AMMONIA
U.S. Gulf/Tampa: Major players concluded second half September Tampa business at $293/mt DEL last week. Those new numbers are in line with the most recent product into Point Comfort. In the meantime, while recent quotes for NOLA have been within the $280-$285/st FOB range, the free-fall in gas prices now has some doubting those numbers will be achieved in the near term. Sources did report that more recent trades did reach the $280/st FOB mark.
Eastern Cornbelt: Sources reported little change in the spot fertilizer markets last week, although there was some product positioning taking place before the fall application season. Ammonia was commonly quoted at $355-$365/st FOB regional terminals, with the low in Illinois.
Western Cornbelt: Anhydrous ammonia remained at $350-$360/st FOB most regional terminals. Several sources said they expect good fall ammonia movement, and noted that some terminals were low on product. There were reports that Koch’s terminal at Enid, Okla., was sold out of ammonia last week.
Northern Plains: Several sources said they expect brisk fall ammonia movement in the region. The ammonia market was quoted at $335-$350/st FOB regional terminals, and $355-$365/st DEL in North Dakota. Dakota Gasification was reportedly planning to restart its Beulah, N.D., ammonia plant on Sept. 15 after some downtime to balance inventories and perform boiler maintenance.
Great Lakes: The anhydrous ammonia market was pegged at $355-$370/st FOB in the region, with the lower numbers reported in southern Wisconsin.
India: The industry is looking to the prices coming out of the PPL tender to help better gauge where the global market – especially the Middle East market – will go.
For now, sources say best guesses put the offers into the tender at $280/mt CFR, which translates to $230-$240/mt FOB. With freight rates remaining high, the lower number is being used as a working estimate until the deal is consummated.
Previous business to India put the market at $240/mt FOB. Buying is expected to pick up, say Asian sources, as IFFCO steps up its production and hence its demand for more ammonia.
The issue now is that with rising freight rates, a strong desire by buyers to hold the line, strong desires by producers to increase their netbacks, and low Middle East inventories, sources say all indicators point to higher prices for Indian buyers.
By Sept. 18, the results of the tender should be known. Sources in Asia expect to see some bargaining going on between the buyer and offering companies. Just how much room PPL will have to negotiate is not clear. Observers point to the limited stockpiles in the Middle East as a major mark against any serious price decrease.
Middle East: In all likelihood, a Middle East supplier will get the PPL/India business. As of press time the best guess from Asian sources put the offering prices at $280/mt FOB. Once freight of $50/mt is backed off, sources say the Middle East could see a change in prices around $230/mt FOB.
The market has had its share of ups and downs in the past 90 days. Just late last month a deal with Pardeep/India shot the price up to $245/mt FOB. At that time sources said the price could continue to climb, but instead it stealthily moved downward to contracted ton levels. With no other spot business to judge the strength or weakness of the market, sources looked to the next set of Indian business. The PPL tender is what they are looking for.
For Asian buyers, the apparent move to $230/mt FOB is a slight relief. They are happy the PPL tender will apparently move the Middle East market closer to early August levels. They are worried because the estimated level is still higher than what was last reported before the Pardeep business.
Adding to buyers’ woes are reports the U.S. buyers will be active for the next few months. And while most of the tons America will buy will come from Yuzhnyy, there is expected to be a healthy amount taken from this region as well. Come Jan. 1 the price should drop off, unless there is a major disruption in the U.S. ammonia production facilities.
Black Sea: Asian sources point to reports the U.S. will soon be heavily in the market. Sellers are reportedly talking $295/mt CFR for a netback in the upper $220s/mt FOB. At least one deal has been concluded at $293/mt CFR, say sources.
For now, however, Asian sources are pegging the market at $220-$225/mt FOB.
To add to the general bullish feeling, sources say European buyers will continue to need tons because the cost of producing their own material is too expensive. High input costs – especially on natural gas – are causing most plant operators to shut down.
At the same time, there are turnarounds taking place in Ukraine and Algeria, thus making the availability of tons for European buyers in particular that much more limited.
