AMMONIA
U.S. Gulf/Tampa: Nothing new was reported in the market last week, with all major benchmarks remaining in place.
Eastern Cornbelt: The regional ammonia market remained at $470-$480/st FOB to the dealer, with reports that a lot of product has been positioned for the region’s fall application season.
Western Cornbelt: Sources in parts of the region said they expect traditional wheat ground to be seeded in wheat again this fall after a shift to corn in 2007. Some nitrogen movement was reported last week on preplant wheat in the region.
The upper end of the ammonia market was quoted by Iowa and Missouri sources at $475-$480/st FOB terminals to the dealer, with the low end reported in Nebraska at the $460/st FOB mark, give or take.
California: Anhydrous ammonia pricing remained at $435/st truck-DEL and $450/st rail-DEL in the state.
Pacific Northwest: Ammonia and UAN were going down ahead of seed drills in parts of Washington last week, along with dry blends on preplant wheat ground in other parts of the region. The ammonia market was quoted at $465/st DEL in the region at the upper end, with the FOB range pegged at $420-$440/st Washington terminals.
Western Canada: Anhydrous ammonia was quoted at $648-$684/mt DEL in the region, up slightly from last report following a pricing adjustment on Aug. 31.
Black Sea: Prices keep edging up. Sources in Asia now report that $270/mt FOB was done. The price increases keep occurring even as sources report U.S. demand has yet to pick up and the Middle East softens.
Aiding the price increase are the continued turnarounds that keep supplies limited and strong demand from Europe, but the Yuzhnyy suppliers are facing competition in their sales to Europe that they have not normally faced. Cheaper tons from Iran are finding their way to European buyers. Yara reportedly picked up two cargoes from IPCC/Iran for $220-$225/mt FOB, and IPCC sold additional tons directly to a European buyer.
Sources estimate that once the import duty on Middle East ammonia and freight is tacked on, the delivered price will come in at $260-$265/mt CFR.
The Middle East will remain a source of cheaper ammonia compared to Yuzhnyy, because Indian phosphate producers have yet to come in for their seasonal buying.
Given the report of last done business, sources now peg the Yuzhnyy market at $265-$270/mt FOB.
Middle East: With India yet to place its usual strong orders of ammonia for DAP production, sources say the price in this region is slipping.
IPCC in Iran also seems to be greasing the rails. Reportedly, at least three cargoes were sold out of Iran at $220-$225/mt FOB. Even taking into account the extra freight costs usually assigned to deals from Iran, which often means a $5/mt discount on the product, sources say the Iranian material offers good value for the money to the European end users.
The low-cost Iranian business comes on the heels of Sabic settling a deal with an Indian buyer last month at $235/mt FOB.
While many at the time were wondering why Sabic would be so brazen as to drop the regional price by $10/mt, it now appears as if it sold at the right time.
Much of this newfound willingness to talk appears to be related to the lack of buying by the Indian DAP producers. Sources say a lack of phos rock is keeping the buyers from entering the ammonia market with the gusto usually seen this time of the year.
The lack of Indian business has apparently also affected the freight market. In anticipation of the traditional rush to buy at this time, sellers reportedly chartered vessels to ensure timely deliveries. Now with no orders on the books, Asian sources say vessels are readily available.
Based on the past Sabic business and the Iranian deals, sources now peg the market at $225-$240/mt FOB.
India: DAP producers face a problem of not being able to secure the quantities of phosphate rock they want and need. As a result, ammonia purchases are substantially down.
At first, the delay in signing ammonia deals was pushed off on the lack of phos acid contracts. Once those contracts were signed in record time, industry observers expected to see ammonia tenders come quickly and often.
Now it appears that the DAP producers were – and are – missing adequate supplies of phos rock.
Until the rest of the inputs for DAP production can be lined up, sources say ammonia purchases will remain sporadic and weak.
