AMMONIA
U.S. Gulf/Tampa: Major players last week reported that second half Tampa ammonia has been concluded at $310/mt DEL. In the meantime, sources are putting new sales into other major Gulf ports at $312-$318/mt DEL. While nothing new has been reported on the NOLA barge market, sources say seller quotes are $290/st FOB.
Trinidad/Venezuela: An earthquake shook Trinidad and Venezuela Sept. 29, registering between 5.5-6.1 on the Richter scale, according to local reports. Industry sources estimated that 50,000 mt of ammonia, if not more, could have been lost to the market as a result. In Trinidad, reports were that electricity was immediately impacted across much of the area, at least causing a blip in local production.
The Terra/Koch facility was down for a turnaround at the time of the quake anyway. Yara’s facilities were temporarily affected, but came back up last week. PotashCorp confirmed temporary outages. However, the company opted to keep its #2 ammonia plant down until Oct. 14 to repair a compressor. The compressor problem was not related to the earthquake. In all, PotashCorp expects to have lost 25,000 mt of ammonia and 16,000 mt of urea as a result of the outages.
Koch indicated that its other facilities in Trinidad and Venezuela were not impacted by the earthquake.
Eastern Cornbelt: Anhydrous ammonia pricing was down slightly from last report, although new truck sales to the ag market were few and far between in the region due to weather-related harvest delays. Sources tagged the spot market at $340-$350/st FOB regional terminals. Several sources said they expect heavy fall ammonia movement as soon as weather and field conditions are favorable.
Western Cornbelt: Anhydrous ammonia was quoted at $340-$350/st FOB regional terminals, with delivered product pegged at $340-$345/st in central Missouri.
Northern Plains: Anhydrous ammonia was tagged at $340-$350/st FOB regional terminals. Delivered ammonia was quoted at $345-$355/st in the Dakotas, depending on supplier.
Eastern Canada: Ammonia pricing was up slightly from last report. The regional market was quoted at $425-$450/mt FOB, with the low for net pricing after discounts and the upper end reflecting dealer reference levels. There were reports as well of reference pricing for rail-delivered ammonia as high as $525/mt to Ontario and Quebec locations.
Black Sea: Prices are moving up as the balance shifts from loose to tight. Sources report stronger demand from the States and Europe. Even with natural gas prices moving lower, sources in Asia say the U.S. plants that have been closed for more than a year or so cannot be easily restarted. As a result, buyers have to look beyond the American shores for product.
The latest fixture out of Yuzhnyy is pegged at $235-$240/mt FOB, with no end in sight for further increases.
Asian sources say part of the issue with Yuzhnyy pricing right now is the number of traders taking positions on the expectation that prices will make their annual trek upward. Just how much of the price increase is due to real U.S. demand is up in the air, but no one is denying the demand does exist. The question is how great is that demand.
Part of the grief buyers are expected to feel soon comes not from the usual ebb and flow of market demand, but rather the grim possibility that the ammonia producers will be hit with an increase in the natural gas price.
Seems there is a proposal circulating in the government corridors that Russian industries will soon have to pay the unregulated price for their natural gas. Currently, the fertilizer companies get a subsidized rate of about $1.25/mmBtu, but the plan being discussed could take that price to $5/mmBtu. An official from the main natural gas supplier, Gazprom, said the new plan would not be that bad. He estimated that prices would go up during the next three years to about $2.50/mmBtu.
Reports are still sketchy about the exact details of how the price increases – if they come – will be calculated. One method under discussion is said to be linked to the Western European prices of petroleum products.
The plan is being floated by the Ministry of Industry, and being opposed by the Minister for Economic Development.
Middle East: Supplies are tight in the area. Sources say the recent offers to Indian buyers PPL and IFFCO confirm the lack of tons for quick sales.
Reportedly Mitsui was the only company to offer tons to IFFCO, and chances are they will send that material from either Indonesia or Malaysia – although there are reports circulating that QAFCO sold a cargo to Mitsui at $245/mt FOB.
Last month PPL settled using South Asian material. Sources reported last month the business went directly to MITCO/Malaysia.