And lastly, there are reports circulating that natural gas prices to Ukrainian producers will jump at the beginning of the year. Some buyers are expected to try to snap up as many reserve tons as they can prior to the New Year. One observer noted buyers do not want to be in a position similar to what happened earlier this year, when natural gas prices were raised and there was a stalemate between gas suppliers and buyers. The uncertainty of the plants’ ability to operate boosted the ammonia price at that time.
Asia: Regional buyers are expecting to see prices rise as the year wanes. The one hope is that once the end-of-year buying is done, January and February might herald lower prices. Demand in Taiwan remains firm. Sources say it could be higher, but at least one major buyer is down because of a strike. Other major buyers, such as CPDC and Taiwan Fertilizer, are still planning on taking their usual amounts.
In Indonesia, the KPA plant is expected to come back on line this week. Full production is not expected until Sept. 25, however.
The plant was down for a routine turnaround.
UREA
U.S. Gulf: Into mid-day Thursday, most folks called the NOLA barge market quiet. While many saw no major changes to the market, others reported new business was topping out at $226/st FOB.
On Thursday, gas prices took a dive (See page 1). There were reports that at least one major domestic producer significantly adjusted its forward pricing on urea and UAN to reflect these lower prices, significantly impacting prompt barge price ideas. Sources said barges were being offered late in the week as low as $220/st FOB. October was reportedly being quoted as low as $210/st FOB.
The low gas prices appear to be having a positive impact for both domestic producers and buyers. Producers can drop their prices, assure full production, and make it hard on importers. Sources said last week that the world urea market is already $20/st above the NOLA market, making it very difficult to justify any new spot cargoes to come to NOLA. Domestic buyers obviously benefit due to the price cut. Still, even at lower prices now, buyers may not see much need to buy if they do not need product until spring.
Eastern Cornbelt: Granular urea was $260/st FOB most river terminals in the region, while dealer postings were up at the $275/st FOB and $280/st DEL levels from Agrium.
Western Cornbelt: Granular urea remained at $255-$260/st FOB river terminals, with inland postings as high as $285/st FOB.
Northern Plains: Granular urea was $250-$260/st FOB, with the low at Minneapolis, Minn., and the high at Carrington, N.D. Reference pricing was quoted as high as $270/st FOB the Twin Cities. Delivered urea in North Dakota was pegged at $265/st last week, with reports of tight supplies out of Canada.
Great Lakes: Granular urea was $265-$280/st FOB, with the upper end reflecting dealer reference pricing in Michigan from several suppliers. A southern Wisconsin source pegged the truck-delivered urea market at the $265-$270/st range last week. Agrium’s Sept. 5 granular urea postings included $280/st FOB Saginaw, Mich., and $285/st rail-DEL in Michigan.
Northeast: Granular urea remained at $265-$270/st FOB regional terminals, with the low reported at E. Liverpool, Ohio, and the high to dealers FOB Philadelphia, Pa. Sources also reported prilled urea available out of the E. Liverpool market at the $260/st FOB mark. Delivered granular urea was quoted at $282/st in southern Pennsylvania.
India: Despite reports Brazil was the main focus of urea talks at the TFI gathering in San Francisco, observers from Singapore to London were watching the IPL/India tender that closed Thursday, Sept. 14.
The Indian buyer snapped up close to 700,000 mt in the past couple of weeks and then called a tender for an unspecified amount. Sources say that once the latest round of private deals is taken into account, IPL only needs to buy 200-250,000 mt of urea to satisfy its needs for the rest of the year.
In addition to the 400,000 mt reported in last week’s Green Markets, additional tons arranged by Helm, Toepfer, and Ameropa last week boosted the amount to the now estimated 700,000 mt on order.
Sources say IPL was looking for prices no higher than what it paid in its last set of purchases – low to mid-$240s/mt CFR – but the initial results of the tender show sellers have other ideas.
While some offers did come in the low-$240s/mt CFR, the majority were $250/mt CFR and up. Still, said one source, some intensive negotiations are expected to take place over the weekend.
Traders were saying IPL is in a strong position because there are no other large buyers around and because IPL is willing to take granular or prilled material. Normally a prilled buyer, by allowing granular to be offered IPL is forcing prilled producers to chase the lower global granular price. Many of the offers indicated a $3/mt discount on granular product.
