Friday’s Insider: Urea Chess

Pre-Indian tender games remind me of a very interesting chess match. In the opening—or, to use chess terminology, the debut—the Indians (who, by the way, are widely believed to have invented chess) surprised their opponents by delaying the announcement of the next urea purchasing tender for an unusually long time. Their opponents-global urea producers-were forced to gradually sacrifice their positions, or rather, their prices.

Then, when many, including myself, thought the Indians were clearly winning this match, the game transitioned into the midgame. And here, it seems to me, they made a mistake. They chose to announce a tender in the middle of the Eid celebrations-hardly the best timing to encourage producers in Egypt and the Middle East to return to their offices or raise their price offers. And it was a mistake. Producers happily accepted the challenge and thus the price rally began.

The endgame is near-next week. Who’s winning now? I think it’s heading for a draw. India will certainly face better prices than if they had announced the tender earlier in Q1. However, the offers will likely be higher than what they had hoped for. I’m hearing a wide range of $365–410 per metric tonne CFR for L1-perhaps the widest price range anticipated in the past couple of years.

Can the Indians wait? It seems not-they’ve already waited for some time, and the state of their stocks demands action. Do they have the money? They do, as this is the first purchase under the newly approved budget.

Do producers need to sell? Yes, they do. Aside from India and Australia, there are no major buyers on the horizon until Brazil returns in June or July. Is the current price fair? It is.

Well, let’s keep watching this breathtaking endspiel. As we know, even grandmasters can make mistakes when the clock is ticking.

————

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.