AMMONIA
U.S. Gulf/Tampa: No new import business was reported last week, leaving the last done price for Tampa at $295/mt DEL. Sources pegged that last vessel into NOLA/Texas at $305/mt DEL. The last done NOLA barge price is reported at $265/st FOB.
The news of a further delay at the Miss Phos plant is not expected to cause too much concern over ammonia placement since suppliers have had time to adjust from the first delay. Sources say the Miss Phos woes have not caused its supplier, Transammonia, to have to sell the excess ammonia, but only to find a home for it so that it can be sent to other accounts.
Eastern Cornbelt: Anhydrous ammonia remained at $450-$470/st FOB, with the low end out of spot river locations and the upper numbers inland. One supplier was referencing forward contract ammonia for September through December at $490-$500/st FOB regional terminals.
Western Cornbelt: The anhydrous ammonia spot market remained at $440-$460/st FOB regional terminals to the dealer, with the low reported in Nebraska. One supplier was referencing forward contract ammonia for September through December at $475/st FOB in Nebraska, $485/st in Iowa, and $490/st FOB Palmyra, Mo.
Northern Plains: The regional ammonia market was quoted at $450-$455/st FOB terminals to the dealer, with delivered ammonia pegged at $465-$470/st in North Dakota. One supplier was offering forward contract ammonia for September through December at the $485/st mark FOB terminals in Minnesota and North Dakota.
Eastern Canada: The only current price reported for anhydrous ammonia was a $595/mt rail-DEL to Ontario and Quebec locations from Western Canada. No current FOB numbers were reported out of regional terminals last week.
Black Sea: The turnarounds in the area are not yet completed. Sources say the resulting shortage in production means the lineup for August is a vessel or two greater than last month. Even with less material available and steady demand, sources say the price remains soft.
Reportedly, $242/mt FOB was the last done business from Yuzhnyy. Sources further report that bids at $240/mt FOB are being seriously considered.
The main problem, say Asian observers, is that the producers claim at $242/mt FOB they are breaking even. Sales at $240/mt FOB and below are said to be money losers, even for the most efficient of the plants.
Despite the protestations of the producers, sources peg the Yuzhnyy market at $240-$245/mt FOB.
Middle East: Buying from India is not as strong as producers were hoping. Sources say the delay is due to production problems at the Indian DAP plants. Even though the phos acid deliveries are beginning to the Indian users, the purchases of ammonia are not at levels producers had hoped for at this time.
Asian sources say the purchases should increase by the middle of August or early September as the Indian plants come online and as demand from the United States picks up.
Even though the official line is that the price remains in the low $260s/mt FOB, sources say the trend is for much softer prices. Reports of an unconfirmed deal to India’s west coast show a netback of $250-$255/mt FOB. Without verification of this deal, however, sources in Asia are reluctant to push the price lower just yet. They are willing, however, to predict that $250/mt FOB is on its way.
The best bet for prices right now remains at $260-$265/mt FOB.
Mitsubishi bought a cargo from Iran for a customer in Taiwan. Sources say the tons quickly became available after problems occurred in a urea production unit.
Indonesia: Kaltim sold 5,000 mt to Philphos/Philippines for $295/mt FOB.
Sources say ammonia output from Kaltim is expected to ease off for the near future. The state-owned facility is focusing on urea exports and so has less ammonia for export. In addition, sources say there are problems in the urea and ammonia production lines at Kaltim.
The joint venture operations – KPI and KPA – continue to run at full capacity. Their output is being used to cover contracts with no spot purchase opportunities.
Japan: A number of industries are winding down operations so employees can take their annual vacations.
Sources say the reduction in end user purchases of ammonia will have a ripple effect on producers and importers. Reportedly, some domestic producers who are not keen on cutting back production have been calling around looking for buyers to take extra tons along with their contracted purchases.
Unfortunately for the suppliers, however, few buyers have the storage space to handle any more material than what they usually take.
The growing surplus of ammonia in Japan is in sharp contrast to the previous two years, when shortages popped up throughout the summer and fall.
