Where you buy urea depends on how much you need. A farm or a grower buying by the bag or the trailer load buys from a local agricultural retailer or co-operative, which has already imported, stored and paid duty on the product. An importer or distributor buying container loads or a vessel parcel buys from a producer's export arm, from a trading company with an offtake contract, or through a broker who places the requirement with one of them. This guide is for the second group.
Where can I buy urea in container or vessel lots?
There are three sources, and it helps to know which one is in front of you.
- Producers. The plants in the Gulf, North Africa, Russia, South-East Asia and elsewhere sell through their own marketing companies. They sell by tender and to buyers they have vetted, mostly in full vessel lots and against a letter of credit. The main producing and exporting countries are listed in our guide to how urea is made and where it is produced.
- Trading companies. International traders buy from producers under term contracts and tenders and resell, often on CFR terms with freight arranged. They will split cargoes and finance some buyers.
- Brokers. A broker does not own the cargo. It takes a buyer's requirement to a producer or trader, and the contract is made between the buyer and the named seller. CBIL works this way.
What is a urea supplier expected to tell you?
A genuine seller, of any of the three kinds, can name the producing plant and the load port, send that plant's specification, and say when the cargo can load. A seller who cannot name the plant is not close to the product.
Lot sizes
Urea is bought in two physical forms, and the form decides the minimum quantity.
| Lot | Packing | Who buys it |
|---|---|---|
| Container lots | 50 kg woven polypropylene bags with a liner, or 1 tonne jumbo bags, in 20-foot containers | Distributors, blenders, industrial users, first-time importers |
| Break-bulk bagged parcels | Bags or jumbo bags in the hold | Importers at ports without bulk handling |
| Bulk vessel parcels | Loose in the hold of a handysize or larger bulk carrier | National importers, large distributors, tender buyers |
Handysize is the smallest class of ocean bulk carrier, with a deadweight of up to about 50,000 tonnes; ships above 35,000 tonnes are also called handymax or supramax. Most handysize ships are geared, meaning they carry their own cranes and can discharge at ports with no shore equipment. That matters for fertiliser, which often goes to small ports.
Bulk is cheaper per tonne but needs a port that can discharge it, covered storage, and a bagging line or a bulk customer. Containers cost more per tonne and suit a buyer who wants to start with a few hundred tonnes.
FOB or CFR
Urea is quoted on two main terms.
- FOB (free on board) the load port. The seller delivers the cargo on board the ship. The buyer charters the vessel or books the containers, pays the freight and insures the cargo. FOB suits buyers who have freight contracts or a chartering desk.
- CFR (cost and freight) the discharge port. The seller arranges and pays the freight. The buyer's risk still starts when the cargo is loaded, so the buyer insures the voyage. Most importers without a shipping department buy CFR.
For a vessel cargo the contract also fixes the discharge rate and demurrage, which is the daily charge when the ship is kept waiting. Slow discharge at a congested port can cost more than the difference between two offers. The terms are explained in our guide to Incoterms for bulk commodities.
What a credible offer carries
A workable urea offer states all of the following. If several are missing, it is an advertisement and not an offer.
- The seller's registered company name and country.
- The producing plant and the load port.
- The grade: granular or prilled, fertiliser or technical.
- The specification with limits. For fertiliser-grade granular urea the usual lines are nitrogen 46.0% minimum, biuret 1.0% maximum, moisture 0.5% maximum and 90% minimum between 2 and 4 mm.
- Quantity with a tolerance, and packing.
- The Incoterm and the named port.
- The shipment period, as dates.
- The payment term and the documents to be presented.
- The inspection company and where it samples.
- How long the offer is valid. Urea prices move weekly, and a real offer lapses within days.
Check the price against the market before replying. We keep a dated urea price page for that purpose.
Inspection
The contract should name an independent inspection company, such as SGS or Intertek, to sample the cargo during loading and to certify quality and weight. For a bulk cargo the weight is established by draft survey of the vessel. The inspector's certificate, not the seller's own, should be the document the bank pays against. Sampling and draft surveys are explained in our guide to inspection and sampling, and reading the certificate in the guide to spec sheets and certificates of analysis.
Payment by letter of credit
Vessel cargoes of urea are paid for by irrevocable documentary letter of credit, normally at sight and subject to the UCP 600 rules. The buyer's bank undertakes to pay the seller when the seller presents the documents the credit lists: the bills of lading, the commercial invoice, the inspector's certificates of quality and weight, and the certificate of origin. The bank checks documents, not cargo, so the buyer's protection is the inspection certificate it has asked for. Container business between parties who know each other is often done with a deposit by bank transfer and the balance against shipping documents. Each method is set out in our guide to commodity payment terms.
A producer will not reserve tonnage for a buyer who has not said how it will pay and which bank will open the credit.
Common fraud signs in urea offers
Urea attracts a steady flow of offers that have no cargo behind them. The usual signs are these.
- A price well below the market. Producers sell at the market. Nobody holds a large quantity at a deep discount.
- Very large quantities on a long contract. Offers of hundreds of thousands of tonnes a month for twelve months, from a company with no trading record, do not come from producers.
- No plant named. The origin is given as a country, or the plant is named only "after the contract is signed".
- A fixed procedure with bank instruments. The offer requires the buyer to sign a letter of intent, then issue a bank comfort letter or a standby credit, before any proof of product is shown.
- Fees in advance. The buyer is asked to pay for registration, a performance bond, an inspection or "allocation" before shipment.
- A chain of intermediaries. Nobody in the correspondence can be reached at the seller's own office.
- Documents that cannot be verified. Inspection companies confirm their own certificates on request. Use that before paying anything.
A simple test covers most cases: ask for the plant, the load port and a recent bill of lading from that port, then check the company in its national register.
How urea is traded through CBIL
CBIL brokers urea between a named producer or seller and a named buyer. The buyer contracts with and pays the seller, and the cargo ships against an independent inspector's certificate drawn at loading. We do not hold stock.
Request a urea quote with your company name, grade, quantity, packing, discharge port, delivery window and the bank that will open the letter of credit.