Middle Eastern ammonia exports are on course to fall by 6pc on the quarter in January-March, reflecting plant outages, reduced demand in India, and difficulties shipping west of Suez. Exports are expected to pick up heading into the second quarter, as plants return and Indian demand recovers.
Middle Eastern exports are due to reach just over 1mn t in the current quarter, up by 12pc year on year, but down from 1.1mn t in October-December.
Sabic's Safco 3 unit in Saudi Arabia is in turnaround this month, while Omani firm OQ's Salalah plant has been intermittently offline since January. The most recent estimated output loss from these outages is 50,000-70,000t. But Safco 3 should return next month, and Saudi Arabia's biggest producer, Ma'aden, plans to increase April exports by 40,000-50,000t from January-March's monthly average.
Shipments to Morocco — where at least three Middle Eastern producers hold supply contracts — might have posed a problem this quarter. With the Red Sea route too risky, deliveries to Jorf Lasfar around the Cape of Good Hope are taking 10-12 days longer each way, pushing up costs. But producers have charged additional tonne-miles or sold on a fob basis, and volumes loaded for delivery to phosphate producer OCP at Jorf Lasfar are due to average nearly 85,000 t/month in the first quarter, up from 76,900 t/month in October-December.
But deliveries to regular customers in Jordan and Bulgaria are now uneconomical. No ammonia has been sent to Jordan this quarter, against 65,500t in October-December, and Middle Eastern producers have been looking east for alternative outlets.
East of Suez
But shipments east of Suez are due to fall by 9pc on the quarter in January-March, driven by lower demand. Middle Eastern producers usually export the most ammonia to buyers in India through term contracts. India imported 155,000 t/month from the Middle East in 2023, but just 62,400t is due to be sent to India in March. At least seven Indian plants have cut runs or are under turnarounds in March-April, partially because of a lack of phosphoric acid supply from Jordan.
Reduced demand in India has offset any tightness that might have built up in the Middle East as a result of loading delays or outages. Last week, two producers entered negotiations for small spot cargoes for shipment at the end of March and in mid-April. They targeted higher prices of up to $375-400/t fob, but buyers pushed back and no deals have been announced. One producer is struggling to find a shipper for a small cargo, as the Red Sea disruption stretches the ammonia fleet.
Reduced optionality for cargo destinations has limited any upward pressure on Middle East fob values, which have been falling since November. The price settled at $290/t fob at the mid-point on 21 March. And prices are still under pressure because of weaker pricing in destination markets. A 25,000t Saudi cargo was sold to OCP by trading company Trammo at $400/t cfr. The cargo will be delivered to Jorf Lasfar in the first half of April.
The full Middle East vessel line up can be downloaded here.
