Southeast Asia, China seen as alternate ammonia hubs amid Middle East conflict

Southeast Asia and China's ammonia markets were increasingly viewed as alternative supply bases in the week ended March 5, as escalating tensions in the Middle East heightened concerns over disruptions to regional exports, six market sources in Asia said.

Uncertainty surrounding Middle Eastern ammonia cargoes transiting the Strait of Hormuz prompted buyers to redirect sourcing toward Southeast Asia and China, both of which had been considered comfortably supplied in recent weeks.

Four Northeast Asian traders reported the emergence of inquiries for Southeast Asian and Chinese cargoes from India, Northeast Asia and markets west of the Suez Canal since earlier this week.

FOB selling indications in Southeast Asia were heard increased by $20/metric ton earlier this week, supported by the firmer buying interest. Three traders based in Northeast Asia also indicated that some offers of Chinese cargoes have been withdrawn from the market, with sellers awaiting more price clarity.

Two Northeast Asian traders continued to highlight the potential for westbound shipments of Asian ammonia, adding that the arbitrage window would be widely opened amid the loss of Middle Eastern supply. However, few fixtures for deliveries to the west of Suez had been concluded due to tight vessel availability in the charter market.

"There is still no vessel space available, which is limiting additional FOB sales to the West," a China-based trader said.

Supply-side indications from Southeast Asia were heard at $480-$490/mt FOB March 5, with multiple sources suggesting that certain sellers in both Southeast Asia and China were targeting levels closer to $500/mt FOB.

Platts, part of S&P Global Energy, assessed Southeast Asia ammonia at $470/mt FOB on March 5, up $30/mt week over week.