November 2, 2023 [ICIS]- CF Industries said in its latest nitrogen fertilizer market outlook that it expects demand through the end of this year and into 2024 to remain strong, led by India and Brazil.
The fertilizer producer said during the third quarter of 2023 it saw robust global demand along with lower production due to global turnaround activity.
There was also the issue of continued challenges facing natural gas fundamentals in key regions, such as Europe and Trinidad as well as tightened the global nitrogen-supply demand balance which together supported an increase in global nitrogen prices late in the quarter.
In the near-term CF said global supply and demand dynamics will be driven largely by several key regions including North America were low channel inventories and favourable farm economics supported strong nitrogen demand during the third quarter.
The producer said it believes that the North American inventory position at the end of the third quarter for all nitrogen products remained below average due to lower import levels and higher export volumes year-to-date.
Another crucial market will be India with CF expecting demand to remain stable, underpinned by robust agricultural production.
The producer said it expects that India will tender for urea frequently through the end of the year to replenish urea stocks following increased sales in recent months, lower imports year-to-date, and reported production outages at new facilities.
Brazil will also be a factor as urea demand is expected to be strong through its growing season and be supported by high planted corn acres and healthy farm incomes.
Urea imports through year-end and into the first quarter of 2024 are expected to be strong in order to meet forecast demand as imports through September were 7% lower than the prior year.
Looking at Europe, CF said approximately 25% of ammonia and 20% of urea capacity were reported as either being shutdown or facing curtailment late in the third quarter. As such the producer feels production economics will remain challenging into early next year due to higher forecast natural gas prices in the region.
The company continues to expect ammonia capacity production rates to be below normal in the region for the near future, with a corresponding higher-than-normal level of nitrogen imports to the region, with some facilities continuing to favour importing ammonia in order to manufacture upgraded products.
Regarding China the producer said urea exports during the third quarter were approximately 1.8m tonnes due to an elevated level of participation in the August India tender. CF said participation in future India tenders is expected to be significantly lower as the Chinese government reinstated measures to limit exports.
CF said when looking Russia it sees exports of ammonia continue to remain lower compared to prior years due to geopolitical disruptions and the resulting closure of the ammonia pipeline.
The producer said exports of other nitrogen products are at pre-war levels, with product moving to countries willing to purchase Russian fertilizer, including Brazil and the US.
For its longer-term, CF said it expects the global nitrogen supply-demand balance will remain positive, underpinned by resilient agriculture-led demand and forward energy.
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