Market Watch

Great Lakes: Wisconsin sources quoted granular urea at $450-$460/st FOB or DEL, depending on location. Those numbers were down considerably from last report based on softer barge pricing at the Gulf, but some sources said they expect the market to firm again when topdress movement begins on wheat. In Michigan, sources continued to quote reference prices for urea as high as $505/st FOB, but most said spot tons could be had for probably $30-$40/st under that mark.

Northeast: Granular urea pricing was down slightly from last report at $472-$485/st FOB, with the lower numbers FOB Philadelphia, Pa., and E. Liverpool, Ohio. Several sources said reference levels were still as high as $492-$497/st FOB in the region, but no sales were taking place at those levels. Prilled urea was pegged at $462/st FOB E. Liverpool.

Delivered urea was quoted as high as $490/st in New England, but one source said rail-delivered urea into the region should be at roughly $460-$470/st based on new barge pricing at the Gulf. He noted, however, that few dealers had any room for new tons until spring movement kicks into gear. He also referred to the “disconnect” between warehouse pricing and delivered pricing based on current replacement costs, adding that this out-of-balance relationship may continue until demand picks up.

Black Sea: Pressure on the producers to lower their prices apparently eased last week as buyers stepped up to cover shorts at prices similar to the week before.

Sources report a short was covered at $330/mt FOB, most likely bound for Nigeria.

Another cargo was reported sold at $320/mt FOB for Turkey.

Despite the moves, the general perception is that the market is once again headed for a slide in prices. Inventories are reportedly building in Yuzhnyy and other Black Sea ports. At the same time, demand from regular buyers is just enough to ease only some of the inventory pressure.

Reportedly, Nigeria wants to take 100,000 mt this month and early March. This level of demand should be enough to ease concerns about over supply at the ports, said one source, but not enough to push the price up.

Helping the price hold even for a while, said another observer, are reports of additional shorts for Turkey, Nigeria, and possibly Latin America. Once covered, however, there appears to be little else on the horizon.

One interesting factor that may change some of the dynamics in the area is a report that the European Community is getting ready to lift anti-dumping duties imposed on Ukrainian material. The move could make it easier for material to get into Europe in competition with Russian and Mediterranean sources.

Despite the interest for Turkey and Nigeria, sources say the price remained stable from the previous week.

Middle East: Producers are trying to get higher prices, but no one is biting. Sources report prices have remained stable. Shipments of granular continue to flow out of the area under contracts and long-term arrangements.

Some small cargoes from the area are being shopped around to buyers in Asia, said one source. Reportedly, a buyer in the Philippines is interested in some material.

The attempt to move material from the Middle East to the Philippines could mean either the seller is desperate or the buyers are.

If the former, the price will have to come down significantly. If the latter, sources wonder where the money will come from.

Reportedly, representatives from STC/India were shopping around for some contracted tons. The buyers are said to be looking for favorable prices. Asian sources said the STC folks left empty handed.

India: Reportedly, STC has been to the Middle East and China looking for commitments for India’s NPK producers.

Sources say they got a cold shoulder in the Middle East. Talks in China reportedly went much better. There were no reports of concluded deals, but, say sources, China has emerged as the most likely source for this year’s orders.

Still on the sidelines are the buyers from MMTC and IPL. Industry observers don’t expect to see them getting serious about buying for at least another four to six weeks.

Whatever the buyers do, local media reports say the national budget will take a hit.

Subsidies for urea are skyrocketing because of the increasing international price.

The subsidies, which are designed to protect the farmers from high input costs, have increased each year because of the ever-increasing cost of fertilizer. The rapid rise in prices during the past 18 months has led to ever-increasing budget deficits, say local news reports.

International traders say there is talk every year of redesigning the subsidy system, but local politics regularly intrudes. Sources report there is little chance of revising the system this year with national elections slated.

China: The country is slowly moving back into full operations as the festivities of the lunar New Year fade and as the rails and roads are cleared of the ice and snow that paralyzed the country last month.

Product is moving out of the ports at a steady pace now. Sources say all the tons committed in the Indian tenders of last year have finally been shipped. What is loading now are newer deals that are in competition with domestic demand.

Reportedly, Agrium bought a cargo of granular for the U.S. west coast.

Sources say the domestic market is just beginning to pick up. Another one or two weeks should give a better indication of what the full demand will be, said one source.

For now, prices remain stable at $350-$360/mt FOB bagged for prill and $400-405/mt FOB for granular.