The latest PPL tender that closed Oct. 3 showed only two offers, but nailing down a source has been difficult. One Asian observer noted the Indian buyer will once again have to go to South Asia for the tons.
Besides South Asia, sources say Middle East suppliers could face competition from Australia from the Burrup facility. So far, said one Asian source, the Australian tons have not had a dramatic impact on Middle East sales – but that could change. What might happen, said one observer, is that Indonesian and Malaysian suppliers could keep offering tons to India, and the Australian company could chip away at Asian buyers who once depended on the Middle East. A source said that while there could be some increased competition from South Asia, the demand for ammonia in the region remains strong enough that Middle East producers do not have to worry about a major collapse of the market.
The conventional wisdom still holds that the market is tight. Backing up that line of thinking are the reports of the deal between QAFCO and Mitsui. The $245/mt FOB price represents a $10-$15/mt jump in prices.
Adding to the tightness, sources report Sabic IV has been acting erratically lately and has not been turning out product as expected.
Sources now peg the market easily at $240-$245/mt FOB.
India: Sources in Asia say demand for ammonia is up because DAP production is up. Unfortunately for buyers, supplies out of the usual sources – the Middle East suppliers – are tight. Last month PPL went to Malaysia for its tons, and sources in Asia speculate that IFFCO will be getting its Mitsui tons from either Malaysia or Indonesia. And sources say the tender that closed last week would most likely be serviced from one of those two countries as well.
Another possibility for tons could come from the Australian facility in Burrup, said one Asian observer. The main issue will be the freight rate rather than the FOB price. Sources say for now the transportation costs make the Australian tons just slightly too expensive, but not out of reach should the local price move upward or the freight rates drop. And, said one source, both are real possibilities.
UREA
U.S. Gulf: It appeared last week that many sellers threw in the towel, as most appeared to have given up hope of propping up prices. Citing very thin demand, full domestic production, and inbound vessels, sources said it was a buyer’s market. Prompt granular barges were reported to have traded between $203-$210/st FOB. Some sellers were reported to have decided to spin off their remaining barges instead of risk holding them for months.
Eastern Cornbelt: Granular urea was $255-$265/st FOB in the region, with the low out of spot river locations. Reference pricing to dealers remained as high as $270-$280/st FOB, depending on location.
Western Cornbelt: Granular urea was tagged at $250-$260/st FOB, with the low out of Mississippi River terminals and the upper numbers inland. The dealer market out of Missouri River shipping points was pegged commonly at the $255/st FOB mark last week.
Northern Plains: Granular urea remained at $250-$260/st FOB; with the low out of the Twin Cities market and the high to dealers FOB Carrington, N.D. Delivered urea was quoted at $265/st in North Dakota from Canadian shipping points. Several sources, expressing little confidence in urea pricing, indicated some hesitancy to commit to tons in the near term.
Northeast: The granular urea market was described as dead. Regional pricing was quoted at $255-$265/st FOB regional terminals, with the upper end reflecting dealer reference pricing FOB E. Liverpool, Ohio.
Eastern Canada: Ontario sources quoted granular urea at $320/st FOB warehouses for a stored prepay program, while rail-delivered cash market urea to Ontario and Quebec locations was quoted at the $325/st mark from one regional supplier.
Black Sea: Despite all the talk by producers on how the price is moving up, all the evidence points to prices around $210/mt FOB.
The Black Sea prices offered into the MMTC/India tender have a netback of $208-$215/mt FOB. Some offers can be estimated in the $220s/mt FOB, but sources say these offers will most likely not be accepted as written.
The problem for the Yuzhnyy producers is that there are lots of tons waiting to be loaded with no homes, and buyers are willing to shift between granular and prilled, depending on the price.
The prices offered in the MMTC tender most likely represent the opening salvo, said one source. Chances are, once negotiations are concluded, material from the Black Sea will end up with a netback closer to $210/mt FOB than $220/mt FOB. There are some who are betting that prices will remain below $210/mt FOB, but not many, said one observer.
Sources have used various terms to describe the situation at the ports. But whether one uses “bursting at the seams” or “overflowing,” the image is not one the producers want to present to the rest of the world.
