India’s RCF fares better than expectations
The past week saw volume and prices confirmed into India’s most recent urea purchasing tender, with 958kmt of awards accepted at levels of $289/t cfr WC and $290.50 cfr EC. The volume was higher than most were expecting, with the Chinese participating in large volume (around 400kmt estimated to be of Chinese origin). In the aftermath of this news, both paper and physical markets cooled, with expectations that India had bought themselves some breathing room. Selling pressure weighed on urea paper markets with AG trading down to $272.50 for September, down from a high of $285 early last week, whilst Nola urea was down as much as $10+, trading $230 for Q420.
But MMTC tenders again!
As mentioned, most were expecting a short break before India returned to market. However MMTC announced a new tender on Tuesday, immediately following the issuance of LOIs by RCF. Alas, the announcement has further highlighted India’s urgency to secure product to meet their burgeoning domestic demand. The market reaction to the news however, was relatively muted vs the previous successive tender announcements. Buyers remain cautious of how much higher prices can go, given China’s appetite in the previous tender. At time of writing, buying interest remains relatively subdued on paper, whilst profit takers are still motivated to lock in gains around the current levels. AG paper has rebounded slightly, trading back at $275 for September, however, it has been offered at the same level on the follow and failed to entice further buying interest. Nola urea is also slightly firmer, trading back at $245 and $243 on Tuesday for the September expiry.
DAP’s bull run continues
Liquidity remains high and prices continue to rise on Nola DAP futures this past week. Supply in Nola still remains very tight in August, with some questioning if there is any product at all available for sale. Of course, the ITC confirming that they will proceed with their investigation of imported phosphates from Morocco and Russia has given support to this market, as it’s assumed no importing distributor will try to import from those origins until final duties are known. September and October futures continue to be the most liquid contracts, with limited interest in taking positions in Q1, given potential duties being in place by then. In saying that, the Jan21 contract has traded once this week at $324, so potentially we’ll start to see more speculation on paper further out the curve.