Welcome back to our blog. This time, we will spend some time on the natural gas market, and then give a short update on the fertilizer market.
Supply (natural gas)
Recent data from S&P Global Commodity Insights reveals some notable shifts in supply dynamics. The average total natural gas supply experienced a slight decline of 0.1% compared to the previous report week and a 0.2% decrease in dry natural gas production. This production level, currently at 101.6 Bcf/d, is approximately 4 Bcf/d lower than the record high set in December 2023. Interestingly, average net imports from Canada saw a modest increase of 2.1%, indicating the importance of cross-border trade in ensuring supply adequacy. Moreover, industry responses to market conditions have been notable, with CNX Resources announcing a delay in completion activities on some upcoming wells, aligning with similar decisions from industry peers like Chesapeake Energy and EQT Corporation. These strategic moves reflect the industry's adaptability in navigating market fluctuations and ensuring long-term sustainability.
Demand (natural gas)
Furthermore, recent insights from S&P Global Commodity Insights, total U.S. natural gas consumption witnessed a notable decline of 2.1% compared to the previous report week. This downturn was primarily driven by reduced heating demand, attributed to above-average temperatures across the country. Notably, consumption in the residential and commercial sectors experienced a more pronounced decrease of 4.0%, amounting to a decline of 1.1 Bcf/d. Additionally, natural gas usage for power generation and industrial purposes decreased 1.6% and 0.5%, respectively. Furthermore, exports to Mexico saw a reduction of 1.9%, indicating shifting dynamics in cross-border trade. Natural gas deliveries to U.S. LNG export facilities experienced a slight dip, averaging 13.3 Bcf/d, or 0.2 Bcf/d lower than the previous week.
Fertilizer market
There have been significant changes in the urea and DAP prices in the US. From the last blog report, the granular urea CFR New Orleans has moved from 381,95 $/MT to 429,90 $/MT, which is an increase of 12,6%. DAP, New Orleans has experienced an increase of 14,9%. In comparison, the Henry Hub natural gas price is down 7,0%.
The increase in the US prices has not impacted the European fertilizer market, which has not experienced any significant changes. However, there have been some significant advancements, such as the introduction of advanced phosphate fertilizers aimed at enhancing the reliability of domestic phosphate fertilizer supplies for Brazilian farmers.
The urea prices in Europe have traded slowly downwards this week, according to weakly update from TDN Direkt. Bad weather is continuing to press down demand in EU, meanwhile the market is well supplied. In China the prices have remained stable at 275 dollars per tonne. There is still no news from India, on their urea order, for delivery this spring.
Sources:
US Energy Information Administration (2024). Today in Energy, Thursday 14th Mars 2024. Accessed from: https://www.eia.gov/naturalgas/weekly/#tabs-supply-1
TDN finans. (2024). Gjødsel: Ureapriser stort sett litt ned denne uken. Accessed from: https://www.nordnet.no/market/news/1009306122 (read 17.march 2024).
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