Topic Page: Fertilizers - navigating the global downturn

The sharp global economic downturn caused by the coronavirus pandemic and the collapse in crude oil prices has wide-ranging implications for the fertilizers industry.

 

Bookmark this Topic Page to stay up to date at this unprecedented time with expert insight and analysis of the impact these developments are having on fertilizer markets.

 

 

Sylvia Traganida speaks to potash markets editor Andy Hemphill following surprising news of a decline in a vitally important long-term potash contract with key importing nation China.
 

 

 

SABIC posted a net loss in the first quarter, year on year, and sales and earnings fell sharply on the the back of lower volumes and selling prices, the Saudi petrochemicals major said on Monday.

 

From net income of nearly $3.5bn in the first quarter of 2019, SABIC has gone to a net loss of nearly $1.0bn.

 

Overall sales volumes fell by 4% as average sales prices fell 2% on the previous quarter.

 

 

The International Fertilizer Association (IFA) revealed the new dates for its postponed annual conference in India next year.

 

The 88th edition of the popular industry event will now be held in New Delhi between 7 and 9 April 2021.

 

The conference was originally due to take place in the same city in late April 2020, but this has been pushed back twice due to the coronavirus pandemic.

 

 

 

The US sulphuric acid market has remained mostly balanced despite a chaotic month of coronavirus worries, feedstock constraints and varying demand requirements throughout the region.

 

Feedstock sulphur supply continues to tighten, with refinery rates remaining at record lows. The Energy Information Administration (EIA) this week placed utilisation rates at 69.6%, an increase from last week, but still a sharp decrease from 87.3% last month.

 

 

The global muriate of potash (MOP) fertilizer market was left stunned this week by news that Belarus Potash Company (BPC) was first to settle a 2020 long-term supply contract with a consortium of Chinese buyers, at a $70/tonne decrease from the 2018-2019 benchmark.

 

Although the precise tonnage BPC is to supply under the agreement is as-yet undefined, the $70/tonne decrease to $220/tonne CFR (cost & freight) China caught many players by surprise.

 

 

Throughout the global urea market, prices have started to decline because any forward buying has effectively been put on hold in the wake of the coronavirus and its devastating impact on the global economy.

 

One global distributor told ICIS, “The main question is... when prices keep falling, at some point people will think it’s cheap and come back to buy and bottom fish. [However,] it has to be one big player to start.”

 

It named a number of major players, adding that smaller companies would be unable to take on the financial risk.

 

“Not one trader is brave enough to go long,” it added.

 

 

 

The US chemical industry could lose against a stronger Chinese sector in the aftermath of the coronavirus pandemic.

 

Listen to this podcast interview with International eChem chairman Paul Hodges, ICIS Asia senior consultant John Richardson, ICIS Insight editor Nigel Davis, and ICIS Senior Editor for potash and sulphuric acid Andy Hemphill.

 

 

 

In India, fertilizer dealers purchased 1.6m tonnes of crop nutrients in 1-22 April, up 46% from 1.1m tonnes in the same period last year, according to the Department of Fertilizers (DOF).

 

The record sales occurred despite the country having been in lockdown since 24 March.

 

A favourable monsoon forecast ahead of the main kharif application season has helped demand.

 

 

Gujarat Narmada Valley Fertilizers and Chemicals Limited (GNFC) has resumed operations at its Bharuch complex, it said in a note to the National Stock Exchange.

 

The company’s Bharuch and Dahej complexes were shut down amid the coronavirus lockdown measures.

 

The countrywide lockdown has been extended to 3 May, but fertilizers have been classified as an essential commodity, allowing the company to restart operations.

 

 

 

Coromandel said that operations at its plants have resumed partially and production will be ramped up gradually, the Indian fertilizer producer said.

 

Operations at its Visakhapatnam plant have started partially and the Kakinada plant continues production.

 

The company added in an announcement to the Bombay Stock Exchange (BSE) that “the plants would be operated adhering to all guidelines relating to social distancing, safety, sanitization, security and other measures required by government and health advisories”.

 

 

Urea prices remain under pressure, dragged by by a weak outlook - which has hurt demand - in the wake of the coronavirus pandemic and its social and economic impact on the global economy.

 

In the Black Sea, prilled urea is now being offered at $210/tonne FOB (free on board) - the lowest level in the world.

 

In the paper market, levels for June are $30/tonne below current prices, prompting greater caution among buyers.

 

 

 

The global sulphuric acid market remains downbeat overall, amid ongoing anti-coronavirus measures in Europe, limited demand from Latin America and low-priced bids for Asian cargoes.

 

 

Second-quarter sulphur contracts in northwest Europe settled at a rollover, amid supply tightness and weak demand.

 

In global terms, sulphur prices have been on a downtrend in the wake of the coronavirus pandemic which has further reduced demand from the end-use phosphates sector.

 

 

 

Norwegian fertilizer major Yara on Thursday swung to a first-quarter net loss on negative currency effects following the strengthening of the US dollar.

 

Q1 EBITDA rose on higher premium product deliveries and lower energy costs, which more than offset the impact of lower prices.

 

 

The collapse in oil prices has only increased uncertainty in an already struggling urea market where coronavirus-related concerns have already impacted on demand and price levels.

 

There is no direct correlation between crude oil and urea prices because most urea plants are gas based - but the price of crude has always affected sentiment in the urea market.

 

 

Australia’s Incitec Pivot Limited (IPL) on Tuesday announced its decision to retain its Fertilizers Asia-Pacific business segment (Incitec Pivot Fertilizers) following a strategic review.

 

The company began the strategic review in September 2019 to explore options for the segment including a sale, demerger or retention and investment.

 

IPL concluded that, given the extraordinary market uncertainty and travel restrictions caused by the coronavirus pandemic, it would keep the business and focus on its core operations to supply fertilizers and services to Australian agriculture.

 

 

Global urea prices have been declining over the last month due to the uncertainty caused by the coronavirus pandemic. Still, fertilizer prices have not experienced some of the dramatic price falls seen in the petrochemicals or energy sectors.
 

 

 

The US spring planting season is making steady progress despite the social and economic impact of the coronavirus pandemic.

 

Although some areas have been affected by weather delays, sowings are progressing and there is an expectation that most of the intended acreage will be planted and supplied with initial nutrients over the next few weeks.

 

Senior Editor Mark Milam talks to Sylvia Traganida about how the latest state of play will impact on fertilizer demand and prices.
 

 

 

It is excited to announce the launch and production of the Global Fertilizer Trade Flow Map in partnership with the International Fertilizer Association (IFA).

 

The map provides a geographical picture of the trade flows of fertilizer products between the major producing and importing countries in the world, as well as production and consumption data.

 

The Fertilizer Trade Flow Map provides:

 

- The world’s major producing countries of fertilizers and raw materials

- The main fertilizer consuming countries

- Trends in prices for ammonia, diammonium phosphate (DAP), muriate of potash (MOP), urea, sulphur, sulphuric acid and natural gas