent trade uncertainties due to blockage in essential trade route Red Sea and Panama Canal.

The European Urea market showcased an optimistic outlook throughout February 2024, continuing the trend observed in the previous month. Despite facing adverse weather conditions across Europe, Urea prices experienced further increases, reaching their highest levels since November 2023. This upsurge in prices can be attributed to several key factors.

Firstly, there was a swift return of buyers gearing up for spring agricultural work, contributing to heightened demand for Urea. Further, persistent tensions in the international market and dwindling stocks exerted upward pressure on prices, further bolstering market sentiment. Mixed weather conditions prevailing across the region influenced purchasing patterns. In the Russian Federation, favourable soil moisture levels resulting from ample precipitation stimulated demand for fertilizers, despite dry conditions persisting in parts of the Caucasus region.

Furthermore, ongoing attacks on maritime vessels in the Red Sea, albeit reduced, prompted vessel owners and operators to reroute shipments, leading to increased shipping charges. Consequently, traders responded by raising prices for various fertilizers, including Urea Ammonium Nitrate, to safeguard their profit margins amid these logistical challenges. A notable event on February 18th exacerbated the supply situation when a cargo ship flying a Belizean flag and operated by a Lebanese firm, carrying combustible fertilizers, sank in the Red Sea after being struck by an anti-ship ballistic missile, as confirmed by the US Central Command (CENTCOM). This unfortunate incident led to further disruptions, including delayed shipments and destruction of fertilizer stocks.

The interaction of these elements led to an expanded disparity between demand and supply, thereby bolstering the continuous increase in prices in the European Urea market. Overall, these dynamics underscore the complex and volatile nature of the fertilizer market, influenced by both domestic and international factors.

Similarly in South America, Urea prices have surged due to optimistic market sentiments, mirroring the trend observed in the previous month. This increase in prices is primarily driven by a revival in demand from the downstream fertilizer sector, compounded by trade uncertainties and heightened freight charges.

Throughout February 2024, there was a modest resurgence in Urea demand, fuelled by the impending spring planting season and recent rainfall. The commencement of harvesting for spring-planted crops and the beginning of sowing for summer crops under favourable weather conditions further contributed to the increased demand for Urea.

However, a shortage of imported Urea was observed in the Brazil market, factors such as stagnant water levels in Panama's Gatun Lake and reduced daily vessel transits through the Panama Canal contributed to delays and reduced shipments of cargoes.

Additionally, ongoing attacks on maritime vessels in the Red Sea prompted vessel owners and operators to bypass the region, opting for the longer route around the Cape of Good Hope. This, coupled with disruptions in essential trade routes, led to delayed and costlier shipments of cargoes to Brazil, exacerbating the shortage of imported Urea in the region. 

As per analysis by ChemAnalyst, Urea market is expected to prevail downward trajectory in the forthcoming months amidst declining feedstock Ammonia prices and faded seasonal demand.

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