AMMONIA
U.S. Gulf/Tampa: Major players firmed up January Tampa business at $460/mt DEL late last year. In other import news, PCS Sales has completed negotiations with Ineos Nitriles for anhydrous ammonia imports in Texas for January. The new average for that business is $467.50/mt CFR. This is based on an average of recently completed new business into the Mississippi River ($445/mt DEL) and recent offers into the U.S. Gulf from the Black Sea and the Arab Gulf at $490/mt DEL.
PCS was also reported to have sold a barge in the NOLA market at $438/st FOB.
October imports were up 14 percent, to 761,115 st from the year-ago 668,242 st, according to DOC. July-October imports were up 8 percent, to 2.84 million st, up from 2.62 million st.
Eastern Cornbelt: The anhydrous ammonia market was quoted in the $620-$630/st FOB range for prompt tons out of regional terminals, with no spring prepay offers reportedly available from suppliers. “Everyone is scrambling to fill terminals for spring, and it will be a struggle to get there,” said one source.
Agrium’s anhydrous ammonia postings firmed on Dec. 21 to $660/st FOB E. Dubuque/West, Iowa; $665/st FOB E. Dubuque/East, Ill., and Niota, Ill.; $670/st FOB Meredosia, Ill., and Marseilles, Ill.; and $680/st FOB Cincinnati/Finney, Ohio.
Western Cornbelt: Sources quoted the anhydrous ammonia market last week at $610-$625/st FOB terminals to the dealer, with delivered ammonia pegged in the $620-$625/st range in Missouri from southern production points. One Iowa source said there were some leftover fall prepay tons trading at sub-$600/st levels in late December, but those tons were gone by Jan. 1.
Agrium’s anhydrous ammonia postings firmed on Dec. 21 to $640/st FOB Greenwood, Neb., Mankato, Minn., and Iowa terminals at Early, Garner and Whiting; $630/st FOB Clay Center, Kan.; $625/st FOB Conway, Kan.; $620/st FOB Mocane, Okla.; and $600/st FOB Borger, Texas. The company’s delivered ammonia postings from the Borger facility to points in Texas firmed on that date to $625/st north of Interstate 40 and $630/st south.
Agrium’s ammonia postings in the Leal, Velva, Grand Forks, and Beulah sales area in North Dakota firmed on Dec. 21 to $680/st FOB and $700/st DEL, up $25/st from the company’s Dec. 7 list prices.
California: The anhydrous ammonia market was quoted at $490-$505/st DEL, up significantly from last report, with an additional and sizable pricing increase expected by mid-January. Agrium’s anhydrous ammonia postings firmed on Dec. 21 to $500/st truck-DEL in central California and $505/st truck-DEL in northern California.
Pacific Northwest: Anhydrous ammonia pricing was quoted at $650-$660/st FOB Washington terminals, with delivered ammonia pegged at $685-$725/st in the region, depending on location. Those levels were up dramatically from last report.
Agrium’s anhydrous ammonia postings firmed on Dec. 21 to $730/st truck-DEL in Oregon and Washington east of the Cascades and in northern Idaho; $725/st rail-DEL in Oregon, Washington, and northern Idaho; and $725/st truck-DEL in Montana and northern Wyoming. Those levels were up significantly from Dec. 7 list prices, which included $685/st DEL in Montana and northern Wyoming, and $685-$690/st DEL in Washington, Oregon, and northern Idaho.
Agrium’s aqua ammonia posting firmed on Dec. 21 to $182/st FOB Central Ferry and Finley, Wash., up $10/st from the Dec. 7 list price.
Western Canada: Anhydrous ammonia pricing in Western Canada had reportedly firmed to $853-$889/mt DEL.
Black Sea: Sources report the situation remains tight. Producers are claiming they are sold out for January. Reportedly, deals at the end of the year moved the market to $400/mt FOB or above. One observer noted that buyers are willing to entertain $400/mt FOB rather than fight to get prices down again. Still others are not believers, speculating that the $400/mt was just top off tons and not a full cargo.
Many of the cargoes being shipped out this month reflect the sub-$400/mt FOB deals that were concluded in December. Anyone walking in today, if producers are to be believed, will have to wait for February and will have to pay above $400/mt FOB.
Middle East: The last year closed with prices rising in the mid-$300/smt FOB. Now producers are arguing $450/mt FOB is the new level.
And sources in Asia say that price neighborhood could possibly be hit this week.
The dramatic $100 jump, said one observer, is due to an ever-tightening global market and continued limited production.