Sources say problems with the safety of older plants two years ago led to shutdowns and reduction in production. To compensate for the loss of domestic material while the plants were replaced or repaired, buyers looked more and more to the international market. Even though many of the plants are now upgraded and working more efficiently and safely, some buyers are still partial to their imported ammonia.
As a result, sources say more ammonia is entering the Japanese market and forcing prices down.
UREA
U.S.Gulf: One early question at the Southwestern Conference was what would be the floor for the urea barge market. As a result, talk early in the week was of lower prices. When players got home from the conference most talk was bullish, however, with many saying there are not that many barges on the water. Some complained that buyers were simply talking the market down and that suggestions of $292-$295/st FOB were not reality. Instead, most players last week were calling the market a firm $300/st, though deals a few dollars below and above were reported by the end of the week, leaving a granular range of $298-$302/st FOB.
One player predicted that if buyers are successful in pulling the market to $290-$295/st FOB, there would be a major wave of buying that would quickly shoot the price back up. Even one traditional price cutter last week was holding true to the $300/st FOB quote.
Some speculated they could buy at $295/st last week but no deals were confirmed. Some buyers were reportedly spooked by word that ConAgra will be buying Chinese granular tons this year. Others said this was a traditional buy, and there is still no word if any of that product, which could be up to 250,000 mt, will go to NOLA anytime soon. One cargo was reported to be loading last week for California.
Eastern Cornbelt: Granular urea was steady at $350-$360/st FOB regional terminals to the dealer, with minimal new business to test the market.
Western Cornbelt: Granular urea was unchanged at $350-$360/st FOB, with the low out of spot river terminals and the upper numbers out of inland locations in Nebraska.
Northern Plains: Granular urea was steady at $350-$360/st FOB in the region, with the low FOB Minneapolis, Minn. Delivered urea pricing was quoted at $370/st in North Dakota on the low end. One supplier was referencing forward contract urea for September through November at $350/st FOB Pine Bend, Minn., and $380/st DEL in North Dakota and northern Minnesota.
Northeast: Granular urea was quoted at $365-$368/st FOB Baltimore or Philadelphia to the dealer. The market FOB Savannah, Ga., remained at the $355-$360/st mark.
Eastern Canada: Granular urea was pegged at $440-$479/mt FOB in Ontario, with the low FOB Hamilton for September shipments. The market for immediate take was quoted at the $465/mt FOB mark or higher, although demand and movement were minimal. Effective July 1, Agrium’s posting for rail-DEL urea to Ontario and Quebec locations moved to $460/mt.
Black Sea: The government has lowered the official KIP to $240/mt FOB. Sources say the reduction is in reaction to a growing softness in the international urea market.
Even though the last done business out of Yuzhnyy was pegged at $260/mt FOB, sources say producers would be more than willing to discuss $250-$255/mt FOB. One trader noted that anyone bidding at $255/mt FOB for the second half of this month would get a contract without much difficulty. The only problem would be that buyers have much lower price expectations.
Traders appear to be waiting for some evidence that the bottom is in sight.
For now, the lineup is not bad. Sources say cargoes will be loaded through the middle of the month. However, by the end of August there could be problems for the producers.
Sources say that even with MMTC/India expected to come in later this month, there is little in the global economic fundamentals to argue against lower prices.
The main competitor the Yuzhnyy producers are facing is China. Chinese tons are already taking business that normally would have been assigned to the Black Sea. The Chinese product will be even cheaper if future tenders look for October material, because the export duty imposed by the central government will be cut in half. The Chinese also have a freight advantage to west coast Indian ports over the Yuzhnyy suppliers.
The recent decision by the European Community to drop the anti-dumping rules against Russian urea is mostly symbolic. Sources say the anti-dumping measures kick in when the price into Europe goes below $157/mt FOB. With the market about $100/mt higher than that, sources say the anti-dumping rule is moot.
Until new deals are consummated, sources say the current market is still officially $260-$265/mt FOB, with expectations across the board for a serious drop in prices once another tender is called. While a number of industry observers say the $250s/mt FOB should be included in any calculations about where the market is, others say they are not able to point to any business below $260/mt FOB.
