India will, for the first time, import a substantial quantity of urea from the United States.
South Korean conglomerate Samsung is about to load 47,000 tons of granulated urea at the port of New Orleans in the United States for shipment to New Mangalore on the west coast of India. The cargo is to be provided at a price of $716.5 per ton, cost plus freight (CFR). With freight costs from the United States estimated at around $65 in addition to the $10-15 for loading from barges, the corresponding free on board or FOB origin price will be $635-640 per tonne.
The United States has so far only been an occasional exporter of urea. Commerce Ministry data shows that its exports to India stand at just 1.47 tonnes in 2019-20, 2.19 tonnes in 2020-21 and 43.71 tonnes in 2021-22. The quantity of 47,000 tonnes, for which loading is expected to start later this week, is against an import tender by Rashtriya Chemicals & Fertilizers Ltd. The state-owned company’s global tender, launched on May 11, resulted in 1.65 million tonnes (mt) of urea being contracted from various suppliers for delivery to ports on the west coast and is at $716-721 per ton CFR.
“Other ships will likely come from the United States in the coming months. This will help us diversify our import sources and send a message to other suppliers,” an industry expert told The Indian Express.
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India in 2021-2022 imported 10.16 tons of urea worth $6.52 billion. Imports were mainly from China (2.79 mt), Oman (1.62 mt), United Arab Emirates (1.06 mt), Egypt and Ukraine (0.75 mt each), Qatar (0.58 mt) and Saudi Arabia (0.50 mt).
Buying more in the US also makes sense in today’s environment. FOB granular urea prices (US Gulf futures) are trading at $500 per tonne for June and $455 for July delivery. These are well above the corresponding forward FOB quotes of $610 and $595 per tonne for Middle Eastern urea.
“Freight costs are lower, at $15-20 per ton, from the Middle East. Travel time is also only 5-10 days, compared to 35 days or more from the United States. But these can to some extent be compensated by the strong FOB discounts on international prices,” the expert pointed out.