Urea Prices Saw a Mixed Week
Last week, urea prices saw a mixed week. Urea is one of the most widely used nitrogen fertilizers in the world. It requires ammonia as a feedstock. Let’s see how urea prices moved over the period.
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China, which is the largest producer and exporter of urea, saw a 1% rise in granular urea prices to $190 per metric ton week-over-week. This bounced off the five-year low point of $188 per metric ton a week ago. Urea prices in China have fallen 31% from $275 per metric ton in the same week in 2015.
In contrast, prices of urea in the Corn Belt region fell by 2% to $195 per metric ton free on board, compared to $199 per metric ton in the previous week. Last week’s granular urea prices hit a fresh five-year low, and YoY (year-over-year), they have fallen 45% from $363 per metric ton YoY (year-over-year).
Granular urea prices in the Middle East moved sideways to $185 per metric ton in the week ended August 5, 2016, week-over-week. Urea prices fell by 35% in the Middle East, compared to $285 per metric ton in the same week in 2015.
Prilled urea prices
Prilled urea prices in the Black Sea rose by 3% to $185 per metric ton compared to the previous week. While this was positive for fertilizer producers, prices remained 34% down from $280 per metric ton in the same week in 2015. Last week’s prilled urea prices bounced off the five-year low of $180 per metric ton.
Urea prices have hit multiyear lows in 2016, which has presented a challenge for nitrogen fertilizer producers such as CF Industries (CF), CVR Partners (UAN), PotashCorp (POT), and Terra Nitrogen (TNH). Falling prices also impact ETFs such as the iShares Global Materials (MXI). MXI invests ~4.5% of its holdings in agricultural chemical companies such as Monsanto (MON) and Dow Chemical (DOW).
In the next part of this series, we’ll look at natural gas, a key input cost for nitrogen fertilizers.