In the previous part of this series, we saw how ammonia prices traded in North America and internationally for the week ended April 15, 2016.
Most ammonia is upgraded to urea. In 2013, about 54% of global ammonia was upgraded to urea, according to FERTECON. Urea prices have rebounded from their lows at the beginning of 2016, especially in the Cornbelt region, implying that demand has picked up.
Granular urea prices
Granular urea prices in the Cornbelt region stood at $272 per metric ton FOB ($300 per short ton) in the week ended April 15. This remained unchanged from a week earlier. However, similar to the downward trend we saw in ammonia prices in the Cornbelt, the prices of urea in that region also declined during the week by as much as 3%. Year-over-year, prices in the Cornbelt are now down by 13%.
For the week ended April 15, urea prices in China remained unchanged at $215 per metric ton compared to the previous week. Year-over-year, urea in China fell by 20% compared to $270 per metric ton in the same week last year. China uses coal as a hydrogen source to produce nitrogen fertilizers, not natural gas.
The price of urea in the Middle East also remained unchanged at $208 per metric ton in the week ended April 15, compared to the previous week. Year-over-year, urea prices fell by 24% in the Middle East.
Prill urea prices
Prill urea prices in the Black Sea were also unchanged at $200 per metric ton in the week ended April 15, compared to the previous week. Year-over-year, prill urea prices at the Black Sea are down 23%.
Rising urea prices in China affect companies such as CF Industries (CF), CVR Partners (UAN), PotashCorp (POT), and Agrium (AGU). Rising prices also affect the iShares US Basic Materials ETF (IYM) because this ETF invests in some of the above companies. IYM invests ~48% in chemical companies.
In the next part of this series, we’ll look at the key input cost for nitrogen fertilizers.