With a FACT/India tender on tap, strong global demand, a delay in the opening of the Iranian facilities, and limited production throughout the region, producers say $450/mt FOB is a reasonable price.
In addition, two Japanese trading houses rushed in to take two cargoes to cover needs in Thailand. Reportedly both cargoes were needed to cover an unexpected shortage out of Mitco when the Malaysian facility went down for an unscheduled repair.
Discrepancies in the netbacks between the two deals — $460/mt FOB compared to $380/mt FOB – are put to competitive efforts to gain a toehold in a new market.
At this point, producers are asking $450/mt FOB. The cargoes to Thailand are being dismissed as one-off wonders, but not too far from the mark.
With estimates that the FACT tender could hit $500/mt CFR, sources say pegging the market at $400-$420/mt FOB for the opening of the New Year is reasonable.
Asia: Buyers keep getting hit by ever-increasing prices.
The latest victim of mind-numbing high prices is Thailand.
Mitsubishi sold a prompt cargo of 5,000 mt to TCL for $565-$570/mt CFR. The deal was put together just before December 25 for early January delivery.
On top of this deal, sources report Mitsui sold 4,000 mt to the same buyer for $450-$460/mt CFR.
These two cargoes were reportedly needed to cover material that was slated to come from MITCO/Malaysia. The plant reportedly had a small problem that required it to be shut down for a few days as the last year closed. The loss of ammonia from the shutdown needed to be covered quickly.
One source speculated that the difference in the prices between the two Japanese companies was not due to the actual price of the product, but rather the desire of one of the companies to offer a better deal now in the hopes of getting more business in the future.
In Indonesia the KPI facility is back up and running. Sources say the plant is fully booked for the year with contracts and other long-term arrangements.
Asian buyers who were looking for some price relief with KPI and KPA both back online will be disappointed.
India: Asian sources predict the FACT tender that closes January 10 could see offers at $500/mt CFR and up.
UREA
U.S.Gulf: While little new business was reported over the holidays, what some called an “armada” of imports did have some impact on the market. Lower price ideas were being reported in both granular and prills. Granular was called $430-$438/st FOB, with most sources calling it toward the lower end of the range. In addition, a fair amount of prill material was reported to be available, with the product priced due to origin. While most continued to hone in on prices of $410-$415/st FOB as the market, others suggested that lower quality product could perhaps be had for as low as $400/st FOB.
While most sources pointed to November/December imports, October imports as reported by the U.S. Department of Commerce reflected a significant increase. October imports were up 50 percent to 607,269 st from the year-ago 403,932 st, according to DOC. July-October imports were up even more at 53 percent, to 1.964 million st from the year-ago 1.29 million st.
Eastern Cornbelt: Granular urea remained in a broad range at $475-$490/st FOB in the region. One Indiana source said he was waiting on tons booked in early December at the $455/st FOB mark, but said current pricing was up considerably from that level.
Western Cornbelt: Granular urea was pegged at $470-$480/st FOB regional terminals, with the upper end reflecting reference pricing in Iowa. Agrium’s granular urea postings firmed on Dec. 21 to $510/st FOB Shakopee, Minn., and North Dakota terminals at Alton, Carrington, Colfax, Marion, and Scranton, and $515/st rail-DEL in Minnesota, Wisconsin, and the Dakotas.
California: Granular urea was pegged at $490-$510/st FOB in the state, with delivered urea quoted at $510-$515/st. Agrium’s granular urea posting firmed on Dec. 21 to $490/st FOB West Sacramento, Calif.; $510/st truck-DEL in central California; and $515/st truck-DEL in northern California. Those levels were up $20/st from the company’s Dec. 7 list prices, $35/st higher than Agrium’s Nov. 19 urea postings, and $65/st higher than the Nov. 2 list prices in the region.
Pacific Northwest: Granular urea pricing was up from last report at $500-$520/st FOB and $520-$540/st DEL in the region. Agrium’s granular urea postings firmed on Dec. 21 to $510-$525/st DEL in Montana and Wyoming, depending on location; $535/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson; $540/st DEL in Washington, Oregon, Idaho, and northern Nevada; $550/st DEL in northern and central Utah; and $555/st DEL in southern Utah. Those levels reflect a $20/st increase from the company’s Nov. 23 urea list prices in the region.
Western Canada: Granular urea was tagged at $575-$600/mt DEL in the region, up $20/mt from last report.