India: The MMTC tender closed with at least 850,000 mt being offered for shipment and delivery between now and the end of the year.
The tender confirmed the Black Sea is awash with material, Chinese urea remains a brake on higher prices, and the Middle East producers remain firm in their public position that they are short of tons for this quarter.
Sources peg the freight rates at $15-$20/mt from the Middle East to India and $30-$35/mt for transportation from Yuzhnyy. The higher prices are usually for delivery to the West Coast of the country.
Tender results follow:
| Supplier/Origin | Quantity (‘000mt) | US$/mt | Remarks (Type and shipment time) | |
| FOB | CFR | |||
| Transammonia/Open | 60 | 238.90 | Prill or granular Nov-1st half Dec |
|
| 35-45 | 243.90 | |||
| 40-50 | 251.40 | |||
| 40-50 | 249.90 | |||
| Chemo Stirol/Ukraine | 35 | 258.00 | 26 Oct-6 Nov | |
| Helm/Open | 2×50-55 | 254.00 | Prills 4-23 Oct & 24-31 Oct |
|
| 35-40 | 254.00 | Prills; 7-13 Oct | ||
| 2×20 | 258.00 | Prills 7-20 Oct & 21-31 Oct |
||
| 55-60 | 242.99(P) 239.99(G) |
Prills or granular Nov – Dec |
||
| Keytrade/Open | 45-50 | 254.00 | Prills; Oct | |
| 45-50 | 252.25 | Prills; Nov | ||
| 20-60 | 244.00 | Prills or Granular Nov-15 Dec Less US$3/mt for granular |
||
| 249.00 | ||||
| 257.00 | ||||
| 255.00 | ||||
| 252.25 | ||||
| ConAgra/Open | 2×35 | 252.25 | Prills or granular Oct-Nov Less US$3/mt for granular |
|
| Toepfer Bangladesh | 20 | 232.50 | 253.43 | Granular; 1st half Dec |
| 255.43 | ||||
| CIS/Egypt/Libya/ | 58 OR |
243.50 | In 1-3 lots 1st half Dec ship. |
|
| Malaysia/China | 20-25 AND |
255.73 | Prills or granular Nov-Dec |
|
| CIS | 40 OR |
248.43 253.46 |
||
| Russ/Ukrainian/Egypt/Libya/China | 2×30 | 249.93 254.93 |
||
| MTPL/Bintulu, Malay | 25 | 226.47 | Granular; Nov – Dec | |
| Fertil/UAE | 2×25 | 231.00 | Prills 1st lot: end Nov-Dec 2nd lot: end Dec-Jan |
|
| Qafco/Qatar | 20-25 | 231.00 | Granular; Nov-Dec | |
| 20-25 | Prills; Dec | |||
| Sabic/Saudi Arabia | 25 | 230.00 | Granular; Dec-Jan | |
Sources say the “Open” offers are designed to allow the trading house the best combination of sources and type of material. Observers expect MMTC to take at least 500,000 mt of the offered material.
How successful MMTC will be in hammering down the price to match the $243/mt CFR that IPL was able to get last month and earlier remains to be seen. Some in the industry say the realities of freight rates and stubborn producers will mean MMTC will have to accept a slightly higher delivered price. Others say that MMTC is just not up to the task to negotiate as well as IPL. Others toss in that it could be a combination of the two that will require MMTC to pay a little more for its urea.
China: Even though the export duty was lowered from 30 percent to 15 percent Oct. 1 and that there are reports of ships lining up to be loaded, sources say the actual loading of urea is off to a slow start.
Seems the Chinese government is continuing its practice of giving its people a full week off for the anniversary of the founding of the PRC.
In the past Beijing wanted people working, and so the holiday period was only a day or two. Now, with more disposable income available, the people have been saving their money. The government, in an effort to help keep the economy growing, wants to encourage spending, not saving. So, for the past few years, Beijing has made the founding day and Chinese New Year holidays week-long celebrations. With workers of all stripes now encouraged to travel and spend, sources say a lot of business-related activities, including ship loadings, are not operating at full capacity.
