Jack Elliott, CRU Fertilizer Week, looks at what’s been behind the substantial liquid urea-ammonium nitrate (UAN) price rises in recent months, and whether the bulls are likely to remain at the helm in the weeks ahead.
Surfing a wave of firming natural gas and nitrogen fertilizer prices, the European UAN market has been unrelentingly bullish since May. In many regions, prices have soared to a three-year high, and counterparts expect that further gains are likely before the market turns.
Limited availability – largely attributable to rising gas costs – has been key to the higher prices, while a firmer dollar against the euro and strong demand have also played a role.
UAN prices spike, supply tight
CRU Fertilizer Week assessed UAN at Rouen – a key market for the product in Europe – at €229/t FCA on November 1, its highest point since April 30 2015 and up 56% from the assessment on May 31.
Baltic Sea and Black Sea prices have been similarly firm – reflecting strong demand for product produced in those regions – while prices in the US and Argentina have also risen substantially.
But despite the sizeable gains, producers have been slow to catch up, either restricted by high gas prices or instead focusing on urea output – where the market has been similarly strong.
Lithuania’s Achema, which sells UAN for the domestic market and for export, had for the summer months been running just one of its ammonia lines, leading to a 50% cut in UAN production.
Egypt-based exporter Abu Qir has floated UAN tenders only intermittently, with the last award reportedly made on September 12 for just 7000 t. In the Ukraine, import demand has been propped up by faltering output from the country’s only UAN producer, CherkassyAzot. The company reportedly produced around 20 000 t UAN in October, down from output in September 25 000 t and 42 000 t in August.
The producer has been struggling with sharply higher gas prices, and has had to halt production entirely on occasions in recent weeks as a result, sources in Ukraine said.
UAN buying for the spring season in Ukraine is yet to begin in earnest, and the precarious domestic production situation could leave the country with substantial import requirements in the coming months.
Read the article online at: https://www.worldfertilizer.com/special-reports/05112018/uan-prices-continue-to-surge/