India: As the old year closed, IPL settled on four suppliers for 245-260,000 mt from a field of about a dozen companies competing in the Dec. 26 tender. Toepfer, with 75,000 mt; Transammonia, with 35,000 mt; Helm, with another 35,000 mt; and Swiss Singapore, with 65-70,000 mt, won the day with IPL. The price range for the offers ranged from $417/mt CFR to $419.50/mt CFR. All offers were officially from open sources, but industry observers figure the tons will all come from China.
The price range is said to have been the result of pre-tender talks with traders and producers. Reportedly, the Middle East producers refused to budge from their $410/mt FOB pricing ideas. The Chinese suppliers offered a bit more flexibility in pricing.
Asian sources say IPL was fortunate to get those prices. In the last tender of 2007 held by MMTC, the buyer was able to get cargoes in the $407/mt CFR range thanks to pre-tender negotiations. All the other tons offered in that tender showed pricing ideas at $435-$450/mt CFR.
Reportedly, the same thing happened in this tender. Offers that deviated too much from the pre-tender agreements were rejected.
Now the big question is whether or not more buying will take place.
For some in the industry, the pressure to buy at least another 200,000 mt is too great. For others, there is a perception that the Indians now have enough urea to not only get through the upcoming season, but also to placate any complaints from opposition politicians.
Logically, said one trader, the buying should end now because discussions on urea purchases for the next fiscal year need to be concluded by the end of February. A final analysis comparing urea demand and usage with purchases and production should conclude in mid-March in time for the new fiscal year to start April 1.
Additional purchases now will have large quantities arriving in the middle of the analysis, and that could confuse the bean counters and politicians.
One observer noted that if India takes a break from buying for a couple of months, the price could come down from its record levels. Again, he said, logically that is what should happen.
However, India will face national elections later this year. Any pockets of urea shortages will be seen as a failure by the government to provide a vital commodity to farmers, and could be used by the opposition in the campaign.
Because of the election, say sources, the government may continue to talk about reforming the urea subsidy program, but will end up doing nothing about it.
IFFCO has alerted the Department of Fertilizer of the critical shortage of gas for its fertilizer plants, saying in many cases they are having to run on spot gas and naphtha. As a result, it warns that urea availability will be worse in 2008 and more imports will be required.
Black Sea: Sources report the market is slipping. Reportedly, the mid-$370s/mt FOB was done in the past couple of weeks. Traders are now waiting to see if this is a real level or just a holiday slump.
Lower prices from the Baltics seem to verify a declining FSU market in general. However, bullish players hold on to claims of slower holiday business that will be corrected as the year progresses.
There has been growing reluctance from European and South American buyers to the ever-rising prices out of Yuzhnyy. If India holds off on its buying for a while and if the Chinese dramatically raise their prices, Black Sea material could come off enough to once again be competitive in India and Asia.
For now, sources put the market at $375-$385/mt FOB.
Middle East: Producers hold onto their desire to sell at $410/mt FOB and no lower. The problem is that no one can point to one bit of business at that level.
Claims there are no spot tons available are accepted with a grain of salt. Industry observers agree cargoes for the United States, Pakistan, and Latin America are keeping the export facilities busy.
One observer noted that while the producers claim to be sold out well into February, if a buyer stepped up and accepted the $410/mt FOB offer, a cargo could appear in just about any timeframe the buyer desires.
Until someone steps up to the plate and makes that bid, sources say the area market remains at $400-$410/mt FOB.
Iran’s ASSC called for three tenders totaling 300,000 mt. The first tender closed Dec. 26 for 120,000 mt. Reportedly, four companies offered. The next tender closes Jan. 8, and the third Jan. 15.
China: Apparently the Chinese central government is still trying to figure out how to stem the flow of urea out of the country. Last year the government imposed an export duty of 30 percent on all urea exports during the peak domestic season. The idea was to make Chinese urea too expensive for the global market. When domestic sales were weak – usually in the last quarter of the year – the duty was cut to 15 percent.
With prices setting new records each week, even a doubling of the export duty did not stop the appetite for Chinese urea.
For now, the government decided the duty should go back up to 30 percent as initially planned. Sources now say there are discussions within the various ministries about bumping up the duty for the second and third quarters.
How much of an increase each quarter will get will depend on how much urea is in the domestic warehouses and distribution system, say sources.
Pakistan: TCP has reportedly negotiated with Sabic for another 50,000 mt of urea for shipment in February-March. This is in addition to the 150,000 mt already negotiated.
Bangladesh: The government plans to import 200,000 mt of urea to meet future local demand. Officials have reportedly met with envoys from China, Russia, Saudi Arabia, Morocco, Qatar, and the UAE at the foreign ministry and discussed the possibility of procuring fertilizer from those countries.