What is clear to most in the industry is that once another Indian tender is called, the Black Sea producers will have to offer prices closer to $250/mt FOB if they want to get an award.
Middle East: Producers were happy with the quantities to be shipped to India because of the IPL tender that closed late last month. Sources say, however, that if MMTC comes in as expected later this month, the producers will have to take a lion’s share of that business as well to stay comfortable.
Unfortunately for the producers, sources say Indian buying expectations are for cargoes at prices below the IPL business. Sources say producers have been calling traders looking for them to nominate vessels and haul away tons committed for other deals. Apparently, said one trader, the warehouses are beginning to fill up.
Shipments to India during the next six weeks should relieve some of the pressure on the loading docks. However, once those cargoes are loaded and gone, there are few buyers on the horizon to help.
Buying from the United States will continue along the lines of long-term agreements and contracts, but new orders to take up the growing excess of urea – particularly granular – are not expected to materialize in sufficient size.
The Middle East suppliers face the same threat as the Yuzhnyy players: China.
With agreements in hand to sell granular to the United States, Chinese producers have cut into some of the longstanding deals Middle East suppliers have had. At the same time, lower Chinese prices have the potential to push the Middle East producers to the back of the line when tenders are opened.
Syria is expected to come in late August or early September for October through February orders. Sources say the Middle East producers could move to take a good chunk of this business, but only if they lower their pricing ideas.
For now, the price remains in the mid-$270s/mt FOB. While the IPL tender showed prices of $277-$278/mt FOB, sources say once commissions and other costs are backed off, the real netback is actually a couple of dollars cheaper. Asian traders peg the market at $275-$278/mt FOB, and few are disagreeing with that assessment.
Indonesia: Pusri sold a cargo for $259/mt FOB. The tons will most likely end up in the Philippines or Malaysia. The deal indicates a drop of about $10/mt from the last selling tender. The price is competitive when compared to Chinese and Middle East tons. The ease of moving the Pusri material to neighboring countries makes up for the lower FOB price of other urea.
PIM is expected to offer tons this week or next.
Kaltim is hoping to gets its production back to top speed by the end of the month, as a portion of the facility had to close. At first, say sources, the shutdown was for an emergency repair. Once work started, however, the company decided to take the plant down for its annual turnaround.
India: The industry is watching closely for the next tender. Sources say MMTC could announce another tender as early as this week. Observers note that India still needs to buy 1.5 million mt by the end of the year.
The expectation is that MMTC will call a tender, to be followed by another IPL tender, and then finally another MMTC buying situation. The next tender will be for October and November deliveries, and sources say MMTC will be looking to get a better deal than IPL got last month.
China: The Chinese domestic market remains soft. More and more urea is being offered to the international market. Sources say the export price has now slipped to $250-$255/mt FOB. This price includes the 30 percent export duty that will remain in effect through September. Industry observers expect to see that duty cut in half Oct. 1. When that happens, say sources, even more Chinese product will hit the market.
Ironically, right now exports from Chinese ports are facing stiff competition from Chinese urea being shipped out of Vietnamese ports.
Sources say the re-exported urea out of Vietnam is selling for less than from the Chinese ports because the export duty was not paid.
Some traders say the duty-free tons are possible because of border trade agreements between Vietnam and China. Others say the reason no duty is paid is that the material “bypasses” the regular line of duty officers.
Once the export duty is halved, however, sources say the re-exported Chinese urea will no longer be competitive.
Vietnam: Domestic supplies are sufficiently strong that tons brought over the land border between China and Vietnam are being offered to international traders.
The urea is brought into Vietnam by truck and rail. Some in the industry say the material comes in free of the 30 percent Chinese export duty because of border-trade agreements between the two countries. Others say there are no such agreements and that the tons are being sent into Vietnam in less than normal methods to avoid the duty.
However the urea is getting into Vietnam, international traders are able to realize a $5-$10/mt discount on Chinese material over the same product coming out of a Chinese port.
