Prices of urea continued their downward trend in the last part of 1997 with December prices more than 40 percent below those of a year earlier. This trend is expected to continue as demand for urea remains very limited with producers in the Ukraine requesting permission to decrease the official indicative export price level below US$88/tonne fob to promote sales. The currency crisis in Asia is affecting fertilizer demand in that region, and at the same time is acting as an incentive for Asian producers to explore export possibilities and thus further increasing pressure on world markets. In addition, new production capacity in the Near East is expected to maintain downward pressure on urea prices, especially due to absence of demand from India, which normally imports from this area, butcurrently holds ample inventories. China is not expected to start importing before the second quarter of the year. In anticipation of delayed seasonal import demand, urea production in western European countries has been reduced.

Prices of ammonia fell during the last two months of 1997 and are expected to weaken in the short term reflecting generally ample supplies and weak demand. There are excess supplies the United States, and ample stocks are also reported in the Ukraine, while demand in Europe remains weak and imports from Latin America are reduced. By the end of 1997, most ammonium sulphate prices had decreased by between 35 percent and 60 percent compared to a year earlier.
 

SOURCE: Compiled from Fertilizer Week and Fertilizer Market Bulletin.
1/ From mid-point of given ranges.

Average spot prices of diammonium phosphate (DAP) fell by between 5 percent to 7 percent in 1997 due to continued weak demand. However, North African prices stabilized somewhat in the latter part of 1997 and the downward trend on all DAP markets may reverse soon due to an expected pick-up in demand, particularly in Argentina, Pakistan, the Islamic Republic of Iran and Kenya. China will not enter the market before new import quotas for fertilizers are issued. Demand in India is affected by farm price and fertilizer import policies. DAP consumption in this country is forecast to reach 5.5 million tonnes in 1998, which, after allowing for stocks in hand, is estimated to result in an import requirement of 1.5 million tonnes in 1998.

Triple superphosphate (TSP) average spot prices have changed little during the last few months after falling in the early part of 1997. In December 1997, spot prices for TSP from North Africa and the U.S. Gulf were 10 percent and 6 percent respectively below those a year ago. Demand from Brazil has been met by imports from eastern European countries. The Islamic Republic of Iran is expected to enter the market in the near future.

Average spot prices of muriate of potash (MOP) remained generally stable during 1997 except in western Europe where prices increased by 18 percent. However, producers ended the year with tight supplies and prices are forecast to increase in 1998. Brazil is expected to import about 3.4 million tonnes of MOP in 1998, with strong demand being fuelled by attractive soybean prices. China has arranged imports of some 700 000 tonnes from Canada where stocks are becoming low.