AMMONIA
U.S. Gulf/Tampa: Tampa is reported firmly at $275/mt DEL for both first and second half of August. In the meantime, folks continue to talk about new barge business at NOLA, with nothing reported. With higher gas prices, sellers are reportedly looking at higher numbers and are meeting resistance.
Gas prices were in for a bumpier ride last week as NYMEX futures numbers moved up and down, due in part to the approach of Chris, a storm developing in the Caribbean. September settled at $7.292/mmBtu on Thursday.
Eastern Cornbelt: Much of the region saw a gradual shift from extreme heat to slightly cooler temperatures last week. Before the cooling trend, however, the high temperatures and humidity brought severe thunderstorms to some locations and prompted warnings from utility operators for residents and business to cut energy use.
Fertilizer was on the backburner in the region. Anhydrous ammonia was quoted in the $325-$340/st FOB range, with the low in Illinois on a spot basis and the higher numbers out of Indiana and Ohio terminals.
Western Cornbelt: Hot weather, worsening drought, and spotty thunderstorms summed up conditions in most of the region last week. Sources reported only slight changes in spot fertilizer prices, with little new activity to test the markets. Several sources said natural gas pricing volatility has prompted some producers to pull in summer and fall fertilizer pricing programs, while others came out with higher nitrogen postings.
Anhydrous ammonia was pegged at $320-$335/st FOB regional terminals, with the low in Iowa and Nebraska and the higher numbers in Missouri. Effective Aug. 2, Agrium’s postings for anhydrous ammonia moved to $345/st FOB terminals in Iowa, Nebraska, and Minnesota; $340/st FOB Clay Center, Kan.; $335/st FOB Conway, Kan.; $330/st FOB Mocane, Okla.; and $305/st FOB Borger, Texas. Delivered postings from the Borger location included $325-$330/st in Texas, with the low north of Interstate 40 and the high south.
Northern Plains: Relief finally came to much of the region last week in the form of cooler temperatures and, at least in southern Minnesota, substantial rainfall. There was little new information to report on fertilizer pricing, however, as sources reported minimal activity to test the markets.
Anhydrous ammonia was steady at $320-$335/st FOB regional terminals, with the low in Minneapolis and the higher numbers out of North Dakota locations. Delivered ammonia in North Dakota was pegged at $350-$360/st, with the low for fill tons and the high reportedly quoted for fall prepay.
Great Lakes: The anhydrous ammonia market in the Great Lakes region was pegged at $335-$350/st FOB for fill material, with the lower numbers reported by Wisconsin sources. One Wisconsin source quoted fall prepay tons at $350-$355/st FOB. A Michigan source said there were some rail-direct fill tons moving into the region earlier, but activity was quiet last week.
Middle East: Pricing is not that easy any more. Sources say with the markets in Europe, Asia, and the Americas all coming in with differing netbacks, the price range is all over the place. One source noted that a sale to India showed a netback of $200/mt FOB, but another deal from the same supplier to another buyer showed a netback of $225/mt FOB.
While some producers are still anxious to talk about material at $240/mt FOB, many in the industry say there is no real market at that level.
Adding to the confusion of pricing is the on-again, off-again promises of Sabic that its Safco IV facility will be up and running. As of late last week the word is the plant will be running by Aug. 15. The problem was said to have been in the ammonia unit. With the last of the glitches now worked out, sources say the facility is slowly producing ammonia – with the idea that granular urea will be the end result – but with some excess ammonia ready for export. Helping keep a lid on Middle East prices is the announcement by Petronas that the Malaysian producer will be churning out more tons and the continued healthy production coming out of Indonesia. And for the Middle East producers, the less said about the Burrup/Australia facility, the better.
The Malaysian, Indonesian, and Australian producers have better access – defined as cheaper freight rates – to the east coast of India than do the Middle East guys, and so are able to be highly competitive in selling there. Burrup reportedly sold a cargo to an Indian buyer early last week, and all indications point to additional sales along those lines.
Still, the anticipated IFFCO/India tender should see some strong offers from the Middle East.
Black Sea: Prices appear to have stabilized after several weeks of softness that would make a couch potato look trim. Sources report the stability has more to do with increased Indian and Chinese business than anything, even though neither buyer is taking from the region. Buying interest in the States continues to be the driving force for Black Sea ammonia – but, said one Asian source, it is impossible to completely segregate the various global markets.