NITROGEN SOLUTIONS
U.S. Gulf: There were no price changes last week to the barge market, though there was some speculation that prices could weaken. Sources cited overseas tenders that saw no interest. As a result, sources surmised that to get a deal overseas sellers may have to drop prices $10-$15/mt, which some say could eventually find its way to the U.S. market.
Eastern Cornbelt: UAN-32 remained in very tight supply at $295-$305/st ($9.22-$9.53/unit) regional terminals to the dealer. Forward contract tons for September-December continued to be referenced in the $297.80-$312.20/st ($9.31-$9.76/unit) FOB range from one regional supplier.
Western Cornbelt: The UAN-32 market was steady at $290-$300/st ($9.06-$9.38/unit) range FOB regional river terminals, and in very tight supply.
Northern Plains: UAN pricing remained in the $9.40-$9.70/unit range FOB regional terminals, with product in very tight supply. On a forward contract basis for September through the end of the year, reference prices for UAN-32 were quoted at the $310.60/st ($9.71/unit) mark FOB Pine Bend.
Northeast: The UAN-30 market remained at $248-$250/st ($8.27-$8.33/unit) FOB Baltimore, with dealer reference prices reported at the $255/st ($8.50/unit) FOB mark. Dealer pricing out of tanks in upstate New York was pegged at the $292/st ($9.13/unit) FOB level before discounts. The UAN-32 vessel market was quoted in the high-$280s to low-$290s/mt C&F for the next round of business.
Eastern Canada: UAN remained in very tight supply, with several terminal locations reportedly sold out of product. The UAN-28 market was quoted at $315-$330/mt ($11.25-$11.79/unit) FOB, where available, with the lower numbers for immediate take and the upper end reported by Ontario sources for a stored program.
AMMONIUM NITRATE
U.S. Gulf: While most continue to put the last done business in the $260-$265/st FOB range, others say product is hard to find. They predict that the next round of barges could easily see $270-$280/st FOB if new barges can be found. Terra is currently concentrating on UAN at Yazoo City and is not offering barges, though trucks are at $300-$305/st FOB at the facility with rail product called $280-$300/st FOB.
Western Cornbelt: Ammonium nitrate remained at a nominal $315-$325/st FOB for the last sales.
Eastern Canada: Ammonium nitrate was quoted at $368-$395/mt FOB in Ontario, where available.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate continued to be quoted in a broad range at $210-$240/st FOB, but supplies were very tight and new sales limited.
Western Cornbelt: Granular ammonium sulfate was steady at $210-$240/st FOB and in tight supply.
Northern Plains: Granular ammonium sulfate remained at $205/st FOB and $210-$215/st DEL in the region, depending on location and supplier. Inventories remained tight.
Northeast: Granular ammonium sulfate was steady at $200-$215/st FOB in the region, with limited availability.
Eastern Canada: Granular ammonium sulfate was tagged at $290-$295/mt FOB in Ontario. On a rail-DEL basis to Ontario and Quebec, the market was quoted at $285-$295/mt last week, with the upper end reflecting the July 1 reference price from Agrium.
PHOSPHATES
Central Florida: As expected, sales slowed last week during the Southwestern Conference. Although slow, some prompt sales were made, but none above the previous week’s high in the price range. Meanwhile, it was generally agreed at the conference that prices for phosphates will remain firm – at least through next year. Inventories were comfortable, and most who need phosphates for the fall season have already received them. However, one thing could suddenly shorten supplies to the domestic market – India, which was studying responses to a recent tender. PhosChem offered 360,000 mt, which would put a dent in supplies if it is accepted.
In addition, private buyers in India were said to be in the market, and Pakistan was as well. However, PhosChem did not nominate tons for Pakistan, because of the previous offer to India.
Phosphate producers settled with their sulfur suppliers for the third quarter at $23/lt up from the previous quarter. Mosaic said at its earnings conference last week that a drop in ammonia prices will help offset that additional expense, so their bottom lines will feel little if any impact from raw materials.