UREA
U.S. Gulf: Granular barge prices remained within the $332-$335/st FOB range last week. Sources said buyers are talking down the market in light of a long line-up of vessels due in throughout the fall. Sellers downplayed these arguments, citing expectations that plenty of corn will be grown in 2008. They said the imports are regularly contracted tons.
Prill barge prices, which have lagged granular for some time and caught up last week, are reportedly now garnering premium prices at least in some cases.
Eastern Cornbelt: Granular urea continued to be quoted at $355-$365/st FOB, with the low end confirmed at Cincinnati to the dealer. One northern Illinois dealer reported a delivered price of $371/st last week, which he said backs up to about $360/st FOB river locations.
Western Cornbelt: Granular urea was pegged at $360-$365/st FOB in the region, up slightly from last report. Some sources continued to quote spot sales at lower levels, but others reasoned that this material was purchased earlier and that the market had firmed for new tons. Urea sales out of the Catoosa/Inola market in Oklahoma continued to be quoted firmly at the $360-$365/st FOB level as well.
California: Granular urea pricing was steady at $380-$400/st FOB and $390-$410/st DEL in the state.
Pacific Northwest: Granular urea was up slightly from last report. Sources tagged the market at $380-$395/st DEL in Montana, and $400-$410/st DEL in the rest of the region. Agrium issued new granular urea postings, effective Aug. 27, reflecting a $10/st increase from the company’s July 9 reference levels. Delivered postings moved on Aug. 27 to $380-$395/st in Montana and Wyoming, depending on location; $410/st in Idaho, Washington, Oregon, and northern Nevada; $420/st in northern and central Utah; and $425/st in southern Utah. Agrium’s warehouse postings in Washington moved on that date to $405/st FOB Glade, Kennewick, Warden, and Wilson.
Western Canada: Granular urea pricing was tagged at $460-$485/mt DEL in Western Canada, up $10/mt from last report.
Middle East: The news last week was the continued rise in prices from this region. Sources say the market has moved above the $300/mt FOB mark and is pushing on $310/mt FOB.
One Asian source noted that the producers are saying bids at $310/mt FOB are needed to get into the room or to get your phone call returned. For now, sources say, $310/mt FOB has not been achieved, so that means once buyer and seller start talking there is still some wiggle room.
Industry observers note, however, that room may get a lot smaller very soon.
One of the major Indian buyers, most likely MMTC, is expected to announce another tender this week. Indian representatives have already been traveling around the region looking for pre-tender deals under $300/mt FOB.
Sources report the buyers are returning home empty handed.
This go-around, sources say, the Middle East suppliers will be in a much better position to dictate terms.
The Yuzhnyy price is in the $300s/mt FOB, which makes it too expensive for the Indians once freight and other costs are tacked on.
Chinese producers are raising their prices as well. In addition to higher prices out of China, sources say the logistics of moving out urea for the next 30-45 days are difficult.
Apparently, the portside warehouses are full of urea waiting for the Oct. 1 reduction in export duties. Buyers are holding off on the loadings until that date. Once Oct. 1 hits, said one observer, it will signal a chaotic effort to load ships and get out as quickly as possible. Sources report buyers are already aware they may have to wait a few days extra to get their material.
With China and Yuzhnyy out of contention for October deliveries, sources say only the Middle East suppliers are left to provide the tons needed by India. And the producers are not expected to offer much in the way of pricing concessions.
For now, the market for prills and granular is pegged at $300-$310/mt FOB.
Black Sea: The best that can be said is that the market out of Yuzhnyy is stable. Sources report that as long as the producers hold to their ideas of $300/mt FOB and up, they will not get any of the upcoming Indian business.
Reportedly, Latin American buyers have been taking cargoes, while at the same time pushing for lower prices.
By keeping its price in the low $300’s/mt FOB, sources say Yuzhnyy will be out of the running for the Indian tender that is expected this week. Sources now put the market at $295-$300/mt FOB.