India: Buying interest is up. Just last week, buyers concluded deals with Burrup/Australia and various Middle East suppliers. More purchases are expected soon. Leading the pack of expected buyers is IFFCO. Asian sources expect to see an IFFCO tender called any day now. The purchases will be for a series of long-term cargoes. Still, said one observer, the final deal will help ensure cargoes are not just sitting in storage containers looking for a home.
Asia: South Korean buyers are reportedly slowing down their buying requirements because a number of plants are going down for routine maintenance. Petronas/Malaysia announced it will be increasing output from its plants. At the same time, the Indonesian facilities – state-owned and joint ventures – are said to be running at close to maximum capacity once again. Buying interest in Japan and Taiwan are is to be holding at levels seen for the past few months, said one source. As a result, demand from those buyers is strong, but not unusual.
UREA
U.S. Gulf: Prompt granular barge prices moved up a little last week, with sources calling new sales within the $223-$225/st FOB range. Some argued that much of the business is simply trader-to-trader business, with end-users staying on the sidelines. One quandary facing the industry is possible demand in wheat country. Sources say drought conditions have stalled demand; however, if rains come, there will not be enough urea around to meet demand, what with the good prices being reported for wheat.
Eastern Cornbelt: Granular urea was tagged in a broad range at $240-$260/st FOB in the region, with the low on the Illinois River and the upper numbers to dealers out of northern Ohio shipping points.
Western Cornbelt: Granular urea remained at $245-$255/st FOB regional terminals.
Northern Plains: Granular urea was $240-$250/st FOB in the region, with delivered tons quoted at $245-$255/st in North Dakota. Agrium reported that its Carseland, Alberta, plant was restarting last week after being down for a week’s worth of repairs.
Great Lakes: Granular urea remained at $250-$270/st FOB, with the high quoted to dealers in Michigan. “Demand is soft,” said one Michigan source.
Northeast: Granular urea remained at $265-$270/st FOB in the region.
India: Ever so quietly, IPL moved on several cargoes from PIC, Bangladesh, and Yuzhnyy. By the end of last week, it had secured at least three – and possibly four – cargoes of granular material for September and October shipments from PIC, two cargoes from Bangladesh, and at least one from the Black Sea. All told, it booked about 200,000 mt.
At the same time, IPL went through with its tender of Aug. 4, with validity of offers through Tuesday. Just how much material it will take is anyone’s guess, but for traders and producers a whiff of an uptick in the market is in the air.
Sources say India will need about 1 million mt by the end of the year. Last year, buyers in the country loaded up on Black Sea tons that carried them well into this year. And now, say sources, the reserves are gone and a major application season is coming up.
The big issue will be when the IPL reviewers open the tender. At press time, sources were divided on what will happen. One scenario has the tender opened early Friday, with the Middle East producers getting the weekend to mull over their offers and think of ways to win an award or two – if they want it. The European suppliers will look over the numbers during the weekend as well, but will not be able to work on the numbers until Monday and make changes – if any – Tuesday.
Another plan is for IPL to keep the tender results closed over the weekend and early Monday and engage in private talks with the lowest offering companies. Then come Monday evening or Tuesday morning, awards will be made if deals are struck.
Complicating the whole Indian urea situation in predicting how much the country will finally take is the confusion over the pricing plans of the government. It seems the cabinet-level Committee on Economic Affairs was not able to agree on a new pricing plan, and so sent it on to the Committee of Secretaries (CS).
The CS was ordered to make its recommendations in two weeks despite a major war of nerves going on between the finance ministry and the fertilizer industry. It seems the producers want to expand production and change their facilities from being naphtha-based to natural gas. And the government is unwilling to pay for the work at the level the industry says is necessary.
Where government and industry agree, however, is in the need to increase India’s urea production so as to decrease its dependency on imports.
Middle East: Sabic says its Safco IV facility will be up and running Aug. 15. Of course, said observers, the producer has announced that the plant will be up and running soon for a while now. It appears that once the urea operation was all set and ready to go, the ammonia unit went bad. Sources say the last of the repairs on the plant were finished early last week, and the ammonia unit has been slowly coming up to speed. As of late last week it appears as if all the kinks were worked out.
Sources expect to see Safco IV add to the growing glut of granular urea by the end of the month.
