Urea is the most utilized nitrogen fertilizer subtype around the world. As most global ammonia production is upgrading to urea, ammonia prices may affect urea prices. Overall, urea prices for the week ended June 10 remained largely unchanged except at the Middle East price point.
Granular urea prices
In the Middle East, granular urea prices fell 5% from $218 per metric ton to $208 per metric ton in the week ending June 10. Earlier in January, urea prices in the Middle East hit a low of $195 per metric ton. Urea prices have fallen 33% in the Middle East from $310 per metric ton in the same week in 2015.
Granular urea prices in the Corn Belt remained unchanged compared to the previous week at $222 per metric ton FOB (free on board). Current granular urea prices in this region have hit a four-year low and YoY (year-over-year), they are down 36% from $344 per metric ton.
Granular urea prices in China have also remained unchanged in the previous week at $208 per metric ton week-over-week. Granular urea prices in China reached a low point of $200 per metric ton in March 2016 and have fallen 34% from $315 per metric ton in the same week last year.
Prilled urea prices
Prilled urea prices also remained unchanged at $195 per metric ton week-over-week. Prilled urea prices fell to the low of $183 per metric ton in January this year and are down 32% year-over-year from $285 per metric ton in the corresponding week a year ago.
Urea prices have hit multiyear lows in 2016, which is presenting a challenge for nitrogen fertilizer producers such as CF Industries (CF), CVR Partners (UAN), and Agrium (AGU). Falling prices also affect the iShares US Basic Materials ETF (IYM). IYM invests ~48% of its holdings in chemical companies and 9% in Monsanto (MON). In the next part of this series, we’ll look at natural gas, a key input cost for nitrogen fertilizers. According to PotashCorp, natural gas accounts for 70%–85% of ammonia production costs.