Last week, urea prices reversed their falling trend. 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.
China, which is the largest producer and exporter of urea, saw a 3% rise in granular urea prices last week, to $195 per metric ton week-over-week. This bounced off the five-year low point of $188 per metric ton two weeks ago, and it was a fall of 29% YoY (year-over-year).
Similarly, prices of urea in the Corn Belt region rose by 5% to $225 per metric ton free on board, compared to $195 per metric ton in the previous week. Two weeks ago, granular urea prices hit a fresh five-year low. They’ve fallen by 37% YoY.
Granular urea prices in the Middle East also rose by 5% week-over-week to $195 per metric ton in the week ended August 12, 2016. Urea prices fell by 32% YoY in the Middle East.
Prilled urea prices
Prilled urea prices in the Black Sea rose by 3% to $190 per metric ton compared to the previous week. Prices remained 32% down from $280 per metric ton in the same week in 2015. Two weeks ago, prilled urea prices hit a five-year low of $180 per metric ton.
This week’s urea price trend reversal brings some positive news for nitrogen fertilizer producers such as CF Industries (CF), CVR Partners (UAN), PotashCorp (POT), and Terra Nitrogen (TNH). The trend will also affect ETFs such as the iShares Global Materials ETF (MXI), which invests ~4.5% of its holdings in agricultural chemical companies.
In the next part of this series, we’ll look at natural gas, a key input cost for nitrogen fertilizers.