NITROGEN SOLUTIONS
U.S. Gulf: UAN barges were called within the $340-$350/st FOB ($10.63-$10.94/unit) range. The relatively firm pricing does not appear to have been impacted by a recent surge in imports.
U.S. UAN imports were up a whopping 207 percent in October, to 304,911 st from the year-ago 99,249 st, according to the DOC. July-October imports were up 137 percent, to 1.11 million st from the year-ago 469,837 st.
Eastern Cornbelt: The UAN market was pegged at $11.43-$11.95/unit FOB regional terminals, with the upper end reported by an Indiana dealer for spot UAN-28 tons ordered before the close of business Jan. 4. He said that level was up from spot quotes one week earlier at the $320/st ($11.43/unit) FOB level at the same location.
Western Cornbelt: UAN-32 was quoted at $360-$366/st ($11.25-$11.44/unit) FOB for confirmed sales, with new reference prices pegged at $372/st ($11.63/unit) FOB from some regional suppliers.
California: UAN-32 pricing was on the rise in California. The market was tagged at $390-$410/st ($12.19-$12.81/unit) FOB and $410-$425/st ($12.81-$13.28/unit) DEL in the state. Agrium’s UAN-32 postings firmed on Dec. 21 to $402/st ($12.56/unit) FOB Sacramento, $420/st ($13.13/unit) truck-DEL in central California, and $425/st ($13.28/unit) truck-DEL in northern California.
Pacific Northwest: UAN-32 was reported at $410-$425/st ($12.81-$13.28/unit) DEL in the region, up roughly $55/st from last report. Agrium’s UAN-32 postings firmed on Dec. 21 to $410/st ($12.81/unit) DEL in Oregon excluding Malheur County, Washington, and northern Idaho; $415/st ($12.97/unit) rail-DEL and $420/st ($13.13/unit) truck-DEL in southern Idaho, Nevada, Utah, and Oregon’s Malheur County; and $440/st ($13.75/unit) truck-DEL in Montana and northern Wyoming. The company’s UAN-28 posting in Montana and northern Wyoming firmed on that date to $386/st ($13.79/unit). Those levels represent a roughly $20/st increase from the company’s Dec. 7 postings for UAN-32 in the region.
Western Canada: UAN-28 was quoted at $362-$378/mt ($12.93-$13.50/unit) DEL in the region as of Dec. 21, reflecting a $12-$13/mt increase from last report.
AMMONIUM NITRATE
U.S. Gulf: Demand was reported to be good, with prices up. Sources were calling the market $355-$365/st FOB, with new quotes of $370/st FOB.
According to DOC, AN imports were off slightly in October – by 2 percent, to 51,925 st from the year-ago 53,142 st. However, July-October imports are up 29 percent, to 311,125 st from the year-ago 241,351 st.
Western Cornbelt: Ammonium nitrate remained firm at $380-$385/st FOB in the region, but sources said a near-term increase would likely bring the market to the $390/st FOB mark or higher in the region.
California: No market was reported for ammonium nitrate in the region. The CAN-17 market, however, had moved to $310-$355/st FOB in California, up roughly $35-$45/st from last report.
Pacific Northwest: No current prices were reported for ammonium nitrate in the region. CAN-17 was pegged at $285-$290/st FOB, up $25/st from last report. Agrium’s ammonium nitrate solution (20-0-0) posting firmed on Dec. 21 to $250/st FOB Kennewick, while CAN-17 postings at that location firmed to $289/st FOB. Those levels were up roughly $10/st from Dec. 7 postings.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate pricing had reportedly firmed to $265-$275/st FOB in the region. Steel mill grade sulfate was pegged at the $215/st mark FOB Burns Harbor, Ind.
Western Cornbelt: Granular ammonium sulfate was up from last report at $260-$275/st FOB, with the upper end reported in Iowa. Agrium’s ammonium sulfate posting for North Dakota, Minnesota, and Wisconsin firmed on Jan. 1 to $282/st DEL.
California: Ammonium sulfate was reported at $250-$270/st FOB in California, up $20/st from last report.
Pacific Northwest: Effective Jan. 1, Agrium’s ammonium sulfate postings firmed to $287/st FOB and $292/st DEL in Washington, Idaho, Oregon, Utah, and Nevada. Delivered ammonium sulfate postings in Montana and Wyoming moved on that date to $292/st.