Offers follow:
| Supplier | Source | Qty ‘000 mt | $US/mt FOB | $US/mt CFR | Notes |
| Helm | CIS/Romania | 35 | 262.50 | 1st half Oct. Kandla dischrg |
|
| Transammonia | Open | 60 | 243.50 | Prill Sept-Nov |
|
| Open | 60 | 243.50 | Prill/Granular Minus $3/mt for granular Sept – Nov |
||
| Open | 75 | 252.50 | Prill Oct – Nov |
||
| Open | 50 | 252.50 | Prill/Granular Minus $3/mt for granular Oct. |
||
| Open | 50 | 252.50 | Prill/Granular Minus $3/mt for granular. Nov |
||
| Toepfer | CIS/Egypt Libya/China |
55-60 | 245.43 | 2nd half Nov – Dec. Mundra dischrg |
|
| 35-40 | 255.43 | Kandla dischrg | |||
| 35-40 | 261.83 | Vizag dischrg | |||
| Bangladesh/China | 20 | 228.50 | |||
| ConAgra | Open | 25 | 252.50 | Oct-Nov. Prill or Gran Minus $3/mt granular Vizag dischrg |
|
| Ameropa | Open | 85-95 | 243.50 | Prill or gran. Minus $3/mt for granular Mundra dischrg Sept – Oct |
|
| Open | 35 | 252.50 | Prill or gran. Minus $3/mt for granular Vizag dischrg Sept – Oct |
||
| CIS | 30-40 | 257.50 | Prill , Vizag dischrg., Nov. | ||
| Keytrade | Open | 50-60 Or |
255.00 | Prill or gran. Mundra dischrg |
|
| Open | 2×35 | 262.00 | Prill or gran. Vizag dischrg |
||
| Fertil | UAE | 20 | 235.00 | Nov-Dec | |
| Qafco | Qatar | 15-20 | 235.00 | Nov-Dec | |
| Sabic | Saudi Arabia | 2×25 | 235.00 | Nov-Dec |
Freight rates have been steadily moving upward. Sources say increased demand for bulk carriers for grain and other commodities is beginning to affect the ability to ship fertilizer.
This increase in shipping is forcing a game of chicken among suppliers, traders, and IPL. The buyer does not want to pay more than it did in its last round of purchases – low $240s/mt CFR. As noted, a lot of traders offered tons in the tender with open sources – the hope being the trading house will be able to secure the necessary tons at a level acceptable to buyers and sellers. But with freight rate increases hitting daily, sources say pressure is building for the buyer to pay a little more and for the producers to shave off a little more.
With no other serious business on the horizon, some observers are putting their money on IPL winning this game.
Black Sea: There are now reports that producers are offering at $210/mt FOB, but with no takers. At least one Asian source said he would ordinarily like material at that level, but with what appears to be a softening market he is afraid to bid at $210/mt FOB and then watch the market continue to drop.
Because this hesitancy is pervasive, sources say no business has been done to confirm a new pricing level. As a result, officially the market is still sitting about $215/mt FOB – but with a lot of room, and potential for a drop. However, there were reports at press time that new business had moved to $220/mt.
Reportedly, Brazilian buyers at the TFI gathering were calling for a price of $235/mt CFR. Increasing freight rates would mean a netback of nearly $190/mt FOB. Sources in Asia and Europe don’t see that happening any time soon.
Middle East: Producers are comfortable for the next couple of months. In fact, their comfort level is so evident they offered prilled material in the IPL/India tender at almost $15/mt beyond the generally agreed-to market level.
While producers will claim the market has indeed moved into the $230s/mt FOB, traders and other sources say with no business to test that level the producers are merely engaged in attempts to jawbone the market up.
Still, say sources, stockpiles are limited. Middle East producers cut early deals with traders or IPL directly at prices that netback to $215-$220/mt FOB for both granular and prill – with some slight differences. Granular remains the main commodity under price attack, as supply levels from around the world feed into an already glutted granular market.
