International nitrogen prices have firmed significantly in recent weeks driven by supply cuts by key exporters. Urea, which is the driver of global nitrogen prices, has seen the biggest hikes. Egyptian urea, which had been trading at $200/t (FOB) at the end of August, has increased in the past few weeks to over $260/t (FOB). Many industry observers question the sustainability of these price rises in such a short period of time.

The strong dollar is not helping, as most fertiliser is purchased in dollars and this alone has added almost €20/t to urea.

The main reason for the price increase is a reduction in supply from China, the world’s largest urea exporter. Despite lower gas prices than last year, China uses coal to produce its urea, and the price of coal has increased substantially. This means that factories losing money were taken out of production.

Locally, nitrogen fertiliser had fallen by about €100/t over the past 12 months and fertiliser was at relatively low prices, with CAN trading below €200/t last summer.

Fertiliser normally increases in summer but as the world adjusted to Brexit and the uncertainty relating to the US election and the subsequent currency headwinds, fertiliser prices were stagnant. These low prices were below the cost of production for many producers.