The urea market continues its bullish run, triggered by larger than expected demand from India
Urea is the most concentrated solid nitrogen fertiliser (46%) and the most commonly used in large scale agriculture. Demand for urea has grown significantly over the last 50 years and now accounts for around half of the world’s use of manufactured nitrogen fertiliser.
Key import markets include India, Brazil and the US. Recently, India was successful in its 5th consecutive urea import tender, securing 2.8m tonnes of the commodity. “India is short of urea, and needs to buy at least another 4m tonnes over the next five months”, according to ICIS (Independent Commodity Intelligence Services). Looking at stronger than usual Indian demand and limited stock availability, it is being anticipated that the global urea market will continue to be extremely volatile in the coming months. Brazil and India are the main countries affecting price volatility as demand coming from both countries was resilient during the summer months of July and August, with cargoes priced at higher levels. As of today, orders of urea in bulk to India and Brazil represents ca. 50% of global demand.
The Black Sea and Arabian Gulf are the most significant export hubs and compete aggressively on prices in the very opaque market of fertilisers.
On the one hand, the Black Sea exporters will prevail in the market if demand for Urea is driven by LATAM/Europe/Africa. On the other hand, if demand comes from Asia/North America then the Persian Gulf exporters will see increased business volumes.
Urea prices have been subjected to the volatility that currently impacts the broader commodity markets globally. Prices per tonne have increased by $15 within the last 3 months. Short-term optimism driven by Indian demand and price increase are reflected on the following graph: “Urea Prices* vs. Shipfix Urea Index”.
The Shipfix Urea Index predicts movements urea order volumes and therefore also directional price movements in a rational market. Our data offers strong signals on urea prices up to two month in advance. As of today, we are seeing a strong increase in urea orders globally and we should expect urea prices to keep growing in the short/medium term.
The Shipfix Urea Index is backed by a strong correlation to UN Comtrade data (United Nations International Trade Statistics Database) over the years, with a main differentiating point - Shipfix is able to provide end of day data, whilst UN Comtrade data is typically published with a delay of between 12-18 months.
To find out more about Shipfix data insights, contact the Shipfix team today.