The DAP price range last week was $382-$385/st FOB. Mosaic’s asking price was $385/st FOB for DAP and $381/st FOB for MAP. CF was listing a price of $382/st FOB for prompt; however, CF rarely makes sales to the dealer level. PotashCorp’s Central Florida reference price remained at $385/st FOB. In Texas, Agrifos was asking $410-$415/st FOB for truck sales and $410/st FOB for railcars, but was sold out through the end of September.
U.S. Gulf: Good news, sort of. Rosedale began moving barges up the Arkansas last week, but the back-up still existed. The river was closed a few weeks ago due to the high speed of the flow after the Corps of Engineers began releasing water from dams that feed the river. As a result, barges leaving New Orleans heading for Inola and Catoosa will be delayed about two weeks. Unfortunately, facilities at those two locations were about the only ones selling phosphates at this time of year, mainly for the wheat crop.
Deals were cut in San Antonio last week, before Rosedale restarted. Some of the barges were sold as low as $398/st FOB NOLA, because the owners of the material feared paying the high fleeting cost. That will not be the case next week, and the market will likely firm as a result. Until sometime next year, phosphate prices were predicted to remain firm.
However, the announcement by Mississippi Phosphates that its production will remain curtailed longer than anticipated could force some of its contract buyers into the market to meet their commitments. If that occurs, it could push prices up a few dollars.
Producer inventories were satisfactory last week, and most who needed phosphates had already met their needs. Most in the industry agreed phosphates will remain firm at least into next year. However, inventories could become stressed if PhosChem’s offer to sell India 360,000 mt is accepted.
One of Mosaic’s loading facilities at Donaldsonville was out of operation last week and will remain out of service for three to six months. The phosphate company will be able to continue loading with its other facility, but a source said the sulfur prill operation there would not be able to do so, and would suffer.
Sales were slow last week due to the conference, but continued at a reduced pace. The NOLA DAP barge range last week was unchanged at $398-$403/st FOB due to the sale of barges at Rosedale; otherwise, the range would have been closer to $400-$403/st FOB. Next week, the low end of the range will likely increase.
Eastern Cornbelt: DAP and MAP were unchanged at $425-$435/st FOB regional warehouse, with the low out of spot river locations and the higher numbers inland. 10-34-0 remained at $335-$350/st FOB regional shipping points to the dealer.
Western Cornbelt: DAP and MAP remained at $425-$435/st FOB regional warehouses. Sources tagged the 10-34-0 market at $345-$350/st FOB.
Northern Plains: DAP and MAP were steady at $425-$430/st FOB warehouses in the region, with rail-DEL MAP reported at the $450/st mark in North Dakota. The 10-34-0 market was tagged $335/st FOB level in Minnesota for spot tons, where available.
Northeast: DAP and MAP were tagged at $430-$437/st to the dealer FOB regional warehouses. 10-34-0 was quoted at $315-$325/st FOB, with the upper end out of tank locations in upstate New York.
Eastern Canada: MAP was $545-$560/mt FOB in the region. DAP remained at $540-$570/mt FOB, and TSP was quoted at the $545/mt FOB mark in the region.
U.S. Export: Last week, PhosChem made a sale of 12,000 mt of MAP into Brazil at a price that will netback $425-$428/mt FOB, depending on freight. Export MAP prices tend to match DAP prices. The increasing ocean freight rates have taken a bite out of FOB prices for PhosChem and other North American companies selling on the export market, which very recently were bringing $440/mt FOB.
India was back in the market, and last week PhosChem nominated 360,000 mt for the Indian tender. If that deal is accepted, inventories in the U. S. will be affected, as well as domestic supplies. However, since most domestic buyers have already met their needs, it will not likely become a problem.
Pakistan was also in the market last week, but PhosChem declined to make an offer on the 80,000 mt tender as a result of its earlier offer to India. In addition, private companies in India were also said to be seeking phosphate supplies.
Based on the most recent sales, the export DAP price range last week was $425-$428/mt FOB. Prices will be determined by freight rates, since most sales are done on a delivered basis.