Industry watchers expect to see the activities in the Chinese ports pick up starting Oct. 8.
The demand for Chinese urea has led to an increase in freight rates that have more than offset reductions in fuel costs, said one Asian source. This shipping demand also coincides with the need for ships to move grains. The combination is the resulting higher rates.
Middle East: Producers claim they are comfortable and have little material available. It is this attitude, said one Asian source, that led to the three offers in the $230s/mt FOB for granular and prilled material.
For prills, a $230-$231/mt FOB offer is not out of line. The market had been pegged in the upper $220s/mt FOB for a while.
Granular, however, is another story. With the world awash in this type of urea and with Middle East prices closer to $215/mt FOB than anything in the $220s/mt FOB, sources wonder just how Sabic and Qafco can expect to get the prices they are asking.
One producer said the issue is not the amount of urea that is in the rest of the world, but rather how much is available from the Middle East. In that respect, he said, the availability of granular is limited because of contract deals that take up much of the production.
Others point out, however, that because MMTC is willing to take from any source and to take either prilled or granular, the buyer has an edge to reject the Middle East tons unless better prices are offered.
Based on the current estimates for freight to India from the area, sources say the $230/mt FOB price translates to a $250/mt CFR east coast price, higher than what MMTC wants to pay.
The MMTC business are the only deals in the open at this time. Sources say that until MMTC accepts these prices, there is no reason to believe the market has moved up for urea.
NITROGEN SOLUTIONS
U.S. Gulf: Like urea, UAN was seeing a downward trend last week, with sources reporting new sales within the $138-$145/st FOB range ($4.31-$4.53/unit).
Eastern Cornbelt: UAN-28 was quoted at $160-$170/st ($5.71-$6.07/unit) FOB regional terminals, with most dealer quotes reported in the $165-$168/st ($5.89-$6.00/unit) FOB range last week.
Western Cornbelt: UAN was quoted at $5.70-$6.00/unit FOB regional terminals. One source pegged the UAN-32dealer market at the $190/st ($5.94/unit) mark FOB Missouri River terminals last week.
Northern Plains: UAN-28 was reported at $6.00-$6.25/unit FOB regional terminals, with the upper end reflecting dealer list pricing. Forward contract tons from some regional suppliers were reported at the $6.25/unit FOB mark for November, and up to $6.50/unit FOB for December.
Northeast: The UAN-30 market remained at $177-$179/st ($5.90-$5.97/unit) FOB Philadelphia, Pa., and Baltimore, Md., with the UAN-32 market quoted at $6.50/unit FOB terminals in upstate New York
Eastern Canada: UAN-28 was steady at $255-$265/mt ($9.11-$9.46/unit) FOB in the region, with the upper end reflecting list pricing to dealers.
AMMONIUM NITRATE
U.S. Gulf: Barges were reported to be going at $190-$195/st FOB last week, with the lower end of the range representing imports and the higher end domestic product.
Western Cornbelt: Ammonium nitrate was unchanged at $245-$250/st FOB in the region.
Eastern Canada: Ammonium nitrate was unchanged and untested at $365-$385/mt FOB in Ontario.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was commonly quoted at $155-$157/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was quoted at $155-$160/st FOB.
Northern Plains: Granular ammonium sulfate was $155-$160/st FOB and $165/st DEL in the region, up slightly from last report.
Northeast: Granular ammonium sulfate remained at $147-$155/st FOB in the region, with the low at Hopewell, Va. Delivered granular sulfate was quoted in a broad range at $155-$175/st, with the low reported in Delaware for barge-delivered tons.
Eastern Canada: Ammonium sulfate pricing was quoted in a broad range at $195-$230/mt FOB in the region, down considerably from last report. The low end was reported FOB Putnam, Ontario.
PHOSPHATES
Central Florida: Although prices for Central Florida DAP are normally $10-$13/st FOB lower than on the river system, that hasn’t been the case lately. Last week the two major markets were separated by only $1/st FOB, and the Gulf market was the lower of the two. DAP prices on the river have been slowly dropping for the past few weeks, and last week that trend began in Central Florida, where of the market was down $3/st FOB.