India: Either MMTC or IPL is expected to issue a tender this week. The odds-on favorite is IPL. Sources report Indian buyers had been going door to door in the Middle East last week trying to secure some pre-tender tons at favorable prices.
Unfortunately for the Indian bookkeepers, the Middle East producers were holding firm to their own pricing ideas.
Middle East offers are expected to dominate the September tender, which could be for another 500,000 mt.
Sources say Chinese ports are too busy and freight costs too high to allow Chinese urea to be a player this time.
Black Sea material is being dismissed because of its price and the freight rate. One source noted that the price at the Yuzhnyy piers is close to where the Indians wanted to be for the delivered price.
With the Middle East solidly in the low $300s/FOB, Chinese prills pushing $280/mt FOB bagged, and the Black Sea in the low $300s/mt FOB, the key factor will be freight and availability.
On both counts, the Middle East wins.
Sources say freight from China has jumped as ship owners are less and less willing to send their vessels into what is rapidly developing into a congested situation.
Freight from the Black Sea to India remains high. In addition, taking a panamax or two from Yuzhnyy limits where the cargo can be unloaded. Indian buyers like the flexibility smaller shipments allow.
Sources estimate India will need another 1.5 million mt by the end of the year. A meeting scheduled for Sept. 7 or 8 was slated to look over the general domestic and international urea situation. Another meeting slated for the 12th is expected to decide if and when a September tender will be called.
Industry observers note that buyers can hold off for a while, but eventually at least two more tenders will have to be held this year to ensure Indian farmers have enough tons for the upcoming season.
China: Freight rates for shipments out of China are going up because of congestion at the ports. Sources say many exporters are waiting until Oct. 1 to lift their cargo. The delay is tied to when the export duty drops from 30 percent to 15 percent.
One Asian trader noted that word is being sent by port authorities to the urea producers to stop sending material for export. Reportedly, the portside warehouses are straining with material.
Sources report the price has moved up. Prills are now pegged at $280/mt FOB, with a $5-$10/mt premium for granular.
Indonesia: Asian sources say the Indonesian government has issued export permits for the fourth quarter to Kaltim, Pusri, and Gresik.
The state-owned companies were nervous about not getting the permits in time. All three want to export because they get hard currency, which is needed to pay for the natural gas feedstock, and they get a better netback on exports than from the domestic market.
One trader noted that the government must think there are enough tons available to local farmers in the coming months. Otherwise, he said, the government would have ordered the producers to focus on the domestic market and denied any exports.
Prices remain in the low $280s/mt FOB bulk for exported urea.
NITROGEN SOLUTIONS
U.S. Gulf: Barge prices were reported as firm-to-strong. Reports continued to circulate that CF was sold out into March, though such was not confirmed.
Eastern Cornbelt: UAN was generally quoted in the $9.28-$9.53/unit FOB range, with the low out of river terminals and the upper numbers inland. An Illinois source tagged the common dealer price at the $9.40/unit FOB level last week, while one Ohio contact pegged the UAN-28 market in the low-$260s/st (roughly $9.30-$9.35/unit) FOB Cincinnati, and up to $265/st ($9.46/unit) FOB inland.
Western Cornbelt: UAN-32 remained in a fairly broad range at $295-$310/st ($9.22-$9.69/unit) FOB regional terminals, with the upper end reflecting dealer reference prices out of some locations. One Iowa source pegged the common dealer price last week at the $300/st ($9.38/unit) FOB river terminals.
California: The California UAN-32 market was quoted at a firm $310/st ($9.69/unit) FOB, with delivered UAN-32 pegged at $320-$330/st ($10.00-$10.31/unit).
Pacific Northwest: UAN-32 was steady at $310-$325/st ($9.69-$10.16/unit) DEL in the region, depending on location. A Washington source tagged the common dealer price at $315/st ($9.84/unit) DEL, with a maximum $5/st discount on the low end.