India: Under a recent IPL DAP tender for an unspecified quantity, the following bids were offered:
- Phoschem, 8 lots of 45-63,000 mt at US$495/mt CFR Mundra basis 10,000c/1, Aug. 31-March 08 shipment;
- Helm, ex China, 25,000 mt firm plus 2 lots of 25,000 mt SO at US4504.50/mt CFR Vizag basis 5,000x;
- Transammonia ex open, 45-60,000 mt, 2-3 lots, US$509/mt Kandla/Vizag in SO basis 6000x. Sept.-Oct. shipment;
- Southern Cross ex Australia, 40,000 mt, US$518/mt CFR, Vizag/Paradeep basis 5000x. Sept.-Oct. shipment.
JPMC, Keytrade, and Astra Global sent regrets.
POTASH
Eastern Cornbelt: Potash continued to be quoted at $245-$250/st FOB regional warehouses for limited spot tons, depending on grade and location.
Western Cornbelt: Potash pricing was firm at $245-$252/st FOB the warehouse, depending on grade and location, and in very tight supply.
Northern Plains: Potash remained at $202-$212/st FOB Saskatchewan mines, depending on grade, with granular muriate quoted at the $207/st FOB mark or higher at the mine. Warehouse pricing was reported in the $245-$252/st FOB range in the region, depending on grade and location, with very tight inventories.
Northeast: Tight supplies continued to push up potash prices in the region. Sources pegged the market at $245-$250/st FOB for red granular tons. Delivered potash was pegged at $257-$284/st, depending on grade and location, with the upper end reflecting reference pricing for soluble potash.
Eastern Canada: Sources continued to describe potash inventories as very tight. Out of the regional warehouse system, potash was pegged at $295-$313/mt FOB depending on grade and location, with the upper end reported by one Ontario source for white granular potash. Most sources were touting the higher numbers as a truer reflection of replacement costs, with $308/mt FOB reported by one dealer for red granular potash.
Coarse potash postings from Agrium were referenced at the $321/mt mark rail-DEL to Ontario or Quebec locations or FOB Ontario warehouses.
Ontario sources pegged the sulfate of potash price last week at $485-$490/mt FOB.
Postings: Due to continuing supply pressure, unprecedented global demand, and escalating production costs of sulfate of potash, Potash Import & Chemical Corp. reports that as of Aug. 15, it will be raising SOP prices by $20/st.
SULFUR
Tampa: About 10:30 p.m. last Monday, July 30, negotiators reached a final agreement on third-quarter sulfur prices, and the deal was finalized on Tuesday. Both Mosaic and PotashCorp agreed to an increase of $23/lt for sulfur delivered to Tampa. “When they first arrived at San Antonio, everybody was screaming at everyone, but on Tuesday, they were all smiling,” one source said. Not surprisingly, accountants for both sides were said to be responsible for pushing negotiators to a settlement. Billing will be retroactive to July 1, and many sulfur providers were holding back on invoices, awaiting the outcome.
While an increase of $23/lt appeared to be a record increase, it still leaves prices for Tampa well below the world market, which has been settling contracts at $100/mt FOB and higher. The high prices will not last too long, perhaps sometime into next year, because sulfur supplies were expected to be in a surplus by then. Another plus for the phosphate companies was that ammonia was on a decline and was expected to offset the higher cost of the new sulfur contracts.
One of Mosaic’s loaders at Donaldsonville went out of service, which the company confirmed, but it did not respond to rumors that it had fallen into the Mississippi River. The loss will not affect Mosaic’s ability to load phosphates because it has another loader there, but it could be a serious problem for the sulfur prill operation at the same location, which may not be able to load for three to six months. However, last week a sulfur prill vessel left Beaumont, which has its own prill facility.
West Coast: Sulfur contracts for the West Coast were also settled last week, and at a much steeper increase than the Tampa price – up between $50-$55 per ton over the previous quarter. That had an unanticipated consequence – domestic buyers backed out of the market and will seek alternative sulfur fertilizers. That could be a problem in the long run. West Coast sales will primarily be for export only.
Prill vessels will be loading this week at both Stockton and Long Beach.