Western Canada: Effective Jan. 1, ammonium sulfate pricing in the region firmed to $375-$380/mt DEL, up from $340-$345/mt DEL at last report.
U.S. Imports: July-October imports are up 42 percent, to 121,383 st from the year-ago 85,245 st, according to the DOC. October imports were less dramatic, up 29 percent at 28,282 st from the year-ago 21,856 st.
PHOSPHATE
Central Florida: For some, the happy holidays continued last week, which meant business was slow. “People are taking vacations, even producers,” a trader said. So how slow was it? “They (producers) haven’t raised their prices in four or five days.”
Although new sales were scarce during the off season, producers continued to load railcars, which were ordered earlier in the year. That situation will continue until spring, when a new round of shipments will begin.
CF and Mosaic were both extremely low on inventories of both DAP and MAP, and weren’t even bothering to push sales. However, Mosaic recently sold a unit train of MAP at $531/st FOB, which equals $535/st FOB for DAP. One source pointed out, however, that the freight discount on a unit train amounts to a savings of about $10-$12/st, so the buyer did save some money.
Phosphate producers’ stocks have risen dramatically during the past 12 months. CF’s stock rose an amazing 330 percent. Others also did incredibly well. However, phosphate producers will face higher raw materials costs this year. The price of ammonia, used in making DAP, rose $100/mt from $360/mt to $460/mt at Tampa. In addition, sulfur negotiations on a serious level will begin this week, and phosphate producers will likely be hit with the biggest bump ever. The exact amount sulfur producers will seek was not clear, but it will be in the triple digits. In addition, phosphate rock from North Africa took a dramatic increase late last year, and that will cut into the profits of Mississippi Phosphates. Still, a source said that at current prices, the company can still make a healthy profit.
Projections were that phosphate prices will continue to be high and going higher this year. Farmers plan to decrease the amount of corn they grow by around five million acres, most of which will be put into growing soy beans, which have also enjoyed extremely high prices. That could reduce the amount of phosphates, especially DAP, needed, but considering the tight market in this country and worldwide, prices are unlikely to tumble. Ultimately, consumers will pay the price.
The Central Florida DAP price range rose to $520-$535/st FOB during the holidays, well up from the previous flat $500/st FOB. Mosaic has basically abandoned posting an asking price for DAP because of a lack of supply. CF’s asking price was $520/st FOB for DAP and $517/st FOB for MAP. MAP supplies were said to be scarce. In Texas, Agrifos’ truck price was $565/st FOB, and its rail price was $560/st FOB for DAP last week. PCS Sales raised its price to $600/st last week.
U.S. Gulf: No big surprise, but business in the Gulf’s river market was slow during the holidays, and last week as well. Most sources – that is, the ones who actually showed up last week – said they expect an improvement this week. However, considering the crummy weather, that was pretty optimistic.
As the year drew to a close, a few who owned phosphate barges decided to go ahead and get rid of them at a sizable profit (rather than a gigantic profit) to avoid having to pay taxes on the load, which put a minor drag on the market. Those barges were gone by the beginning of the year, and even if they were not, the price went back up. One trader was able to buy two DAP barges at $533/st FOB, but the same seller, who had more, declined further sales. That was the deal of December.
Just how high the price of phosphates will go on the river was still as murky as the Mississippi last week. Speculation that it would hit $600/st FOB by the end of the year did not pan out, but don’t rule it out before the end of January. Most of the product being purchased at this time of year is not for resale but, instead, is destined for warehouses. With prices still on an upward spiral, those who can were filling up their bins.
The phosphate industry remained in high spirits last week. The price of corn was around $4/bushel, and soybeans and wheat were around the $10/bushel mark. As long as that continues, fertilizer prices will remain high, say sources.
The NOLA DAP barge market price range last week was $533-$550/st FOB, but the low end of the range will not be available this week. At best, look for barge prices in the $540-$555/st FOB range.
Eastern Cornbelt: DAP and MAP were quoted at $565-$585/st FOB regional warehouses to the dealer, with the low out of spot river locations and the upper numbers inland. No current prices were reported for TSP or 10-34-0 in the region. 10-34-0 remained in very tight supply, with several sources saying they were unable to get a price quote for spot or prepay tons last week.
Western Cornbelt: DAP was quoted at $565-$575/st FOB in the region. MAP was reported at $570-$585/st FOB, with the upper end reflecting new dealer reference pricing out of spot Missouri River terminals.
10-34-0 pricing covered a very wide range in the region. The low end was pegged at $440/st FOB in Iowa for recent sales, but a Missouri source said much higher phosphoric acid prices and the firming ammonia market had pushed 10-34-0 pricing to as much as $510/st FOB in the region for new business.
