We raise our global urea price assumption following our recent increases to our gas, oil & coal price forecasts. In Q1 2022, the average Middle East urea price rose 138.4% YoY to USD822/tonne before skyrocketing to over USD900/tonne in April; however, it has cooled to USD700/tonne in May. These high prices beat our expectation and were driven by a lower supply from Russia and Europe and continued export restrictions in China, as well as by a demand recovery and surging input costs. Meanwhile, the International Energy Agency (IEA) raised its average 2022 gas price forecast by 26% in its Q2 2022 report vs its Q1 2022 report (Figure 8) as it expects gas prices to remain elevated in H2 2022 instead of cooling down starting in Q3 2022 as it previously forecast. In our April 8, 2022 Energy Sector Update, we raised our gas, oil and coal price assumptions as we expected the Russia – Ukraine conflict could keep these prices high. In this Sector Update, we increase our average 2022F global urea price by 16% from USD550/tonne to USD640/tonne and increase our price assumptions for 2023-2026F by 14% on average.

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