Bangladesh: The country faces a shortage of urea following the suspension of urea production at the Zia factory for the last 25 days. The factory stopped production for 16 days in two phases and was expected to resume production soon. According to local media, it remained silent for eight days – from Jan. 22-30 – due to an explosion in the ammonia plant’s compressor vessel. Then, after ten days it again fell silent on Feb. 10 as its reformer tubes became overheated and went out of order. Engineers were working to get it repaired as soon as possible.

NITROGEN SOLUTIONS

U.S. Gulf: Barge prices continue to erode, with sources saying it is hard to find storage space for new shipments. Most were putting new trades within the $305-$310/st FOB ($9.53-$9.69/unit) range, with speculation the price may have dropped as low as $300/st FOB.

Eastern Cornbelt: UAN remained at $11.45-$12.00/unit FOB regional terminals for spot or prepay tons.

Western Cornbelt: UAN-32 was quoted at $11.34-$11.88/unit FOB regional terminals. Iowa sources tagged the common dealer market for UAN-32 in the $370-$380/st range ($11.56-$11.88/unit) for spot or prepay tons. Reference pricing out of Missouri River terminals remained at the $370/st mark ($11.56/unit) FOB last week.

Northern Plains: UAN remained at $11.80-$12.20/unit FOB regional terminals. The low end was quoted FOB Winona, Minn., for prompt tons, with prepay there reported at the $12.00/unit FOB level. In North Dakota, UAN-28 remained at $350/st ($12.50/unit) DEL for prompt tons within a limited shipping area.

Great Lakes: The UAN market was pegged at $12.03-$12.79/unit FOB regional terminals, with the low reported in Wisconsin for spot tons and the upper number to dealers FOB Muskegon, Mich. Other dealer postings included UAN-28 at $349/st ($12.46/unit) FOB Schoolcraft, Mich., and prepay UAN was said to be available in Wisconsin at the $12.40/unit mark FOB terminals.

Northeast: The UAN-30 market was quoted at $329-$335/st ($10.97-$11.17/unit) FOB Philadelphia and Baltimore, Md., with most sources reporting the common dealer price at the $330/st ($11.00/unit) FOB level last week. Out of terminals in upstate New York, UAN-32 remained at reference levels of $405/st ($12.66/unit) FOB before discounts. Pressure on UAN pricing internationally resulted in slightly lower vessel replacement values, with sources tagging the current vessel market in the mid-tohigh $350s/mt C&F.

AMMONIUM NITRATE

U.S. Gulf: Compared to urea and UAN barges, AN barges continue to be reported in short supply. As a result, prices remain stable within the $355-$365/st FOB range.

Western Cornbelt: Ammonium nitrate was pegged at $390-$395/st FOB in the region.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was steady at $285-$300/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate remained at $285-$300/st FOB.

Northern Plains: Granular ammonium sulfate was pegged at $280/st FOB in Minnesota on the low end. Dakota Gasification raised its ammonium sulfate cash market postings to $325/st DEL in North Dakota, $330/st DEL in South Dakota and eastern Montana, $335/st DEL in northern Minnesota, and $344/st DEL in Manitoba and Saskatchewan.

Great Lakes: Granular ammonium sulfate was pegged at $292-$295/st FOB in the region, with mid-grade sulfate reported at $270-$275/st rail-DEL in central Wisconsin.

Northeast: Granular ammonium sulfate remained in tight supply in the region. Delivered pricing was pegged at the $290/st mark, but sources said the market would firm to $300-$320/st DEL on March 1, depending on supplier.

PHOSPHATES

Central Florida: It’s tough being a trader these days. Last week, a trader made a sale at the top of that week’s price range – $720/st FOB – only to see a two-day-long price sheet from CF’s $740 a day later. That price was good only on last Thursday and Friday. Meanwhile, Mosaic raised its asking price to $760/st FOB for sales and, surprisingly, got that price for a prompt shipment the same week.

Mosaic began an unofficial summer fill program, for June and July, at $760/st FOB, but was said to have limited the number of tons it will sell at that price. That makes sense. Earlier, phosphate producers made advance sales of several months at prices in the $400-plus/st FOB range, only to see prices rise a couple of hundred dollars by the time the orders were shipped. Producers were facing uncertain raw materials costs for sulfur and ammonia, and didn’t want to stick their necks out too far. Second-quarter sulfur negotiations were more than a month from starting last week, but indications were the price will probably rise between $100/st and $250/lt. That’s a wide range, and the companies need to be in a position to deal with whatever the final price will be.