The IPL business was instrumental in making sure Sabic and PIC have no reserve building up. Cargoes slated for shipment to India are said to be booked well into November and possibly December.
China: Producers would like to sell offshore, but do not appear to be in a major rush to cut prices to do so.
Come Oct. 1, the export duty will be reduced to 15 percent from its current 30 percent. A traffic jam of vessels is already expected in most urea ports for October, as orders for a number of Southeast Asian countries and Bangladesh seek to be filled.
And pending approval by the Bangladesh government, another 400,000 mt could be slated for November and December loadings.
Add to those deals reports that Vietnam is still looking for tons in small lots to be sent to smaller ports near the end users.
Sources say the successful domestic season that is just about wrapped up left the producers in healthy financial shape. So much so, said one trader, that some producers are willing to walk away from business or not even begin talking until a higher price level is put on the table.
At the same time, new potential buyers are poking around. Sources report MITCO/Malaysia is looking for cargoes to make up for a shortfall in domestic production. Rumors continue to circulate that Indonesia may require a cargo or two for the same reasons.
For now, the price at the docks remains in the low $220s/mt FOB bagged.
Vietnam: Domestic producers continue to thwart efforts by importers to bring in tons. Sources report that every time someone gets close to arranging for a cargo from China, the domestic producers drop their prices so that the imported material is suddenly too expensive for the farmer.
Asian sources note that domestic production is significantly lower than demand, and that the actions to reduce imports is actually hurting the farmers. For its part, the government is backing the state-owned plants and claiming the gap between production and demand is smaller than outside analysts say.
NITROGEN SOLUTIONS
U.S. Gulf: At midweek, most sources said UAN barges had about topped out and prices were beginning to erode. They were called $155-$158/st ($4.84-$4.94/unit). As with urea, however, ideas for future pricing were down even more once gas prices started diving on Thursday.
Eastern Cornbelt: UAN-28 remained at $163-$175/st ($5.82-$6.25/unit) FOB regional terminals, with the low end confirmed last week by Illinois sources out of spot Mississippi and Illinois River locations.
Western Cornbelt: UAN was steady at $5.80-$6.25/unit FOB regional terminals, with the low on the river and the upper numbers inland.
Northern Plains: UAN was quoted at $5.70-$6.15/unit FOB regional terminals, with the low reported for spot sales to dealers in Minnesota. Delivered UAN-28 remained at the $185/st ($6.61/unit) mark in North Dakota for the last done business.
Great Lakes: The regional UAN market was quoted in a broad range at $6.15-$6.61/unit FOB, with the low reported in Wisconsin for prompt tons and the upper end reflecting reference pricing out of Michigan terminals. Delivered UAN was quoted at $6.41-$6.79/unit in the region.
Northeast: UAN-30 was quoted at $177-$180/st ($5.90-$6.00/unit) FOB Baltimore, Md., and Philadelphia, with delivered product pegged at the $202/st ($6.73/unit) mark in areas of southern Pennsylvania. Out of terminals in upstate New York, the UAN market was referenced at $6.75/unit FOB.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate remained at $245-$250/st FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $150-$155/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was steady at $150-$155/st FOB, with a posted increase reportedly scheduled for Sept. 20.
Northern Plains: Ammonium sulfate remained at $150-$155/st FOB and $155/st DEL in the region. A $5/st increase from Honeywell on Sept. 20 will put the warehouse reference price in the region at $160/st FOB, sources said.
Great Lakes: Granular ammonium sulfate was tagged at $155-$160/st FOB and $165-$170/st DEL, with mid-grade sulfate quoted at $145-$150/st DEL in Wisconsin.
Northeast: Granular ammonium sulfate was pegged at $147-$155/st FOB in the region, with the Philadelphia market quoted at the $150/st FOB mark. Delivered granular sulfate remained at $164-$175/st, depending on location.
PHOSPHATE
Central Florida: With the exception of sales made before Sept. 1, no new sales were reported last week, and that may not change for a while. Areas served by Central Florida have not begun their fall seasons, and some may not do much buying even when the season arrives. Dairy farmers in Pennsylvania are faced with a sharply declining price for milk, and many will be spending far less on phosphate and other fertilizers this season.