Western Canada: Slightly higher prices were noted for UAN-28 last week. As of Aug. 31, sources said the regional market had moved to $292-$308/mt ($10.43-$11.00/unit) DEL, up $3-$4/mt from last report.
AMMONIUM NITRATE
U.S.Gulf: Barges continued to be called strong, with sellers eyeing $280/st FOB for the next round of business.
Western Cornbelt: The ammonium nitrate market remained at a nominal $320-$325/st FOB in the region, where
available. Nitrate pricing at other locations included $305/st FOB Yazoo City, Miss., and $315/st FOB Catoosa, Okla.
Southeast: The Tampa ammonium nitrate market was reported firmly at $325/st FOB in early September, and not at the $310/st FOB level reported during the prior week.
California: No market was reported for ammonium nitrate in the state. CAN-17, however, was quoted in a broad range at $220-$235/st FOB.
Pacific Northwest: Ammonium nitrate pricing was up from last report, with the regional market tagged at $352/st DEL on the upper end before discounts. CAN-17 remained at a nominal $222-$227/st FOB and $232/st rail-DEL in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $220-$240/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was tagged at $220-$230/st FOB in the region.
California: Granular ammonium sulfate remained at $210-$230/st FOB in California, depending on location.
Pacific Northwest: Granular ammonium sulfate was tagged at $220-$225/st DEL in the region. Agrium’s ammonium sulfate postings will firm on Sept. 22 to $235/st DEL in Washington, Oregon, Idaho, Montana, Wyoming, Utah, and Nevada. Warehouse postings in Washington, Idaho, Oregon, Utah, and Nevada will firm on that date to $230/st FOB.
Western Canada: Granular ammonium sulfate pricing was steady at $305-$310/mt DEL in the region.
PHOSPHATE
Central Florida: Central Florida has become the most active of the major phosphate markets in recent weeks. All of the producers have been loading orders placed earlier, and inventories were tight across the board last week. Mosaic was even making some prompt sales, although most new deals were for delivery later this year and up to April 2008.
Last week, the Central Florida DAP price range remained a flat $385/st FOB. CF and Mosaic had both set prices at $385/st FOB. Mosaic’s asking price was $381/st FOB for MAP, while CF was listing a price of $385/st FOB. PotashCorp’s Central Florida reference price remained at $385/st FOB. In Texas, Agrifos raised its truck price to $430/st FOB, and $410/st FOB for railcars, but was sold out through the end of September for rail-delivered phosphates.
U.S. Gulf: Most terminals and dealers filled their bins earlier this summer, and it’s a good thing. Last week, tons began moving out to the fields at a rapid rate throughout the river system, but it will be another week or two before restocking begins.
In Kansas, farmers were harvesting their corn crops last week, and will soon be buying fertilizer for their wheat crops – or possibly soy beans. In Oklahoma, rain was persistent but not too heavy, which has been a blessing for farmers in that state.
The Army Corps of Engineers had still not issued any new information on the dredging of the Arkansas River north of Lock 17 at Muskogee, and barge traffic was moving single file though a narrow channel there. Last week, terminals and dealers were still in good shape because the spring season was just beginning, but that could change quickly once the season gets into full swing. Supply could become a problem in Inola and Catoosa at that point.
Some buyers were concerned that the ongoing sulfur shortage could affect production, and fear producers may be forced to curtail production. However, it was not clear that will actually happen. Both CF and Mosaic were taking orders up to April next year, so inventories will remain low.
NOLA DAP barge sales were slow last week, and that should continue for another week or two. One company sold a DAP barge it could not put into storage at $398/st FOB last week. In addition, MAP deals were done at between $395/st FOB and $401/st FOB.
The NOLA DAP barge price range last week was $398-$405/st FOB, compared to the previous week’s flat price of $400/st FOB.
Eastern Cornbelt: DAP remained at $430-$438/st FOB in the region last week, with MAP quoted at $430-$435/st FOB. The DAP market FOB Cincinnati was quoted at the $435/st mark to the dealer.
