Petrotahlil - Strong sales to India have allowed Chinese prilled urea suppliers to maintain fob prices this week, despite lower prices at competing origins.
But these suppliers will find limited alternative export options outside of India in today's uncertain market.
Chinese prilled urea suppliers are maintaining offers upwards of the mid-$240s/t fob, the level at which over 300,000t of urea were sold from China to RCF India earlier this month.
This comes despite prilled prices in other supply origins, such as Indonesia and the Middle East, falling into the $230s/t fob.
China is moving towards the end of its high domestic spring application season and suppliers will increasingly pivot to export markets from May.
Production has increased from around 120,000t/d during the peak of Covid-19 closures to around 160,000t/d currently, supported by a range of government measures to ensure domestic fertilizer supplies.
Domestic prices in Shandong have fluctuated in recent weeks as supply has ramped up, but still reflect in excess of $250/t fob equivalent, another deterrent to lowering export offers.
India has increasingly dominated Chinese urea exports, especially for prilled urea that has fewer substantial outlets in Asia Pacific. Major markets like Thailand and Australia typically favour granular urea.
China in 2019 exported close to 5mn t of urea, of which 2.4mn t or 48pc was shipped to India. This increased from 27pc of Chinese urea exports in 2018. The trend has been similar so far in 2020, with 207,000t or 40pc of Chinese urea exports during January-February going to India.
Potential regional prilled outlets outside India are limited. Many are slower than usual amid the spread of the coronavirus and increasingly tight control measures including those in southeast Asia.
Chinese suppliers will have to contend with competitively priced Indonesian urea in some traditional markets such as Taiwan as exports rise in line with the lower subsidised fertilizer allocation for the domestic market.
India is expected to tender again in late April or early May, which will provide a potential outlet again. But Chinese prilled sellers will likely have to match price levels there in light of limited alternatives and without high domestic consumption to fall back on.