Friday’s Insider: Urea and gas prices — market in transition

Since February 11, TTF gas has shed almost 20% of its value, driven by rumors of gas storage relaxation and renewed peace talks in Ukraine. Meanwhile, urea prices have stabilised, encountering some resistance. In short, the market took a brief nap.

But are these two factors connected? Not really, beyond a psychological correlation. Gas has become cheaper, yes, but not cheap enough to trigger a wave of additional fertilizer production in Europe. As I’ve said before, the EU is heading toward a structural decline in domestic fertilizer production—regardless of gas price movements.

At the same time, urea prices remain high. The rally we’ve seen has been fundamentally justified, but now the market is sitting at elevated levels. That means it’s time to break the urea market into its key components and analyze them separately.

Russia: A Strengthened Rouble and Competitive Prices

Since the optimistic headlines about peace talks, the Russian rouble has strengthened by about 10%, making domestic urea prices more competitive relative to international markets. This shift is already impacting trade flows.

Europe: Buying Like There’s No Tomorrow

European importers are on a buying spree, stockpiling ahead of potential tariffs on Russian fertilizers. The urgency is so intense that even US products struggle to compete at these price levels. Without revealing exact figures, let’s just say I’m hearing numbers that start with a “5.”…

US: A Slow Catch-Up

The US remains behind its usual purchasing pace. Importers have hit the pause button following a quiet international market and cold weather in key agricultural states. Right now, prices are hovering around $400 per short tonne FOB or $435 per metric tonne CFR.

India: Playing Poker with Imports

All indicators—from recent domestic sales data to production figures—suggest that India will need to import. However, the country continues to delay a much-anticipated tender, maintaining a poker face while the rest of the market watches.

China: A Well-Timed Rumour

Someone started a rumor about a potential easing of China’s export restrictions in March-April, and it worked in favor of domestic producers. Local prices saw a much-needed rally – well deserved, given how tight supply has been.

A Market of Local Battles

What we’re witnessing isn’t a single, unified urea market – it’s a series of regional battles:

• EU vs. Russia: A long-term struggle, with fertilizer tariffs looming.
• AG/Nigeria vs. US: A short but intense price war.
• World vs. India: Waiting for India to make a move.
• China: Standing by, waiting for its moment.

Some of these fights, like the EU’s tariff-driven shift, will shape the market well into the spring. Others, like pricing skirmishes between key exporters, will be fast and furious. Either way, buckle up – this market is far from dull.

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About the Author of “Friday’s Insider”: Ilya Motorygin is the co-founder of GG-Trading and brings 30 years of experience to the fertilizer industry. Renowned for his comprehensive problem-solving skills, Ilya expertly manages deals from inception to completion, overseeing aspects such as financing, supply chains, and logistics.