Global urea prices have cooled from their December peak. In early January 2022, global urea prices declined ~12% vs mid-December 2021; however, they remained high at ~USD800/tonne and could potentially stay high throughout Q1 2022, which is in line with our expectation. We believe the average global urea price in 2022 will be ~USD625/tonne — ~25% higher than in 2021 — while the average urea price in 9M 2022 will be ~80% higher than in 9M 2021. Our 2022 global urea price assumptions also imply that global urea prices will decline further in Q2 2022 vs Q1 2022. If global urea prices are weaker than expected, our assumption of a 20% discount of domestic urea prices vs global urea prices will provide a strong buffer for DPM and DCM’s selling prices (Figure 4).

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