With the sale of three-four cargoes to IPL/India by PIC, sources say the slide in granular prices has halted for a while. The deal easily took up the growing excess in PIC stockpiles, but did little else. In fact, say sources, the sale by taking up the slop of unsold July did more to prevent PIC from having to shut down than to boost the price. Sources said the stockpiles were bulging at the seams.
The sale apparently did not make a dent in the August and September inventories.
Depending on offering prices in the IPL tender, Sabic and PIC will be pleased if IPL shows a willingness to take more tons so regional stockpiles will not build up to dangerous – for producers – levels. But that depends on the Middle East guys participating in the tender. In previous Indian tenders the Middle East producers have skipped the exercise and were left with tons and tons of unsold material that eventually had to be sold in small lots to almost anyone who would take them.
For now, however, say sources the price of granular has stabilized.
Looking at the market, sources say estimating a netback from the States the price should be about $207/mt FOB, while the Indian business is estimated closer to $213/mt FOB. So until an award is made to a Middle East producer in the IPL tender, sources say the best price guess is in that range. Still, they say, there are blessed few tons that can be purchased at those levels that will easily find a home.
Prills also remain firm. The three producers – QAFCO, FERTIL, and Sabic – reportedly have enough orders booked to keep them happy. FERTIL nailed down enough business with BCIC/Bangladesh. QAFCO has contracts with plenty of small- to mid-sized buyers, so it is in no rush to offer discounts. And Sabic is said to be fully committed through this month and well into September.
One other thing that concerns sources is the traditional drop in prices following an Indian tender. Actually it’s not a long-held tradition, but following the last three tenders after a bump up in prices because of an Indian tender, the prices in the Black Sea and Middle East slid back down.
Black Sea: As a result of Brazilian buying and speculation on the IPL/India tender, prices have surged upward. Just how sustainable this increase will be is hard to determine. Sources point out that after the previous three Indian tenders the price dropped following a spike leading up to the tenders.
Sources now say prices have jumped up to $210/mt FOB and more. The best guess now is the market settled at $210-$215/mt FOB by the end of last week. This week the betting is the price will go up some more as a result of traders taking short positions for the IPL tender.
Buying in Brazil will help provide a floor for prices, but only as long as there is strong demand from other places such as India. The Brazilian purchases offer a psychological boost to stemming a price slide, but can do little to move the market on its own.
Sources expect to see buying from Brazil take just under half a million tons during the next 45 days.
Bangladesh: The BCIC tender of July was scrapped. Sources say the BCIC bean counters were reportedly not happy with the prices offered, the falling international market, and the unwillingness of the offering companies to lower their prices accordingly. The action will put more pressure on BCIC to definitely buy something in the tender that closed last week. Sources expect lots of Chinese material to be offered in that tender as well, because shipment is not expected until after Oct. 1, when Beijing lowers the export tax.
Observers say there is a definite need for urea in the country and that BCIC would be well-served to snap up the offers that are made in the tender for as many tons as they can possibly afford. With the scrapping of the July tender and the long delay in awarding the June tender – and even not awarding the full amount in that one – sources say the country’s urea reserves are dwindling rapidly.
China: One Asian trader noted that all the talk of Beijing halving the export tax early goes against the whole history of the way Chinese do business with urea. Beijing has long stated the export tax would be cut from 30 percent to 15 percent Oct. 1, and sources say it is the rare situation when the country’s leadership goes back on their oft-repeated word – at least in the urea business.
Sources say the government is checking to make sure there are plenty of tons on hand at low rates for local farmers before they allow exports to occur. One source noted that if the floodgates for exports were to be opened Sept. 1, there could be a possibility of selected urea shortages in the country.
NITROGEN SOLUTIONS
Eastern Cornbelt: UAN-28 was quoted at $155-$165/st ($5.54-$5.89/unit) FOB regional terminals. Sources continued to report rumors of sold out production, although several said their tanks still carried extra tons from the spring season.
Western Cornbelt: UAN pricing was something of an enigma, with reports of sold-out production tons but also a fair amount of dealer carryover in the region. Sources tagged the market at roughly $5.40-$5.78/unit FOB regional terminals, up slightly from last report, with the low out of spot Mississippi River locations and the higher numbers to dealers out of Missouri River terminals.
Northern Plains: UAN was tagged at $5.55-$5.85/unit FOB regional terminals, with delivered fill tons referenced as high as $6.60/unit DEL in North Dakota.