Despite the lower prices, new business out of Central Florida remained slow last week. Two of the major areas served by the market, the Northeast and Mid-Atlantic regions, have been receiving heavy rain, and more was predicted this week. A trader serving those regions said he did not expect the fall season to begin there for at least another two weeks. Generally, the fall season has been slow throughout the nation, but there were signs that could change some time this month. If not, producers’ inventories will begin to grow, but most have alternatives. PhosChem should be able to keep its members in good shape at least through the end of October, but November may be a different story, with fewer export vessels currently on the books.
Last week, the Central Florida DAP price range was $218-$221/st FOB. The previous week, the range was $221-$224/st FOB. Customers who place large orders get the lowest prices. Mosaic’s posted price was $228/st FOB, but was selling as low as $221/st FOB, and CF’s posted price was said to be $227/st FOB, with sales in the same range as Mosaic’s. 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: An announcement that Miss Phos will withdraw from PhosChem at the end of the year meant more DAP barges will be available on the river in the future. Actually, supply for the Gulf market has not been a problem, but selling barges has proven more difficult until the past two weeks. Miss Phos reasoned that its primary market was domestic, but it will still consider making export sales – most likely through third parties, such as ConAgra. The impact of the change by Miss Phos will not be felt until the spring season.
The river system continued to show signs of a resurrection last week with more barges being traded and warehouses making increased sales, but prices for NOLA DAP and MAP barges continued to drift downward last week. One source said he had received an offer to purchase DAP barges at $216/st FOB, but had not pulled the trigger. Still, a buy at $217/st FOB was still lower than the previous week’s low of $218/st FOB.
Activity was increasing in the mid-Mississippi River areas and along the Illinois River, and the Arkansas River has been up and running for the past several weeks. Traders and producers were both hopeful the fall season will gain steam during the next two-to-four weeks. One factor that could help is lower barge freight rates. Several sources said prices were lower in October and were expected to be even lower in November, as the price of fuel continued to fall. Most barge companies base their monthly fuel surcharge on the cost from the previous month, so prices in November should be lower, even if fuel prices increase following the election. The normal closing of the river north of St. Louis on Oct. 15 has been delayed. The river will remain open as far as Dubuque indefinitely. That will change if the water level falls along with the temperature, to somewhere below freezing for a prolonged period. Barge companies were likely to include provisions in contracts heading that far north, just in case the river does close, but the delay does provide an extended window to ship from New Orleans.
The Gulf’s NOLA DAP barge price range last week fell from $218-$224/st FOB the previous week to $217-$220/st FOB.
Eastern Cornbelt: DAP continued to be quoted at $255-$265/st FOB regional warehouses, with MAP in roughly the same range. The lower numbers were reported out of spot Illinois, Ohio, and Mississippi river locations.
TSP was unchanged at $235-$245/st FOB in the region, with upper numbers out of inland warehouses and the low on the river system. 10-34-0 remained at $250-$260/st FOB in the region.
Western Cornbelt: DAP and MAP remained at $255-$260/st FOB most river terminals, with the upper end of the regional range at the $265/st mark out of inland locations. Warehouse postings out of some locations were as high as $280-$283/st FOB, but sources reported no sales at those numbers.
TSP was unchanged at $235-$245/st FOB, with the low on the river and the upper numbers inland. 10-34-0 was steady at $255-$265/st FOB in the region, with list prices as high as $275/st FOB in eastern Iowa.
Northern Plains: A South Dakota source said phosphate movement on winter wheat ground was heavy in areas that saw an early harvest. DAP and MAP remained at $260-$265/st FOB the Twin Cities, with delivered green MAP unchanged at $295/st in North Dakota from western shipping points. No current numbers were reported for 10-34-0 in the region.
Northeast: DAP and MAP remained at $275-$280/st FOB regional shipping points. 10-34-0 was $260/st FOB terminals in upstate New York and $270/st DEL in Pennsylvania.
Eastern Canada: Phosphate pricing in the region was down from last report. DAP was quoted at $358-$385/mt FOB, with MAP at $349-$375/mt FOB. The low end of both ranges was reported FOB Belton, Ontario. TSP remained at a nominal $341-$343/mt FOB for the last done business.