California: MAP was quoted at $605-$615/st FOB or DEL in the state, with DAP pegged at $620-$630/st FOB or DEL. Agrium’s MAP postings in California and Arizona firmed on Dec. 28 to $620/st FOB or rail-DEL, up $15/st from the Dec. 6 list prices in the region.
10-34-0 and 16-20-0 were also up significantly from last report. 10-34-0 was pegged at $360-$376/st FOB, with the upper end in desert areas of the state. 16-20-0 was $378-$385/st FOB in California, up $35/st from last report.
Phosphoric acid prices were up dramatically from December, with super phosphoric acid (SPA) quoted at a firm $8.15/unit DEL and merchant grade acid (MGA) at $8.05-$8.15/unit DEL in the region. One supplier was referencing MGA out of warehouses in California at the $8.35/unit FOB mark as of the first of January. Phosphoric acid postings from Agrium for January include SPA at $815/st rail-DEL and MGA at $805/st rail-DEL in California and Arizona. A $10/st increase is scheduled in February for both products, followed by additional $10/st per month increases in March, April, and May.
Pacific Northwest: Phosphate pricing was up dramatically from last report, and remained in very tight supply. Sources pegged the MAP market at $600-$615/st DEL, depending on location, and DAP was quoted at $610-$625/st FOB or DEL in the region. Agrium’s MAP postings firmed on Dec. 28 to $605/st DEL in Montana and Wyoming; $610/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $615/st DEL and $610/st FOB in Washington, Oregon, and northern Idaho. Those levels were up $15/st from the company’s Dec. 6 postings for MAP in the region.
16-20-0 pricing was up $40-$45/st from last report, with the regional market tagged at $380-$385/st FOB and $385-$390/st DEL. 10-34-0 was quoted at $402-$412/st FOB in the Pacific Northwest, with some sources predicting a move to the $425/st FOB mark in the near term.
Super phosphoric acid (SPA) was quoted at a firm $8.15/unit DEL in the region, with merchant grade acid (MGA) at $8.05-$8.15/unit DEL. Those levels were up $0.70/unit from December pricing. Phosphoric acid postings from Agrium for January include SPA at $815/st rail-DEL and MGA at $805/st rail-DEL in Idaho, Montana, Nevada, Oregon, Utah, Washington, and Wyoming. A $10/st increase is scheduled in February for both products, followed by $10/st per month increases in March, April, and May.
Western Canada: MAP pricing was up dramatically at $655-$690/mt DEL in Western Canada, up $15/mt from mid-December pricing levels and $95/mt higher than early December dealer prices in the region.
U.S. Export: The holidays may have slowed activity in the DAP export market, but not the price. During that period, PhosChem sold 25,000 mt into Africa at $610/mt FOB, well up from its pre-holiday high of $597/mt FOB. In addition, a source said Ameropa sold Russian DAP at $620/mt FOB, so the export market continued to be strong into the new year.
Indications were that export phosphate prices will continue to increase this year, as more and more developing nations seek more food, especially protein, to feed their growing and increasingly wealthy populations. That will put a strain on phosphate supplies long into the future.
The export DAP price range last week rose to $597-$610/mt FOB, and will go higher with the next sale. That was up from the previous $580-$597/mt FOB range.
Correction: In the last issue of Green Markets in 2007, a statement was made that PhosChem had reserved more phosphates for the U.S. domestic market than in the past. However, PhosChem is not involved in the domestic market, and the statement should have been attributed to Mosaic, which did increase its commitment to North America.
Bangladesh: BCIC has issued three tenders to import 30,000 mt (65.5 percent BPL Min.), 15,000 mt (72 percent BPL Min.) and 15,000 mt (72 percent BPL Min.) phosphate rock on a C&F Chittagong basis. Offers shall be received up to Jan. 9 for import of 30,000 mt, Jan. 16 for 15,000 mt, and Jan. 28 for another 15,000 mt, respectively. The offers should be valid up to 30 days from the date of closing bids.
POTASH
Eastern Cornbelt: Potash tons, if available, were said to be priced firmly in the $415-$425/st FOB range for very limited warehouse inventories, with reports that some suppliers were referencing white granular potash as high as $450/st FOB in the region last week. As an example of the current supply situation, one source said he has nearly 13,000 tons of potash storage at his facilities, but has only 300 tons in the bin, with another 1,300 tons currently booked out for January/February shipment.