Great Lakes: Michigan sources quoted UAN-28 at roughly $165-$175/st ($5.89-$6.25/unit) FOB terminals, up from reports of $155-$160/st ($5.54-$5.71/unit) FOB pricing in June. One Michigan source, citing reports from producers of allocated tons, even reported a recent rail-DEL quote as high as $191/st ($6.82/unit). He noted, however, that no buying was taking place even though there are empty tanks in the region.
Northeast: UAN-30 was quoted at $180-$184/st ($6.00-$6.13/unit) FOB Baltimore and Philadelphia, while UAN32 pricing out of tanks in upstate New York was quoted at $6.50-$6.75unit FOB.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate was unchanged at $255-$260/st FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $150-$155/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was unchanged at $150-$155/st FOB and $155/st DEL in the region.
Northern Plains: Ammonium sulfate remained at $150-$155/st FOB and $155/st DEL.
Great Lakes: Granular ammonium sulfate was $150-$160/st FOB regional shipping points.
Northeast: Granular ammonium sulfate was up slightly to $142-$155/st FOB, with the low at Hopewell, Va., and the high FOB Philadelphia. Delivered sulfate ranged from $160-$175/st in the region, depending on location.
NPK
South Korea: Apparently the South Korean government is sticking to its guns in denying additional shipments of NPKs and urea to the North because of the missile firing exercises last month. North Korea has regularly needed about 300,000 mt of donated fertilizer semi-annually to help feed its people.
In the past South Korea has used fertilizer and grain shipments to pressure North Korea into granting concessions on issues close to the heart of the South Korean people, notably visitations and reunions for families divided by the border between the two countries. And in the past the North has acceded to the southern requests. This time, however, Pyongyang appears to be holding firm in its desire to have its missiles and fertilizer at the same time.
PHOSPHATES
Central Florida: Most likely because of the pending rate increase by CSX Transportation on Sept. 1, phosphate sales out of Central Florida saw an uptick last week. Although somewhat more was sold, the sales were within the exiting price range.
The fall season had not yet begun last week, and it may be another couple of weeks before phosphate products begin to move. Hot weather and drought have slowed the beginning of the season in areas that would normally be underway, but rain could change that situation quickly. Speculation was that farmers will be buying more DAP and other phosphate products this season, because grain prices – especially for wheat – were up. In addition, farmers cut back on application rates last spring by 20 to 25 percent, and the soil can be milked only so long before crops are affected. With the move toward ethanol, more corn was expected to be planted this season – or so at least those in the fertilizer business hope.
The Central Florida DAP range was unchanged last week at $223-$227/st FOB. Mosaic’s posted price remained at $235/st FOB, and CF’s posted price was $227/st FOB. Prices do not include discounts; however, some large buyers can obtain a lower price without a discount from some producers. CF was said to be selling DAP as low as $223/st FOB. Mosaic discounts MAP $4/st from the price of DAP, while CF has no price difference. PotashCorp’s Central Florida reference price remained at $245/st FOB. In Texas, Agrifos’ prices were unchanged at $255/st FOB for DAP and $261/st FOB for MAP.
U.S. Gulf: It’s summer time, but the living ain’t easy on the river – at least not if you are in the fertilizer business. Oklahoma and parts of Texas continued to experience a drought and temperatures over the 100-degree mark. The high temperatures were drying up even subsurface moisture. Normally, that area would be buying phosphates and other fertilizers because the fall season should already be getting started, but not this year. Warehouse prices for DAP on the Arkansas River system have settled down to $260/st FOB and product was beginning to move out the door, but the quantities were below normal. Most of that, sources said, was going into storage for dealers.
Mosaic plans to import its first vessel of TSP later this month, but prices have not been set. Most, if not all, of that will go to the river system, which is capable of handling larger vessels than those in Central Florida, where prices will likely be higher – if it is available at all.
Traders and producers both said inquiries were up, many from the cornbelt, but few new sales were made. Only two new barge sales could be found last week, and both were at the bottom of the previous week’s price range.
The NOLA DAP barge price range last week was unchanged at $228-$233/st FOB, with the lowest prices coming from traders, who were eager to get rid of what they obtained earlier and out from under high storage rates.
Eastern Cornbelt: DAP and MAP were both quoted in the $260-$270/st FOB range out of most river terminals, with inland warehouses referenced at higher numbers. No market was reported for TSP. 10-34-0 was $255-$265/st FOB in the region.
