Why Urea Prices Are Gaining Positive Momentum

Urea prices

For the week ended August 11, 2017, urea prices continued to gain positive momentum at the locations in the graph below. In recent weeks, urea prices have been moving positively as a result of capacity rationing by producers. Let’s dig more deeply into price movements at each of the four locations below.

Why Urea Prices Are Gaining Positive Momentum

Weekly movements

Overall, urea prices rose 4.8% week-over-week at the four locations on the above graph. Granular urea prices in the Corn Belt region of the United States saw a strong gain of 5.8% week-over-week to $200 per metric ton, from $189 per metric ton the previous week. Granular urea prices at NOLA (New Orleans) rose 5.4% week-over-week to $178 per metric ton, from $169 per metric ton the previous week.

Lately, North American nitrogen producers (XLB) such as PotashCorp (POT), CVR Partners (UAN), and Terra Nitrogen (TNH) have been benefiting from capacity shutdowns in China, which have affected imports into North America. In its recent 2Q17 earnings call, CF Industries (CF) management stated that urea imports from China fell 46.0% year-over-year in 2Q17.

CF management also estimated that more than 8.0 million tons of urea capacity and 10.0 million tons of ammonia capacity were curtailed over the last year in Eastern Europe, South Asia, and Ukraine combined.

Prices outside North America

Outside of North America, prices for granular urea in the Middle East rose 5.4% week-over-week to $197 per metric ton, from $187 per metric ton the previous week.

While the above price movements showed positive momentum for granular urea, prilled urea also moved higher last week. At the Yuzhny, Ukraine location, prilled urea prices rose 2.6% week-over-week to $197 per metric ton, from $186 per metric ton the previous week.

In the next part, we’ll take a look at natural gas prices.