Fertiliser suppliers get caught out by slump in demand

UK manufacturers and merchants are still taking stock of the recent collapse in global urea prices which, if anything, is today even worse (or better, depending on whether you are selling, or buying).


However, the reason that that the f.o.b price of urea at the Baltic port of Yuzhnni is so low at $275/t is that no one, currently, is buying, so the situation is rather unreal, if not bizarre. Yuzhnni is a major export terminal for Russia and the Ukraine.


On the global stage, the markets hold stocks purchased at high prices and many countries are experiencing reduced demand brought about by a lack of credit and poor foreign exchange positions. This is expected to continue until the end of the year.


Suppliers get caught out

International markets have over-corrected prices due to this temporary void in demand and lack of financial liquidity resulting in producers and traders attempting to clear their stock positions, in many cases at below cost.


With prices below production costs, not surprisingly manufacturers are starting to reduce production of ammonia & urea. Yara has temporarily ceased production at its 500,000t urea plant at Ferrara in Italy and it would come as no surprise if planned maintenance shutdowns for GrowHow are brought forward.


The merchant trade has been shocked by the sudden collapse and many people have been caught with expensive stocks. Across the world attempts are being made to renegotiate contracts, with mixed success and some losses.


But, the overall supply and demand fundamentals have not changed and it is expected that this volatility will take some weeks to sort through, but market prices will adjust to a more realistic level early in January 2009 when the Asian and American markets start to purchase the large volumes needed to satisfy demand.


Price slump fails to reach UK

In the meantime, weakness continues in the international phosphate market amid sustained slump in demand, sales and prices. This still fails to get through to the UK farmer because of a 20% drop in sterling against the US dollar. This is also a paper low, as UK suppliers still have stocks bought at higher prices.


There is also a crisis for suppliers of sulphur with trade in paralysis, seeing prices down to $50 from $800\t.


However, potash producers are maintaining values due to low stocks and reduced production, with little new business being concluded.


Back home, prices have not changed, which is of no consequence because the market is dead. UK producer, GrowHow, will review its pricing policy early in the New Year when the position will be clearer.


Their stocks are low and January prices have been withdrawn. What little business being done is at £390 for ammonium nitrate, with no change on compound prices, but no business expected before Christmas and therefore a challenging spring to follow.


There are no buyers for imported AN, and very few for urea around £300/t.


UK merchants have stocks in store or at ports purchased at higher prices.


GrowHow pulls out of Ireland

In the midst of this upheaval, but not as a result of it, GrowHow have announced their withdrawal from the Irish market. This will have a bigger impact in the north, where market share is thought to have been around 15%. In many ways this withdrawal makes sense because GrowHow rely on the products they make in the UK and these are not those required in Ireland.


Ammonium nitrate is of course banned, and phosphate-containing compounds are now frowned upon. There was little point in GrowHow acting as an importer of third party materials into Ireland when, between Yara’s strong presence and the local merchant trade, suitable products can be imported more efficiently.


Latest prices:

Great Britain


Domestic N
(34.5%N) SP5

Imported AN 
eg Lithuanian

Imported urea

Liquid UAN
37kg N/100litre

 (28.8 %N/t)



around £390


Little trade

Market quiet


no prices





TSP (47%P2O5)

Volatile, few prices £700


Muriate of Potash (60%K2O)













From £400





no trade

 Varied availability




20.10.10 / 27.5.5

No trade






No trade





Aftercuts (NK)


No market












Autumn grades (PK)













Trace elements

Copper, zinc, selenium,
cobalt Iodine and sodium

£11.80/acre pack

Ireland  Volatile prices in dead market.













of Ireland






Note in the Republic of Ireland nutrients are expressed as elements not oxides.  Analyses will not be directly comparable with those used in the UK.
*Known as 24.2½.10 blend in the Republic of Ireland
**Known as 27.2½.5 in ROI

Note All illustrated prices are based upon 24 tonne loads for immediate payment. Prices for smaller loads and those with credit terms will vary considerably.

Source: Bridgewater

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