Fertilizers

Urea prices generally remained stable in October, as compared to September, but the monthly averages were between 45 and 66 percent higher than prices one year ago. Indonesia’s exports are dwindling because of delays in issuing exports licenses. Availability in China is tightening, and thus prices are increasing. Hence Viet Nam and the Philippines are seeking to purchase urea in the Arab Gulf countries. Higher freight prices are inhibiting end-user sales for the EU and the Russian Federation. However, the strong euro is assisting European buyers, resulting in strong demand from Spain and Italy. Latin America is expected to enter this market. The Venezuelan product has become very competitive for sale to the US because the price is attractive. Egypt is directing all its nitrogen production to the domestic market. FAO has issued a tender for 350 000 tonnes with delivery to Iraq, in addition to a previous tender for 100 000 tonnes. The Arab Gulf is supplying the Philippines, Sri Lanka and Viet Nam. In India production is forecast to be about 9.2 million tonnes; taken together with inventory, this supply would meet demand during the Rabi season. In South Korea one of the urea production plants has re-opened in preparation for domestic demand at the end of the year. The Republic of Korea will also supply Korea, DPR from its stocks as part of a fertilizer aid package.

Prices for ammonia from most origins increased slightly over the past two months, and were about 65 percent higher than in the corresponding period last year. Supplies remain rather scarce. Exports to South Africa and Jordan are expected to sustain current prices and further tighten the market. However, buyers are trying to keep price increases under control by utilizing their inventories. Demand from India is being covered by the Arab Gulf.

Prices for ammonium sulphate in the Black Sea region and western EU remained practically unchanged during the past two months; however, they are 75 and 40 percent higher respectively than prices one year ago. Malaysia is tendering for its requirements for early 2004.

Diammonium phosphate (DAP) prices fell in the US Gulf over the past two months. However, the prices showed an increase of 12 percent compared to last year for all three regions. It is forecast that prices in the US Gulf will fall further if no US producer cuts output. There have also been large increases in raw material costs. The US is trying to export as much as possible to Ethiopia, India and Pakistan before prices decrease even more. As one of the plants in India is inactive, the government announced a subsidy increase for both imported and domestically produced DAP. North Africa is supplying the EU, New Zealand and Thailand, and possibly also China. FAO has awarded the substantial tender of 140 000 tonnes of DAP for Iraq to Jordan. In Australia fertilizer production has returned to design capacity following a shutdown. China has issued tariff import quotas for 2004 of 6.25 million tonnes, with state-owned importers being assigned 75 percent. In order to reduce fertilizer exports before the spring season, China is reducing VAT from 13 percent to 8 percent.

Triple superphosphate (TSP) prices continued to remain stable for North Africa and rose slightly in the US Gulf; they are about 20 percent higher than last year's levels. The Islamic Republic of Iran has just closed a tender for TSP.

Average spot prices of muriate of potash (MOP) have not changed over the past two months. Compared to October 2002, however, prices are down slightly. The freight market is reportedly dominating the discussions for potash supply and is thus hampering new business. Suppliers are looking for another price increase of US$10 per tonne, and even this may not cover the latest rises in freight rates. However, higher production costs, especially energy, have caused price increases. India has tendered for 280 000 tonnes and Malaysia is tendering for its requirements next year. The Russian Federation is supplying Indonesia, the Philippines, Taiwan and Viet Nam. It has been reported that China intends to increase the domestic price of MOP.

Average Fertilizer Spot Prices (bulk, f.o.b.)