10-34-0 was pegged at $350-$360/st FOB, up from last report. One Ohio source pegged the common dealer price at $355-$360/st FOB for new tons.
Western Cornbelt: DAP and MAP remained at $430-$435/st range FOB regional warehouses to the dealer. 10-34-0 was tagged at $350-$365/st FOB, up again slightly from last report, with the upper end reported in Iowa to the dealer.
California: The MAP market was tagged at $450-$460/st FOB or DEL, with the upper end reflecting Aug. 24 list pricing from Agrium in California and Arizona. The DAP market was pegged at $455-$460/st FOB or DEL. One regional supplier has scheduled another $10/st increase on Sept. 16 for both DAP and MAP.
Phosphoric acid prices were also strong, with the California market tagged at $7.00-$7.10/unit DEL for merchant grade acid (MGA) and a firm $7.10/unit DEL for super phosphoric acid (SPA). Agrium’s phosphoric acid prices for Nevada and California moved in September to $700/st rail-DEL for MGA and $710/st rail-DEL for SPA, up $5/st from August levels. Postings for both products will increase by another $15/st in October, followed by $10/st increases in November and again in December.
16-20-0 was firm at $295-$300/st FOB or DEL, and 10-34-0 remained at $310-$320/st FOB in the state.
Pacific Northwest: MAP was quoted at $445-$450/st FOB or DEL in the region, with DAP pegged at $452-$457/st FOB or DEL. Sources said a $10/st increase is scheduled for both products on Sept. 16.
10-34-0 pricing was reported at $320-$325/st FOB in the region, which was up slightly from last report. 16-20-0 was tagged at $302-$307/st DEL, with a move to $310-$315/st slated for Sept. 16.
Super phosphoric acid (SPA) was quoted at a firm $7.10/unit DEL in the region, with merchant grade acid (MGA) tagged at $7.00-$7.10/unit DEL, depending on supplier. Agrium’s phosphoric acid prices in Washington, Oregon, Idaho, Montana, Wyoming, and Utah are slated to increase to $715/st rail-DEL for MGA and $725/st rail-DEL for SPA in October, followed by a $10/st increase in November and another $10/st increase in December.
Western Canada: MAP was unchanged at $540-$575/mt DEL in the region last week.
U.S. Export: Last week, PhosChem sold 11,000 mt into Brazil at higher delivered prices – between $494/mt and $505/mt – but the netback resulted in roughly the same FOB price of $430-$433/mt FOB in the previous week’s range. Higher ocean freight rates were given as the reason.
India continues to be in the market for additional phosphate supplies, but PhosChem has been unable to respond because of low inventories.
Despite the higher delivered prices for DAP, the export DAP price range was unchanged last week due to the higher freight rates, $430-$433/mt FOB.
India: Sources in Asia report that DAP producers are unable to start production at levels they would like because of a shortage of phos rock. One trader noted the price is now at $45/mt FOB for 30 percent rock. Another observer noted there is a global shortage of good quality phos rock, which is adding to India’s purchasing woes.
POTASH
Eastern Cornbelt: Potash was quoted at $255-$265/st FOB regional warehouses and in tight supply.
Western Cornbelt: Potash remained at $260-$270/st FOB the warehouse, depending on grade and location, and in very tight supply. One Iowa source pegged the granular market now firmly at $267-$270/st FOB for new sales, with talk of another increase in November.
California: Potash was quoted at a firm $260-$275/st FOB in the state, depending on grade. Potassium nitrate pricing remained at $500/st FOB for bulk and $560/st FOB for bags. Sulfate of potash (SOP) pricing was steady at $368-$378/st FOB.
Pacific Northwest: Potash remained in extremely tight supply, with several sources expressing doubts about sourcing enough product to meet fall demand. Rail-delivered potash was pegged at $274-$282/st in the region, depending on grade, with the FOB market at $265-$272/st. Sources said a $20/st increase is scheduled for Oct. 1.
