Urea prices in the US experience price rally amid Middle East confrontations

The urea market in the United States experienced a significant price increase amid escalating conflicts between Israel and Iran, on Oct. 2.

While the International Longshoremen's Association strike on the East and Gulf Coasts, which began on Oct. 1, raised concerns for most imports, it was the international developments that primarily influenced the fertilizers market.

In the business week starting Sept. 23, urea trades had been recorded at $310-$320/st FOB New Orleans. On Oct. 2, deals were seen at $328-$336/st FOB NOLA.

"The rally has all to do with the events in Israel," a market source said.

As confrontations between Iran and Israel escalated over the week, prices for natural gas -- essential for urea production -- experienced an immediate uptick. Although LNG prices stabilized on Oct. 2, Iran's status as a major urea exporter raised additional concerns.

Despite Iran facing several sanctions that prevent US buyers from importing its products, a potential failure to supply other countries could significantly alter the urea market landscape. According to S&P Global data, Iran exported 4,766,597 metric tons of urea in 2023.

Neighboring countries such as Qatar, Egypt, Saudi Arabia, Oman, and the United Arab Emirates are also important urea exporters that could be impacted by the geopolitical tensions.

Market participants consulted by Platts, part of S&P Global Commodity Insights, said there is currently no immediate concern regarding supply shortages, especially because this is a time of little demand in the US market.

"Much of a price rise comes as a justification for the risks, but thinking about fundamentals is much more linked to the traders' strategy," a second source said.