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How Urea Traded in the Week Ending April 8

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Urea

In the previous part of this series, we saw how ammonia prices traded in North America and internationally for the week ended April 8, 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 Corn Belt region, implying that demand has picked up.

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Granular urea prices

Granular urea prices in the Corn Belt region stood at $272 per metric ton FOB ($300 per short ton) in the week ended April 8 compared to $281 per metric ton ($310 per short ton) a week earlier. This marked a 3% fall in prices.

However, similar to the upward trend we saw in ammonia prices, prices of urea in the Corn Belt have also picked up since the beginning of 2016, rising 17% from $231 per metric ton ($255 per short ton) and indicating a demand pick-up. Year-over-year (or YoY), prices at the Corn Belt have fallen 15%.

For the week ended April 8, urea prices in China fell by about 2%. Prices stood at $215 per metric ton compared to $220 per metric ton the previous week. YoY, urea in China fell 24% compared to $275 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 inched up by 1% to $208 per metric ton in the week ended April 8, compared to $205 per metric ton in the previous week. YoY, urea prices fell 24% in the Middle East.

Prill urea prices

Prill urea prices in the Black Sea inched up by 3% to $200 per metric ton in the week ended April 8, compared to $195 per metric ton in the previous week. YoY, prill urea prices at the Black Sea fell 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 about ~48% in chemical companies.

In the next part of this series, we’ll look at the key input cost for nitrogen fertilizers.

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