Sanction Against Iran Terminated, Global Urea Market Flagged

By CnAgri2013-12-17 09:46:46 Print On Nov. 24th, periodic agreement was reached between Iran and Six Nations after negotiation in Geneva that economic sanction against Iran was canceled, which was favorable for fertilizer export in Iran. But to the surplus international urea market,  it was no doubt an unfavorable news.

According to previous sanction, fossil and chemical products including synthetic ammonia and urea were suspended from exporting in Iran. In the first 8 months of 2013, urea exports from Iran registered 1.3 million MT, significantly down from  the 1.9 million last year. 80% of its urea was exported to India and Turkmenistan. The termination date has not been set and is said to be January next year, by when, its annual urea exports are expected to recover to 3 million MT with broader international market.
 
Besides, it was previously said that China would relax fertilizer export policy in 2014, which undoubtfully would worsen international urea market with sever surplus capacity. By the end of 2012, global capacity of synthetic ammonia and urea reached 203 million MT and 192 million MT and output reached 166 million MT and 168 million MT respectively. in 2013, except 18 urea projects were put into operation in China, whose capacity totaled 8 million MT, 4 urea projects in international market were also put into operation with total capacity of 5.3 million MT. The 4 projects were settled in Turkmenistan, Algeria and the United Arab Emirates.

Earlier, economic sanction against Iran brought Asian urea market downward. India mainly imports urea from Iran, which led India urea price to decline and thereby influenced China urea trade. Therefore, the sanction termination shall favor Asian urea market but still affect global urea market.
 
For international urea market next year, it depends not only in operation of new capacity, but also many other factors should be taken into consideration, such as operating rate in Egypt struggled by natural gas problem, urea cost in Ukraine controlled by natural gas price imported from Russia and urea export in Algeria impeded by limited loading etc.. As for urea demand, the change brought by factors like global economy situation, grain price level and abnormal weather condition etc.. should be paid attention.

From “China Fertilizer Market Weekly Report”