According to information recently released by TFI, inventories crept up a bit last month, but overall production was down. Various sources said the reduction in phosphate production was the result of sulfur shortages. Mosaic was said to be taking extraordinary measures to obtain the yellow stuff in order to maximize production. While Florida phosphate producers have little control over sulfur and ammonia prices, they do own their own rock mines, which helps keep their profits up and makes them more competitive against offshore producers.

While export prices seesawed back up to the top, the domestic market has dominated sales for months, and with prices for all markets continuing to escalate, that situation was not likely to change.

The Central Florida DAP price range continued its upward surge last week, from $685-$720/st FOB the previous week to $720-$760/st FOB last week. Mosaic was posting an asking price for phosphates of $760/st FOB for DAP and $756/st FOB for MAP. PCS Sales’s Central Florida reference price increased to $740/st FOB from $700/st FOB, and CF’s asking price hopped up to $740/st FOB for DAP and MAP. Discounts for national accounts were no longer available. MAP supplies continued to be scarce. In Texas, Agrifos’s truck price rose to $780/st FOB and its rail price was set at $775/st FOB for DAP last week, but it was no hurry to make sales.

U.S. Gulf: Cold, icy weather was sweeping into the Midwest last week, and that didn’t exactly encourage farmers to hit the fields. In Oklahoma, a large cooperative began work preparing fields the previous week on Friday, only to have heavy rain arrive the following day and put an end to its ambition of an early start. “Some try to get an early start,” a source said. “But, as farmers say, ‘If you don’t get stuck, you’re not trying hard enough.”

Mosaic has begun an unofficial summer fill program, with a limited number of tons available at $780/st FOB. The limit was due to the uncertain prices of sulfur and ammonia, as well as the continuously rising market. Sources generally agreed that farmers in the Corn Belt will continue to make phosphate buys, while those with pasture land will likely not apply phosphates and potash due to the high costs, but will probably apply nitrogens, which were somewhat more reasonably priced. Beef prices have risen significantly and will continue to do so, but not enough to make up for the difference in fertilizers for pastures. Higher feed corn prices were pushing up the price of cattle.

While the price of NOLA DAP barges has continued rising rapidly, warehouse prices have not. Warehouses at Inola were selling DAP at about $735/st FOB, which was in the range of barges, but without adding the cost of transportation and handling costs. In the St. Louis area, warehouse prices were running around $750/st FOB and $775/st FOB for northern, upriver locations.

Mississippi Phosphates’ production problems continued last week with more troubles at one of its two sulfuric acid plants (see page 1). As a result, DAP production will continue to be limited to about 900 st/d for the time being.

Traders said last week that inquiries from customers in the upriver areas had increased, but buyers suffered sticker shock when they learned of current prices and were holding off. By the time those barges were to arrive at the northern terminals, the cost would amount to more than $800/st. However, orders for deliveries later in March were made at $755-$780/st FOB last week.

Early last week a NOLA DAP barge buy was made at $710/st FOB, which set the low for the week’s NOLA DAP barge price range; the top price found was $750/st FOB for a floater.

Eastern Cornbelt: The rapidly firming phosphate market dominated conversation last week, and more sources were talking of possible cutbacks in usage this spring. While some sources said warehouse pricing was still available on a spot basis for as low as $775-$785/st FOB, others said DAP and MAP had firmed to $800/st FOB or more, with reports of new reference prices as high as $813/st FOB Maumee, Ohio. One Illinois source said he also fielded some quotes for summer fill DAP at the $800/st DEL level last week.

10-34-0 remained in very tight supply, with most sources saying product was unavailable in the region either for spot or forward sales.

Western Cornbelt: The continually firming phosphate markets were the big topic in the region last week. A Missouri source pegged the current warehouse markets at $800/st FOB for DAP and $815/st FOB for MAP, with reports of some locations referenced as high as $830/st FOB for MAP. At the low end of the range, sources continued to talk of $750-$775/st FOB available on a spot basis out of river locations early in the week, but those numbers were more difficult to find as the week advanced.

One supplier reportedly pulled its prices last week and was planning to repost the following week at the $800/st FOB mark or higher from its previous level of $750/st FOB Midwest warehouses.