At TFI’s World Conference little was done in terms of new business. Dealers appeared to be taking only what they need from local terminals after a difficult year the last time. While business at warehouses has increased in recent weeks, that has not translated into new sales for resupply. Many sources said they did not believe business will pick up until sometime in December or January. Currently, producers have been able to keep inventories under control through heavy export sales, but that should begin to taper off in November unless some new, large sales are made.
In Texas, phosphate sales improved significantly last week, and Agrifos, which had resisted the move by major producers to lower its price for MAP, changed its mind last week and dropped the price of MAP to the same as DAP.
With no new business, the Central Florida DAP price range did not change last week and remained at $223-$226/st FOB. Mosaic’s posted price was $228/st FOB, but was selling as low as $226/st FOB; CF’s posted price was said to be $227/st FOB with sales at $223/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 was still at $245/st FOB. In Texas, Agrifos’ prices were $255/st FOB for DAP or MAP.
U.S. Gulf: The NOLA DAP barge market has become strange, with a wide spread of prices in the range and most sales at the extremes. Miss Phos barges for resale by those under contract continue to be on the low end, while those sold by Mosaic, which enjoys lower freight rates because of its current contract, were on the opposite end of the range. How long cheap barges will be available was difficult to determine last week. A rumor, which could not be confirmed, was that a trader had bought 14 or 15 barges on the river for transloading onto a vessel for resale into Uruguay. If so, that would help to reduce the glut of cheap barges.
Terminals on the Arkansas River system continued to be busy last week and some reordering was taking place, although not enough to make the market healthy. The U.S. Army Corps of Engineers was scheduled to reopen the lock near Little Rock on Sept. 14, so barges will be able to make the trip. Since that was the most active area of the country for phosphate and other fertilizer sales, warehouses should not be in danger of running out. However, several sources said the wheat run in that area was running behind normal for this time of year. Many of the farmers were apparently waiting until October to begin planting. In addition, the rain that helped those parched areas in Oklahoma, Kansas, and northern Texas continued last week, and that will impact phosphate sales unless they get more moisture.
In general, the NOLA DAP barge market continues to run behind normal levels. Sales last week were at the extremes, which set the NOLA DAP barge price range at $221-$230/st FOB. However, freight rates continue to be a major factor in FOB pricing. The previous week’s range was $221-$227/st FOB.
Eastern Cornbelt: New phosphate sales were few after CSX Transportation implemented its higher seasonal surcharge of $250 per car, or $2.50/st, into effect on Sept. 1. Although activity out of regional warehouses was very limited in mid-September, one regional source said he thinks the fall will see an active warehouse market for phosphates due to late commitments from cautious buyers, along with expectations for increased corn acreage in 2007.
DAP was quoted as low as $255-$257/st FOB river warehouse, with inland pricing $10/st higher. Some sources maintained that the most common dealer price out of river locations was $260/st FOB last week. MAP pricing was the same as DAP, and TSP was quoted at $235-$239/st FOB river terminals and roughly $245/st FOB inland. 10-34-0 remained at $250-$260/st FOB in the region.
Western Cornbelt: DAP remained at $257-$265/st FOB regional warehouses, with MAP quoted in the same range. One Iowa source pegged the common river warehouse price for DAP at the $260/st level, with direct-transferred material trading at the $255/st mark or lower on the upper river system.
TSP was $235-$245/st FOB, with the low on the river and the upper end inland. 10-34-0 remained at $250-$265/st FOB, with the low in Nebraska and the upper end in Iowa.
Northern Plains: Phosphate demand was starting to pick up, as dealers who postponed summer fill commitments started positioning for the fall. DAP pricing was down from last report, with the market pegged at $260-$265/st FOB the Twin Cities. MAP was roughly the same price as DAP, with delivered green MAP unchanged at $295/st in North Dakota from western or northern shipping points. 10-34-0 was $265/st FOB and $275/st DEL in the region.