Western Cornbelt: DAP and MAP were quoted at $260-$270/st FOB most river terminals, with postings at the $275/st FOB mark or higher at inland locations. No current pricing was reported for TSP. 10-34-0 was pegged at $255-$265/st FOB in the region.
Northern Plains: DAP remained at $270-$275/st FOB the Twin Cities and Winona, Minn., with MAP quoted at $268-$272/st FOB. Delivered green MAP was pegged at $292-$295/st in North Dakota. No current numbers were reported for 10-34-0 in the region.
Great Lakes: DAP and MAP remained in a broad range of $265-$280/st FOB, with the low reported in southern Wisconsin and the high out of Michigan warehouses. No market was reported for TSP. 10-34-0 pricing was pegged at a nominal $260-$270/st FOB.
Northeast: DAP and MAP remained at $275-$280/st FOB. The 10-34-0 market in upstate New York was quoted at $255/st FOB, down slightly from last report, with delivered product reported at the $270/st level in Pennsylvania.
U.S. Export: PhosChem made no new sales last week, but it did improve its margin for the FOB price by obtaining a lower freight to India, currently its biggest customer. Pakistan was also said to be in the market, and PhosChem should benefit from that. A deal with Brazil for the sale of 40,000 mt of MAP at $259/mt FOB was pending at press time.
Last week, Jordan made a sale to India of 150,000 mt at $285-$288/mt FOB, but the delivered price was about the same as what PhosChem receives, about $306/mt. Transportation for the closer location was responsible for the large FOB price difference. Jordan has a letter of memorandum from India for another 50,000 mt. However, once that is completed, that country will be out of product until some time in November. Russia will not be in a selling mode again until some time in October, so that pretty much leaves the field open for PhosChem.
Including the about-to-be-concluded sale of MAP to Brazil, the export price range last week fell at the bottom and increased at the top as a result of lower freight rates. The export price range last week was $259-$264/mt FOB, compared to the previous week’s range of $260-$261/mt FOB.
POTASH
Eastern Cornbelt: Potash was steady at $195-$201/st FOB in the region.
Western Cornbelt: Granular potash was $193-$200/st FOB in the region, depending on grade and location.
Northern Plains: Potash remained at $178-$183/st FOB Saskatchewan mines, depending on grade. Delivered potash was tagged at roughly $198-$208/st in the region. One Dakota source said a fair amount of potash fill was being pulled to beat a rumored price increase in September.
Great Lakes: Potash pricing was down from last report, although sources said reports were circulating of producer price increases taking effect in September. The market in Michigan was quoted last week at $201-$204/st FOB, with the low for red and the high for white granular potash. A southern Wisconsin source quoted rail-DEL potash at the $200/st level, give or take.
Northeast: Potash remained at $217-$238/st DEL, depending on grade and location, with the upper end reported for delivered soluble tons on a spot basis.
SULFUR
Tampa: Contracts for West Coast prillers were signed last week at prices $7.50/lt below the previous quarter. That followed on the heels of the settlement between phosphate producers and the sulfur industry, where third quarter contract prices fell $3/lt.
The fourth sulfur vessel of prill was loaded at Beaumont last week, but that will probably be the last for between 30 and 60 days, because supplies were running low. An earlier vessel, loaded for a trader who planned to sell it to Senegal, was diverted and sent to Brazil. The reason was said to be financial. Senegal was just emerging from bankruptcy, and the sulfur shipment was supposed to be supported by India, but that did not happen.
The heat wave in the Northeast, where temperatures were around 100 degrees or better last week, affected refineries in that area, and production for both fuels and sulfur were reduced as a result. In Texas, where temperatures of 100 degrees or higher are common at this time of year, there was no reduction in production due to the heat.
Valero’s refinery at Texas City ran into unexpected maintenance problems with its No. 3 SRU unit, and sulfur production will be reduced from 700/lt day to 350/lt day for about two weeks. In addition, ExxonMobil’s refinery at Baytown ran into unexpected maintenance problems, and that will result in a loss of about 25,000 lt of sulfur production.
On the plus side, it appeared Tropical Storm Chris was weakening, which greatly reduced the chances it will become a problem for either drilling operations in the Gulf or refineries on the Gulf Coast. If the storm survives its trek across Cuba, it could still produce showers somewhere on the Gulf Coast, but was not expected to form into a hurricane. Of course, that could change.