10-34-0 was basically unavailable and “completely oversold,” according to several sources last week. Those who did report hearing of spot sales or offers talked of pricing in the $580-$625/st FOB range in the region, though these numbers were greeted with skepticism from other contacts and actual business was not confirmed. “If they keep delaying acid cars, we’re all in deep do-do for spring,” said one source.

Northern Plains: The DAP and MAP market had firmed dramatically from last report. Minnesota sources tagged the warehouse market firm at the $780/st FOB mark last week for the near term, with reports of pricing working its way to the $800/st FOB mark for May shipments forward. Sources also relayed reports of pricing already being offered for summer or fall fill tons.

North Dakota dealers tagged delivered MAP at $800-$810/st from Central Florida for spring tons. There was some talk of delivered MAP from western U.S. shipping points available in the Dakotas for as low as $735/st DEL, but it was unclear if that number was still doable last week.

10-34-0 remained in extremely tight supply, with most sources saying product was simply not available. One Minnesota source, when pressed, said limited spot tons could possibly be found at the $625/st FOB level last week, but that was a guess.

Effective Feb. 1, Agrium’s phosphoric acid postings jumped to $940/st rail-DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA) in Minnesota and the Dakotas. Additional per-month increases of $10/st are slated for both products in March, April, and May

Great Lakes: Phosphate pricing was up dramatically from last report. Sources quoted the DAP and MAP markets at $785-$818/st FOB regional warehouses, with the low reported in southern Wisconsin and the upper number reflecting new dealer reference pricing FOB Webberville, Mich. One Wisconsin source reported a $795-$800/st truck-DEL price last week, with reports of summer fill program tons being offered in the $800-$825/st DEL range. A Michigan dealer said these drastically higher numbers will “stifle demand” in his trade area, and he expects growers to look to manure as a possible substitute this spring.

No current market was reported for TSP or 10-34-0 in the region last week, with 10-34-0 supplies reportedly tapped out or spoken for both on a spot and forward basis.

Northeast: The DAP and MAP markets were up significantly from last report, at $738-$758/st FOB regional warehouses. Some were doubtful of the lower numbers as the week advanced, and said still higher prices were around the corner based on current Central Florida pricing. 10-34-0 remained in very tight supply, with numerous reports that tons were not being offered for spot or prepay sales in the region.

The rapid upswing in phosphate pricing, coupled with tight supplies and high prices for potash, had some sources talking of cutbacks in spring usage. One source said farmers in his location are turning heavily to manure applications this spring as an alternative.

Western U.S.: Simplot announced a $70/st increase for DAP and MAP pricing in the Western U.S. The company’s new postings for Idaho and Utah include MAP at $815/st DEL and DAP at $830/st DEL. In the Washington and Oregon market, MAP pricing is moving to $820/st DEL, with DAP at $835/st DEL. California pricing moved to $825/st DEL for MAP and $840/st DEL for DAP.

Simplot’s new 16-20-0 postings include $485/st DEL in Washington, Oregon, Idaho, and Utah, up $30/st from the previous level. The California 16-20-0 price is firming $32/st to $485/st FOB Lathrop. Simplot also announced increases for 0-45-0, with new postings at $610/st FOB Pocatello, Idaho, $625/st FOB Hedges, Wash., and $655/st FOB warehouses or rail-DEL in California.

U.S. Export: Last week, PhosChem made a sale of 36,000 mt of DAP/MAP into Brazil at a new record price, ho-hum, of $850/mt FOB, which continued to give the export market a higher value than the domestic.

Also last week, India issued a tender seeking 585,000 mt of DAP, but it appeared unlikely the entire need could be filled, considering the worldwide phosphate shortage.

After dragging out the process, China announced it was increasing its export tariff from 20 percent to 35 percent in order to maintain domestic supplies. That move will continue to push the export market upward.

Last week the export DAP price range moved from $785-$800/mt FOB to a flat $850/mt FOB. Expect prices to be higher this week, if new sales are made.

POTASH

Eastern Cornbelt: Potash remained firm at $525-$550/st FOB regional warehouses for limited brokered tons.

Western Cornbelt: Potash pricing continued to firm. Most sources tagged the warehouse market at $525-$530/st FOB for brokered tons last week, with several suppliers either already referenced at or planning to move soon to the $550/st FOB mark.

Northern Plains: Minnesota sources pegged the potash warehouse market firmly at the $525/st FOB level for limited brokered tons last week. A North Dakota source talked of delivered pricing in the $440-$450/st level based on current mine prices, but strict allocations applied.