Great Lakes: DAP was pegged at $265-$275/st FOB regional warehouses, with dealer reference pricing reported as high as $283-$285/st FOB in Michigan. Delivered DAP was quoted by one Wisconsin source at $270-$275/st last week. MAP was essentially the same as DAP, and TSP was quoted at the $245/st FOB mark.
10-34-0 pricing was pegged at $265-$275/st FOB in the region, with the low in Wisconsin for prompt tons. The upper end of the range was quoted out of Michigan terminals and by Wisconsin sources for prepay 10-34-0.
Northeast: DAP and MAP remained at $275-$280/st FOB, with the upper end quoted as the dealer reference price FOB E. Liverpool. Delivered MAP was reported at $292/st in southern Pennsylvania. 10-34-0 remained at $255/st FOB terminals in upstate New York, and $270/st DEL in Pennsylvania. One source said the New York terminal market will firm on Oct. 1 to $260/st FOB.
U.S. Export: PhosChem made no new sales last week, but will ship about 750,000 mt during October – the biggest chunk of that to India. China was not scheduled to receive a phosphate vessel this month. Considering the U.S. domestic market has been at a virtual standstill, the heavy export schedule will help producers maintain lower inventories. If no new export sales are made during the next month or so, inventories will begin to grow.
A rumor circulating last week, which could not be confirmed, held that a trader purchased 14 or 15 DAP barges to transload onto a vessel for delivery to Uruguay, but the purchase price of the barges and the sale price into Uruguay were not available.
Freight rates continued to depress FOB prices for overseas sales, and there were no signs that that will change anytime soon. The export DAP price range was unchanged for the third week in a row at $259-$263/mt FOB.
Bangladesh: New DAP production has reportedly begun after the inauguration of two new plants by Prime Minister Khaleda Zia on Sept. 12. One was built by a Chinese firm and the other by a Japanese company in the Chittagong Urea Fertilizer Ltd (CUFL) complex. The DAP-1 project, involving Tk 5106.4 million ($73 million), has been funded jointly by the governments of Bangladesh and China and constructed by Chinese company Complant China. While involving a cost of Tk 5196.4 million, the DAP-2 project was jointly funded by the Bangladesh government and JBIC. Toyo Engineering Corp. and Mitsui Ltd. of Japan constructed the unit. The two new units will produce around 500,000 mt/y of DAP.
POTASH
Eastern Cornbelt: Potash remained at $195-$200/st FOB regional warehouses. One source reported some buying interest prior to the scheduled pricing increase in October.
Western Cornbelt: Potash remained at $193-$198/st FOB regional warehouses.
Agrium’s fuel surcharge rates decreased on Sept. 6 to 22.5 percent in Iowa, Nebraska, Missouri, the Dakotas, Minnesota, Wisconsin, Kansas, and Oklahoma, and to 22 percent in Texas and New Mexico.
Northern Plains: Potash remained at $198-$210/st DEL in the region, depending on location. Effective Oct. 1, postings from PCS Sales FOB Saskatchewan mines will move to $178/st for standard, $183/st for soluble and granular, and $188/st for white granular.
Great Lakes: Potash remained flat at $198-$204/st FOB regional warehouses, with the upper end quoted by Michigan sources for white granular potash. On a rail-delivered basis, the potash market was tagged at $200-$204/st in southern Wisconsin.
Northeast: Potash remained at $217-$236/st DEL for dry muriate, depending on grade and location, while pricing for 62 percent soluble potash was reported as high as $246-$260/st DEL in the region. The granular potash market FOB E. Liverpool was pegged at the $206/st mark last week.
SULFUR
Tampa: At TFI’s World Conference, sulfur buyers and sellers talked mostly about why the price should go up or down, depending on which end they were on, but nothing concrete took place.
BP was expecting to put its Texas City refinery, which suffered a fire and explosion earlier, back into full operation sometime in April. At the moment, sulfur supplies on the Gulf Coast remained in balance and should continue that way, unless a hurricane or other disaster strikes the area in the next few months. The world market continued to be depressed, and that will be the biggest factor in the upcoming fourth quarter sulfur contract negotiations. The main reason for lower world prices continued to be higher freight rates, and there was no sign that will change anytime soon.