Western Canada: Sources tagged the potash market at a firm $280-$295/mt FOB regional plant sites or warehouses.
SULFUR
Tampa: Phosphate producers continued having trouble getting sulfur last week, and there were no signs that will change anytime soon. The big fear is that phosphate production may have to be curtailed, unless the situation changes. That could come in the form of earlier maintenance turnarounds, rather than simply curtailing production.
Adding to their woes, the Sulfur Enterprise, which delivers sulfur to Tampa, was in dry dock last week. Most refineries along the Gulf Coast were operating normally last week, so inventories should build somewhat until the Sulfur Enterprise returns to service. Meanwhile, Chevron restarted several of its process units at its Pascagoula refinery, after a fire on Aug. 16 that damaged the No. 2 unit. The company said it will take several months to complete repairs.
The extremely tight sulfur supply situation will provide an incentive for sulfur suppliers to seek another hike in price for the fourth quarter. Talks will likely begin at the TFI meeting in Boston this month.
Prill vessels were scheduled to depart from Beaumont this month for deliveries to Brazil and Morocco.
Hurricane Felix, which had Category 5 winds of 160 mph when it made landfall in Central America last week, did not affect sulfur transportation in the Gulf of Mexico.
West Coast: Last week there was no new news on how sulfur producers will deal with a pricing system in order to continue serving the domestic agricultural market, which was unable to pay the prices commanded by the export prill market.
Correction: Contrary to an earlier report (GM Aug. 20, p. 9) Chevron says it has not considered selling at a price of $18/lt.
Vancouver: Negotiations on new semester prices for Brazil were hardly off the ground last week, and Canadian producers were in no big hurry. The price of sulfur on the world market continues to be strong and getting stronger, and the longer they wait, the higher price they can demand. When the contracts are settled, they will likely be higher than the current high price paid by China. China will soon begin negotiating for its new quarterly contracts, and their price, too, will be higher.
MARKET NOTES
Pakistan: Port Qasim Authority (PQA) and a consortium of local-Fauji Foundation, Akbar Group, and Portia Management Services of UK have signed a memorandum of understanding for the construction of the country’s first dedicated modern grain and fertilizer terminal at port, at a distance of 50km from the Karachi City Center and 15 km from the National Highway.
The terminal assets would be transferred to the Port Qasim Authority on the completion of the 30-year agreement period. The terminal, with an annual handling capacity of 4 million mt, will cost US$100 million. During the 30-year period PQA will earn an estimated amount of US$123 million.
Pakistan will import DAP from Tunisia to overcome the shortage of the fertilizer in the country, and export horticulture, halal meat, and other agriculture products to Tunisia. This was agreed to in a meeting between Pakistan’s Minister for Food, Agricultural and Livestock and the Tunisian Minister for Industry, Energy, Small and Medium Enterprises.
India: The Reliance Group proposes to enter the fertilizer sector with India’s largest fertilizer plant. “Reliance has made a proposal to set up a fertilizer plant at Kakinada in Andhra Pradesh. However, it is contingent on the new fertilizer investment policy envisaged by the government. The Reliance proposal is under consideration,” said a senior fertilizer ministry official. “The proposal is for two plants, each of 2 million mty capacity. Kakinada has been chosen since it is close to the source of gas” from Reliance Industries Ltd.’s oil fields in the Krishna-Godavari basin, said a senior Reliance official. However, the official maintained that the proposed fertilizer plant will not get gas at a concessional rate from the Reliance oil fields. “The plant will procure gas at the market determined rate. The delivered price of gas could fall between $5.8-$6.2/mmBtu.”
Ukraine: The government recently announced the forthcoming sale of the Odessa Port Plant, the second largest producer of urea in the country. Initial reports were that the facility could be sold as early as October, though others now say it may not occur until November, if at all, as whether to privatize is still an issue. Those seeking the price must top 2.5 billion UAH (US$500.1 million), according to the Ukrayinska Pravda.