Potash pricing FOB Saskatchewan for March shipments forward include standard grade at $382/st, granular at $387/st, and soluble and white granular at $392/st. Agrium’s potash postings for March 1 shipments forward include red premium potash at $385/st and standard at $380/st FOB Vade, Sask.

Great Lakes: Potash was commonly quoted at $525/st FOB regional warehouses for brokered tons, with some sources reporting spot tons as high as $540/st FOB last week. Producer postings were largely irrelevant due to no availability, according to sources. As one Wisconsin source said, the real issue at present is availability.

Agrium’s red premium potash postings for March 1 forward include $413/st rail-DEL in Wisconsin and $417/st rail-DEL in Michigan. Warehouse postings for that shipping period include $422/st FOB Saginaw, Mich.

Northeast: Potash remained in very tight supply, and previously ordered fill tons are taking their time to ship. One source said his supplier told him not to expect any March railcars, and that it didn’t look much better for April or May. Other sources said “current” prices are largely meaningless from producers, as they are not a true indication of what the market will be at time of delivery – whenever that is. One said postings are currently at $427/st DEL, but added that securing any tonnage at that level is “impossible.” He said the operative phrase for the potash market now is “call for availability.”

As a result, the best guesses from sources on “true” replacement costs for potash generally fell in the $500-$600/st DEL range. “We’re talking about a big, big number for potash, over and above the prices (producers) are talking about,” said one source.

Agrium’s red premium potash postings for March 1 forward include $442/st FOB Lewistown, Pa., and $437/st rail-DEL in the Northeast.

Potassium Sulfate: K+S North America reports that it will raise SOP prices by $80/st U.S. ton on all grades, effective March 3. K+S cited continued potash market pressures and production/transportation cost escalation.

SULFUR

Tampa: Sulfur supplies remained short, as expected, again last week, and there was no relief in sight. Sources said blocked sulfur was being moved from areas of Canada as far north as northern Alberta and the Northwest Territories to Galveston for remelting and shipment to Tampa, which was an indication of how serious the situation was. Although negotiations for second-quarter sulfur contract prices were more than a month away from starting last week, speculation held the increase would be between $100/lt and $250/lt, and would probably settle around $400/lt for the next quarter.

At Sweeny, Texas, a ConocoPhillips sulfur recovery unit suffered a leak, although two other sulfur trains were still operating at the approximately 250,000 barrel/d refinery.

At Tyler, Texas, Delek Refining had a release of 2,800 pounds of sulfur dioxide during a switchover between strippers. The incident was said not to be serious. The plant’s safety system switched the gas to a flare. No complaints from the public were reported.

Valero’s Delaware City refinery suffered a power outage, which resulted in acidic gases being transferred to safety incinerators five times during the previous weekend. The facility had not returned to full production as of late last week.

MARKET NOTES

Russia: Russian fertilizer producers, fearing proposed export tariffs, are taking action to freeze or lower domestic fertilizer prices, according to The Moscow Times. Reportedly, producers have agreed to freeze or lower prices by up to 5.6 percent through June 1. The government is expected to make a decision soon on tariffs, which producers fear will hamper competition.

Warsaw: The new Polish government of Donald Tusk decided to privatize two leading fertilizer plants: pre-war Tarnow and Kozle-Ketrzyn. In the past, German firms wanted to buy both plants and offered several millions dollars for modernization and new products, but the former government of Jaroslaw Kaczynski blocked the sale as a “sellout of national property.”

The Polish Gas and Naphtha Co., which delivers gas to plants, will remain in government hands.

Bergen, Norway: Odfjell, the transportation company, said it has cancelled contracts in Russia for new vessels. It explains that in 2004 it placed contracts with the large Russian Sevmash shipyard, located near Archangelsk, for up to twelve 45,000 tdw IMO type II coated product/chemical carriers. The initial fixed total contract price for all twelve vessels was approximately US $500 million, later increased to $544 million. Following serious delays in the construction process, combined with demands for further price increases from the yard, continuous cooperation problems, as well as protracted negotiations, Odfjell said it has decided to serve formal notice of cancellation to Sevmash. It said the installments already paid are covered by standard refund guarantees from international banks. Odfjell will further claim full compensation for its costs and losses caused, on account of misconduct and massive contract breaches. Unless the matter is solved amicably between the parties, the issue will be solved by arbitration in Sweden, as provided for in the contract.