SABIC AN expects several factors to support urea market in Q4 2023

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SABIC Agri-Nutrients Co. expects several factors to support the urea market in the fourth quarter of 2023, most notably resilient global demand and higher-cost winter-time supply with lower-than-expected Chinese export volumes. 

The urea market entered Q3 2023 on firm footing, given the overlap of scheduled maintenance in Russia, a backlog of commitments from SE Asian exporters, and the sudden news of Egyptian regulators mandating a 30% cut to urea production to divert natural gas towards power generation. 

Commenting on Q3 2023’s financials, SABIC Agri-Nutrients said that the increasing demand in the Middle East led to a rise in July’s export prices; however, this change was short-lived as production cuts continued globally. 

Perceptions of ample supply optionality sidelined global buyers, contributing to a decline in Middle East export assessments, the statement added. 

SABIC Agri-Nutrients indicated that sentiment and realized pricing improved at the tail-end of Q3 following state-owned marketers of Chinese urea enforcing a stop-sale on new exports in an effort to ensure local stock and safeguard domestic pricing. 

Global trade is counting on healthy demand from major importers in the Americas, Africa and Europe ahead of the new-crop planting season. 

“The commitment of Chinese producers to suppressing local market prices and the standard emissions-related / feedstock-diversion curtailments across China provides opportunity for Arab Gulf and Southeast Asian exporters to effectively allocate a majority of production volumes within nearby eastern markets,” SABIC Agri-Nutrients stated. 

Western markets are set to be more contested with ample export supplies pushing Baltic and African marketers to compete on sales into the Americas at the expense of netbacks, the company added. 

According to data compiled by Argaam, SABIC Agri-Nutrients’s net profit plunged 66% to SAR 2.68 billion in the first nine months of 2023 from SAR 7.86 billion a year earlier.

Similarly, the third-quarter net profit slumped 55% year-on-year to SAR 1.04 billion.