The Chinese government announced its intention in December to flatten its urea export tariff to RMB80/t. Previously a two-tiered structure was enforced with a low-season tariff of RMB40 from 1 July to 31 October, and a high season tariff of RMB40 + 15% of net export value for the remainder of the year.
A potential HI supply glut is building, and four new plants are planning to commission and begin commercial production in Q1 2014. Safco V, the Algeria Oman Fertilizer Co., MOPCO and Kaltim V should add just over 3.0 million t/y of new granular supply (Kaltim V is replacing an older unit that will close) which should place a downwards pressure on prices when coupled with the flat Chinese export tax through Q2.
Higher purchasing in the USA, Brazil and the EU27 have boosted trade in the Atlantic basin this year and provide some uplift to prices in December that should carry into Ql 2015. Indeed, this buying pattern has partially offset the overcapacity that has been building in China, keeping full-year Black Sea prices above $310/t and Arab Gulf granular only S10/t down on 2013 at $335/t.
Oil markets and Russian roubles suffered a spectacular sell off in H2 2014as investment US shale oil producers and OPEC's desire to preserve market share oversupplied the oil market. The loss of essential hydrocarbon revenues routed the rouble on fx markets tipping Russia into recession.

Executive Summary 1

Chapter 1 - Demand 9

1.1 Global Urea Demand overview 9

1.2 Agricultural markets overview 9

      1.2.1 Recent agricultural market developments 9

      1.2.2 Agricultural market outlook 14

1.3 Regional Assessment of Urea Demand 20

      1.3.1 North America 20

      1.3.2 Central & South America 21

      1.3.3 Europe & CIS 22

      1.3.4 Asia 24

      1.3.5 ROW 26

Chapter 2 - Supply 27

2.1 Outlook for Urea Supply 27

2.2 Medium Term Regional Outlook for Urea Capacity 33

      2.2.1 East Asia Supply Outlook 33

      2.2.2 North American Supply Outlook 41

      2.2.3 European Supply Outlook 42

      2.2.4 Central and South America Supply Outlook 43

      2.2.5 CIS Supply Outlook 44

      2.2.6 Africa Supply Outlook 45

      2.2.7 South Asian Supply Outlook 46

      2.2.8 South East Asia and Oceania Supply Outlook 48

2.3 Urea Costs 52

Chapter 3 - Trade, Balance and Prices 57

3.1 Global Trade 57

3.2 Regional trade outlook 58

      3.2.1 East Asia 58

      3.2.2 North America 60

      3.2.3 Latin America 61

      3.2.4 Africa 62

      3.2.5 Europe 63

      3.2.6 CIS 65

      3.2.7 Middle East 66

      3.2.8 South Asia 67

3.3 Pricing Fundamentals 68

3.4 Supply Balance and Operating Rates 70

3.5 The Global Urea Price Floor 71

      3.5.1 Coal Price Outlook 71

      3.5.2 Calculating the Chinese export floor 72

3.6 The Outlook for Urea Prices to 2016 74

3.7 The Outlook for Urea Prices: 2016-2019 76

3.8 Risks to the forecast 78

Appendices

Appendix A - The Long Term Outlook for the Urea Market 79

A.1 The long-term outlook for urea demand 80

A.2 Urea gap analysis 88

A.3 Long-term guidance: CRU's LRMC methodology 89

A.4 Choice of regions for LRMC 90

A.5 LRMC base year: 2013$ 91

A.6 LRMC inflation indexes 93

A.7 Long-run marginal cost forecast, 2012-2037 96

Appendix B - Economic Outlook 99

B.1 Overview 99

B.2 Exchange rates 104

B.3 Macroeconomic outlook 106

B.4 Scenario 115

Appendix C - Nitrogen Fertilizer Consumption, 2013-2019 119

Appendix D - Urea Consumption, 2013-2019 125

Appendix E - Urea Production, 2013-2019 131

Appendix F - Urea - Gross Capacity, 2013-2019 135

Appendix G - Urea - Net Capacity, 2013-2019 139

Appendix H - Urea Imports, 2013-2019 143

Appendix I - Urea Exports, 2013-2019 149

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