PCS Sales is raising its FOB mine prices by $80/st FOB for all grades of potash for U.S. buyers, effective March 1. This increase is on top of the $50/st increase that took effect Jan. 1.
Intrepid Potash’s postings for 60 percent red granular potash FOB McComb, Miss., firmed on Jan. 2 to $406/st, up $40/st from the company’s Nov. 18 list price at that location. Another $40/st increase will bring the price to $446/st FOB McComb on Feb. 1.
Western Cornbelt: Potash remained in very tight supply, and spot pricing for available tonnage continued to climb. Sources pegged the regional warehouse market at $415-$425/st FOB last week for limited cash tons, up another $25-$35/st from mid-December levels.
Potash postings from Intrepid Potash FOB Carlsbad, N.M., firmed on Jan. 2 to $357/st for 60 percent granular and 62 percent standard, $360/st for 62 percent fine standard, and $365/st for 62 percent granular. Those levels represent a $40/st increase from the company’s Dec. 1 postings, and another $40/st increase is scheduled for Feb. 1.
California: Potash remained in very tight supply. The regional market in early January was tagged at $400-$417/st FOB depending on grade and location, provided tons could be had. Intrepid Potash’s potash postings FOB Bakersfield, Calif., firmed on Jan. 2 to $417/st for 62 percent white standard, up $45/st from the company’s Dec. 1 list price at that location. Another $40/st increase will bring the price at Bakersfield to $457/st FOB on Feb. 1.
Intrepid also announced new potash postings FOB Chico, Calif. Effective Jan. 2, postings at that location moved up $40/st to $400/st for 60 percent white standard and $406/st FOB for 60 percent white granular. Another $40/st increase for both products is slated for Feb. 1.
Potassium nitrate in California was pegged at $610/st FOB for bulk and $670/st FOB for bags, up $40/st from last report. Sulfate of potash (SOP) remained at $417-$427/st rail-DEL and $423-$433/st FOB for the last done business, but inventories on all grades were very tight, if not out completely. One source said a significant increase is planned before the next SOP cargo arrives in the coming weeks.
Pacific Northwest: Potash pricing in the region was reportedly at the $400/st FOB mark or higher out of warehouses, although very limited availability made it difficult to confirm any specific numbers. Intrepid Potash announced potash pricing increases at its Moab and Wendover locations in Utah. Effective Jan. 2, 60 percent granular potash firmed $40/st to $357/st FOB Moab and $371/st FOB Wendover, while 60 percent standard moved to $351/st FOB Moab and $365/st FOB Wendover. Another $40/st increase will take effect Feb. 1 for both products at both locations.
Western Canada: No current prices were reported for potash in the region due to limited availability.
U.S. Imports: October imports were up 30 percent, to 1.09 million st from the year-ago 834,007 st, according to the DOC. July-October imports were up 18 percent to 3.42 million st from the year-ago 2.9 million st.
SULFUR
Tampa: If you thought the college bowl games were interesting to watch, wait until you see the negotiations for first quarter sulfur contract prices. Sulfur producers will be asking something in the triple digits, and the settlement could reach something in excess of $100/lt for Tampa liquid sulfur.
“This is not the old days of tug-of-war,” a source said. “It’s hard to believe we used to spend months arguing over a $3-$5/lt increase.”
The sulfur industry – i.e., oil and gas companies – will continue to attempt to push the Tampa market closer to the world market, but that will be tough to do. In the Middle East the price has risen to $495/mt FOB, and that will probably not be the end of it. Suggestions that more prill operations should be built along the Gulf Coast to put more pressure on the phosphate industry seemed unrealistic. Although sulfur prices have reached astronomical highs in the past year, it is a fleeting balloon. As more refineries come online during the next couple of years, sulfur prices will take a sharp and continuous fall around the time new prill operations come online. In the meantime, supplies continued to shrink and the pressure was forcing up sulfur prices worldwide.
Anything can cause customers to hit the panic button during periods of shortages, as much or more than the price of oil, which moved to over $100/barrel last week, although briefly. A sulfur vessel stuck in port for an extra day in Tampa last week was cause for concern. Valero’s Port Arthur refinery cut in production to about 50 percent of its normal 1,000/lt sulfur production also drew attention.
West Coast: Contracts between refineries and prill operators on the West Coast will also begin this week, and will probably conclude by the end of the month.
U.S. Imports: Sulfur imports were up 66 percent in October, according to the DOC, to 206,503 st from the year-ago 124,695 st. July-October imports were up 25 percent, to 676,358 st from the year-ago 542,559 st.
