Insights on the global ammonia market - looking back at April 2017
The international ammonia price climb has come to a halt during. Improved availability from the Black Sea with good product flow from the TogliattiAzot plant, Rossosh pumping ammonia to the port of Yuzhnyy during April as well as the restart of the OPZ plant in Ukraine, covered the earlier tightness in the typical markets for Black Sea ammonia. Urea production has been halted at OPZ around 20-21 April due to poor market conditions and two ammonia plants continued to run with producer’s strategy to focus entirely on ammonia for the time being.
Spot availability remained scarce out of the Baltic terminals of Sillamäe and Ventspils and only one spot deal has been concluded in the second half of the month by Uralchem and OCI for 11,000 t lifting in May at mid-$330 fob Ventspils.
Spot volume remained limited in the Middle East as the Qafco 6 ammonia/urea plants in Qatar were offline during most of April and Muntajat faced some shortness, which was eventually covered from Saudi Arabia. However, as of late April, some Middle East suppliers reported low probability of spot offering in the market during May as most tonnes are already committed under contract obligations.
Reduced output from Sorfert Algeria, where the merchant ammonia line has been under prolonged maintenance during April, has not stopped the downward pressure on prices. Demand was broadly stable from India and the Far East during April. However, pressure on ammonia prices is emerging from the caprolactam producers as after months of increasing caprolactam values and reported good margins, prices are now weakening in Asia and the United States.
In the United States, the OCI’s subsidiary Iowa Fertilizer Company announced that production has officially started at its new Wever plant in the south east of Iowa, where an estimated merchant ammonia surplus is just around 120,000 t/y. At the same time, the commissioning of the new urea plant by Agrium at Borger, Texas, will lead to a reduction of merchant ammonia supply by around 350,000 t/y. In the domestic market for direct application ammonia, in the short term, ammonia prices look to run flat to softer as preplant demand wanes in many markets. Moreover, there are reports of domestic producers cutting urea production in favour of ammonia.
The market sentiment had visibly shifted from bullish to bearish and by the end of April and prices in are now assessed as soft for the near-term.
This monthly analysis is an extract from the World Fertilizer Review (May 2017), which is produced by highly experienced analysts who look at the market as a whole. The report is a monthly round-up of information on all the major commodities, including ammonia, sulphur, nitrates, potash, phosphate and more.