U.S. Export: Just as PhosChem was welcoming a new member, CF Industries, another announced it was withdrawing from the group – Miss Phos. The company decided its major market was domestic, but it will still consider making export sales through third parties, such as ConAgra. CF’s start date with PhosChem was Oct. 1, last week, and Miss Phos will make its exit on Dec. 31. However, the company said it still has commitments with PhosChem prior to its departure and will honor those. The amount of tons the company was committed to give to PhosChem was not available.
PhosChem made no new sales last week but still has a heavy export schedule through October, and producer inventories were expected to be at the bottom by that time. Phosphate producers hope that the domestic fall season will kick into gear before the end of the month.
With no new sales, the export DAP range was unchanged last week at $259-$263/st FOB, but direct hedge FOB prices were several dollars lower. Ocean freight rates have dipped recently and export sales are normally based on the delivered cost, so it was difficult to determine what the price of the next sale might be.
POTASH
Eastern Cornbelt: Potash was $195-$200/st FOB regional warehouses, depending on grade and location. Effective Oct. 1, Agrium’s rail-delivered coarse potash postings moved to $210/st in the region, with warehouse postings firming to $204-$208/st FOB.
Western Cornbelt: Potash remained at $193-$198/st FOB regional warehouses. On the Missouri River, pricing was quoted at $195/st FOB for red granular and $198/st FOB for white. Agrium’s rail-delivered coarse potash postings moved on Oct. 1 to $212/st in the region, with warehouse postings at $208/st FOB Dubuque, Iowa, and Kansas City, Mo. Sources said the new postings were untested, however.
Russian potash barges were still moving at the $180-$185/st mark or lower for direct-transferred tons on the river system, sources said.
Northern Plains: Agrium’s potash postings FOB Saskatchewan mines moved on Oct. 1 to $175/st FOB for standard, $181/st for coarse, and $183/st for granular. Mine postings from PCS Sales moved on that date to $178/st for standard, $183/st for soluble and granular, and $188/st for white granular. One source reported reference pricing now at the $204-$208/st FOB level out of regional warehouses, depending on grade and location, but those numbers were untested.
Northeast: Granular potash remained at $206/st FOB E. Liverpool, and roughly $210-$230/st DEL in the region, depending on location. Sources continued to report delivered pricing for 62 percent soluble potash as high as $246-$260/st in some regional locations.
Eastern Canada: Potash pricing ideas varied greatly in the region last week, perhaps due to new postings that were slated to take effect in October. Potash was quoted at $264-$301/mt FOB in the region, depending on grade and location, with the upper end reported for granular potash FOB the warehouse or rail-DEL in Ontario. Another Ontario source, however, pegged the common dealer price for coarse potash at $285/mt FOB.
SULFUR
Tampa: Accountants in both the sulfur and phosphate industries will not get stressed out during the fourth quarter this year, after the two industries came to terms on new contract prices for the quarter, which were down $5/lt from the previous quarter. One source said indications were that contracts, at least for the first quarter of next year, will likely be less contentious than in the past. That was due to the faltering world market and the curtailments in production made by Mosaic earlier this year. The sulfur industry is not in a position to demand higher prices for their waste product.
Houston: Valero had a leak at its refinery in Houston that sent a couple of people to the hospital. That facility was already conducting a turnaround when the incident occurred, but the delay of the restart will reduce sulfur production by only about 1,000 lt. The company’s refinery at St. Charles, La., will go down for two weeks beginning Oct. 7, which will take approximately 4,200 lt out of the system. Considering the phosphate industry had more than sufficient supplies, those losses were not expected to have an impact on the market.
MARKET NOTES
Pakistan: The Ministry of Industries and Production plans to give control of state-owned Hazara Phosphate Fertiliser Ltd. (HPFL) to National Fertiliser Corp. (NFC), as Privatization Commission has failed to attract any buyers. The Ministry hopes NFC can take a year to shore up the SSP plant, which produced 82,635 mt in the eleven months ending in May, 2004, and try to privatize once again.