Bangladesh: BCIC has issued a tender to import 15,000 mt of rock sulfur on a C&F Chittagong basis. Offers shall be received up to Jan. 9 and valid for 30 days.
MARKET NOTES
Pakistan: The dispatch of imported DAP and urea from Karachi Port Trust (KPT) was suspended recently due to deteriorating law and order after the assassination of former prime minister Benazir Bhutto in Rawalpindi on Dec. 27. A local stevedore company told Green Markets that imported DAP on the vessel Haeun was being offloaded, but unfortunately an earlier dispatch of about 850 mt from the port was looted in interior Sindh, and later ten trailers were also set on fire. As a result, importer Pak Arab Fertilizer has suffered a huge loss. Port authorities were being cautious before sending other cargoes inland.
Poland: The government has released a tentative list of state firms that are to be privatized, and it includes two fertilizers factories – Ketrzyn and Tarnow. Those firms were to be sold to German firms, but the government of Jaroslaw Kaczynski changed its mind and the sale was suspended. The Polish Oil and Gas Co., however, is expected to remain under strict government control.
Jordan: JPMC on Dec. 29 signed a partnership agreement with IFFCO to build a full-fledged plant for the production of phosphoric acid at the El Eshidia Mine. Under the agreement, IFFCO will be responsible for the production of phosphoric acid, while JPMC will annually provide the project with 2-2.5 million mt of phos rock. The new plant will produce 475,000 mt/y of phos acid, and around 1.5 million mt/y of sulfuric acid. JPMC will take a 48 percent stake in the project, while IFFCO will hold the remaining equity. IFFCO will ship phos acid to its Indian phosphates plants.
India: Tata Chemicals has said that as part of its de-bottlenecking plans, the company will be increasing its urea production capacity to 1.2 million mt/y by September 2008. It currently produces 875,000 mt/y.
India: The DOF has sought Rs 50bn from the finance ministry as capital support to revamp the defunct fertilizer plants of the Hindustan Fertilizer Corp. (HFC) and the Fertilizer Corp. of India (FCI) during the 11th five-year Plan. “The money could either come by way of equity infusion by the government or through interest free debt,’’ a senior official of DOF said. The proposal is reportedly in its final stages.
Pursuant to the decision, DOF has initiated the process of examining the feasibility for the revival of the Durgapur, Talchar, Barauni, and Ramagundam plants, subject to the confirmed availability of gas. While RCF has shown interest in the revival of the Durgapur and Talcher plants, National Fertilizers Ltd. (NFL) and Krishak Bharti Cooperative (Kribhco) will acquire the Barauni, Ramagundam, and Gorakhpur units. The revival of the seven plants is expected to combat the need to import urea.
India: The DOF has circulated a draft proposal on a New Urea Investment Policy for comments from other ministries. Proposals are as follow:
- Urea from all greenfield/brownfield projects is to be procured on a price equivalent to 95 percent of the monthly import parity price.
- All such investments are to be exempted from customs duty on imported capital goods and excise duty.
- An income tax holiday for the first 10 years of commercial production
- The exemption of customs duty on imported capital goods will also be provided for the revamping of existing units, though limited for the period that NPS-III would be running
- To provide adequate comfort to investors, a floor price of Rs 9800/mt is to be given to new and brownfield units so that investors are protected against a sharp fall in the international price of urea.
- Well-placed North Block sources also said that the DOF has proposed a plan to revive three presently closed fertilizer plants, RCF Trombay, FACT Udyogmandal, and Duncans Kanpur. These units are to be given a retention price equivalent to 95 percent of the monthly import parity price.
- The sources also said that units set up abroad would be encouraged to sell urea to India by offering a confirmed offtake at a price equal to 95 percent of the FOB price.
Senegal: The Government of Senegal and The Indian Farmers Fertilizer Cooperative Ltd. (IFFCO) have inked an understanding for the revival of Industries Chimiques Du Senegal (ICS), a joint venture between the Governments of India and Senegal and IFFCO. In the joint venture company the Indian government holds a 6.97 percent equity stake, IFFCO holds 19.06 percent, and the government of Senegal 47 percent. The company has an installed capacity of 660,000 mt/y of phosphoric acid; 80 percent of the production capacity is currently imported by IFFCO under a long-term offtake contract. As per the memorandum of understanding signed recently, IFFCO has agreed to inject US$100 million into ICS in the next three years, with a view to increase the production to the optimum level of efficiency. This investment would be directly contributed by IFFCO or generated from the operations of ICS.