Fertilizer prices fall on slow demand, Chinese exports and Iran conflict

• Fertilizer prices have declined since late April.
• Reduced demand, increased Chinese exports, and the Middle East conflict are contributing to falling fertilizer prices.
• Market volatility in fertilizers may persist for months.
• Oil prices have stabilized after a recent drop.
• A U.S. sanctions waiver on Iranian oil is unlikely to boost Asian refiner demand.
• Independent Chinese refineries are expected to be primary buyers of Iranian oil.
• Middle East EDC output remains low.
• Vessel congestion, high inventories, and weak VCM/PVC prices affect EDC output.
• Three Saudi Arabian DAP/MAP cargoes totaling 154,000 tons have transited the Strait of Hormuz.
• These are the first phosphate cargoes to cross the Strait of Hormuz since early May.
• The transit occurred after a de-escalation of tensions between the US and Iran.

Fertilizer prices have seen a decline since late April, influenced by a confluence of factors including reduced consumer demand, a surge in export volumes from China, and the ongoing conflict in the Middle East. Despite this downward trend, industry experts are warning that the market could remain volatile for several more months.

In the energy sector, oil prices have stabilized following a recent downturn. This stabilization comes as a temporary U.S. sanctions waiver concerning Iranian oil sales is not expected to significantly increase demand from Asian refiners, who are currently holding substantial inventories. Independent Chinese refineries are anticipated to be the principal purchasers of any available Iranian crude.

Concurrently, the production of Middle East EDC (Ethylene Dichloride) remains subdued. This low output is attributed to persistent vessel congestion, elevated inventory levels, and weak pricing for downstream products like VCM (Vinyl Chloride Monomer) and PVC (Polyvinyl Chloride), even after a recent ceasefire involving Iran. While Fujairah is preparing for the potential return of Iranian HSFO (High Sulphur Fuel Oil), market participants are expressing caution regarding the exact timing and the effectiveness of any enforcement mechanisms.

In a positive development for agricultural trade, three Saudi Arabian DAP/MAP (Di-Ammonium Phosphate/Mono-Ammonium Phosphate) cargoes, collectively weighing 154,000 tons, have successfully transited the Strait of Hormuz since the beginning of the week. This movement signifies the first phosphate cargo shipments through this critical maritime chokepoint since early May, occurring in the wake of a de-escalation of tensions between the United States and Iran.