Urea Prices Surge in European Market, Decline Marginally in North America

In the first half of September 2023, Urea prices experienced a significant surge in the European market. However, the prices declined marginally in the North American region. This substantial price increase can be attributed to a combination of factors, including supply chain disruptions, a resurgence in demand from the international market, and an increase in freight charges. Additionally, there was a notable rise in the cost of the crucial feedstock, Ammonia, in Europe, significantly contributing to the overall price escalation of Urea. Further, the surplus material availability in the USA market also supported the price decline.

Urea prices declined marginally in the USA during the first half of September 2023. This was due to the surplus availability of the material in the market. Demand for Urea from the domestic market was stable during this time period. However, amidst the ongoing Hurricane Idalia, production activities in many parts of the country were halted, prompting Kinder Morgan to temporarily close its Port Manatee, Port Sutton, and Tampaplex terminals, all of which handle fertilizers, including Urea. This has led to a surplus availability of material within the country. However, prices of essential feedstock Ammonia were increasing during the same timeframe. Additionally, as per data from the Bureau of Labor Statistics, the CPI index of the country rose by 0.6% in August, along with a 0.1% rise in the Natural gas index.

On the other hand, Urea prices experienced a substantial upswing in the European region during the first half of September 2023. The increasing price of feedstock Ammonia and upstream Natural gas contributed to the current price escalation. Procurement orders from the regional market remained strong during this period. Consumers were busy building up their stocks in anticipation of the upcoming planting season for Wheat, Rye, and Barley in the local area. Additionally, in the face of mounting inflationary pressures, manufacturing facilities were operating at reduced capacity, resulting in a scarcity of materials in the market. Furthermore, this month, Russia imposed export duties on Nitrogenous fertilizers, including Urea, which dampened international buyers' enthusiasm. Interestingly, Russian producers are now active in the US market during this period due to the high local prices, which allowed them to protect their profit margins.

According to data from the Russian Fertilizers Production Association, Russia had fulfilled 80% of its annual supply of fertilizers by the first half of September. Moreover, there was a current shortage of spot availability in the Urea market because producers were primarily focused on meeting existing supply contracts, exacerbating the supply situation.

According to ChemAnalyst, Urea prices will increase in North American and European regions in the forthcoming months. This price escalation of Urea can be attributed to the increased feedstock Ammonia and upstream Natural gas prices. Further, the downstream fertilizer sector expects a modest resurgence in demand.