GCC urea exports hit all-time high amid global supply shortage

Urea prices maintained their sharp increase – which began at the end of September – rising by over 100% per ton in the last six weeks.

Saudi Basic Industries Corp. (SABIC), which markets the products of SABIC Agri-Nutrients Co., sold a shipment for $950 per ton – the highest level ever, customers said.

On the other hand, a large order from India is expected to be awarded this week. Market observers said that sell offers exceed $950 per ton. India, the world’s biggest importer of urea, suffers a shortage of supplies, as the government slowed imports this year and did not secure the necessary quantities in the latest two tenders issued in September and October.

India needs to buy 3.5 million tons of urea in the next three months to cover this shortage.

The upward momentum accelerated in the last three weeks, following decisions on limiting exports from Russia and China – two of the biggest exporters of urea in the world.

Similarly, according to media reports Egypt followed in their steps this week, asking local urea producers to obtain the approval of the Ministry of Agriculture on a monthly basis prior to any exports. The move aims to ensure sufficient urea supplies in the local market.

On the other hand, industry sources said that Malaysia-based Petronas sold a shipment of urea to South Korea for $1,000 per ton. South Korea has been suffering from a shortage since China restricted exports. Laws in South Korea stipulate the use of urea solution as an additive for trucks that use diesel fuel to reduce emissions.

Prices rose unprecedentedly by the end of September when several European companies shut production of the substance that is widely used in agricultural crops, amid the record rise in natural gas prices in Europe.

Natural gas (methane) is the main feedstock used in the production of ammonia, which is used to produce urea.