Market Watch

Western Cornbelt: Granular ammonium sulfate was quoted in a very broad range at $375-$435/st FOB, with the low reported out of some Missouri shipping points and the upper end reflecting new producer postings in the region.

Southern Plains: Ammonium sulfate pricing in the region was on the march. Previous levels in the $325-$355/st range FOB range were in effect early in the week for granular ammonium sulfate, but new postings were taking effect. On July 2, reference levels FOB Plainview, Texas, moved to $415/st for granular from the previous $355/st FOB level; $405/st FOB for coarse grade from the previous $345/st; and $380/st FOB for standard grade from the previous $320/st FOB level. Effective July 7, ammonium sulfate postings from American Plant Food Corp. were slated to firm $50/st, with granular postings FOB Freeport, Texas, moving on that date to $375/st FOB.

South Central: Granular ammonium sulfate was reported at $390-$410/st FOB in the region last week, up significantly from last report

Southeast: Ammonium sulfate was up considerably from last report. DSM Chemicals moved its reference prices up $60/st across the board on June 23, with postings FOB Augusta, Ga., firming to $420/st for granular and $370/st FOB for standard grade. The company’s delivered postings into Florida moved to $440/st for granular and $380/st rail-DEL for standard.

Honeywell on June 23 moved its granular ammonium sulfate postings up to $435/st rail-DEL or FOB warehouse, with mid-grade sulfate postings moving to $420/st FOB or rail-DEL to the dealer.

PHOSPHATES

Central Florida: Activity was picking up in the Central Florida phosphate market last week, at least in terms of forward sales. Still, producers were busy loading domestic orders received earlier and for export. An October DAP sale for a unit train was made at $1,095/st FOB and a unit train of MAP for October was done at $1,120/st FOB; however, neither of those sales affected the current price range, which was based on prompt sales only.

Mosaic’s previously announced partial restart of its South Pierce processing plant will increase production by about 500,000 st. The South Pierce plant will make only sulfuric acid, and granulation will be done at the company’s Lake Wales facility.

The Central Florida DAP price range was $1,070-$1,080/st FOB. Mosaic was reported to have sold at $1,080/st late in the week. PCS Sales’s Central Florida reference price remained at $1,050/st FOB for DAP. CF’s price was $1,050/st FOB for DAP and $1,125/st FOB for MAP, which continued to be scarce. In Texas, Agrifos increased its prices from $1,050/st FOB to $1,075/st FOB for trucks and from $1,045/st FOB to $1,070/st FOB for rail shipments.

U.S. Gulf: Apparently most of the cheap barges that had been available in the past several weeks were mostly gone by the end of last week, and prices began to rise. In addition, prices on forward sales of phosphate barges also took a sharp increase last week. Very early in the period, four DAP barges scheduled for loading during the first half of August were purchased at only $1,010/st FOB, but a number of DAP barges for delivery in September were sold at $1,090/st FOB and MAP barges for October delivery brought $1,125/st FOB.

Meanwhile, flooding along the Mississippi River was receding last week, but crops in Iowa and some other areas were underwater and their status had not been fully determined. Barge traffic in many areas came to a halt.

A trader said large dealers were seeking to prepay for phosphates, but added his company was reluctant to take those orders because of the uncertainty of its barge supply and what prices will be at the time of delivery. However, some traders were taking those deals, and Mosaic was as well. With the disappearance of lower-priced phosphate barges, prices appear to be heading upward.

The wheat crop in Oklahoma was said to be “excellent,” and those farmers will be in the market for additional phosphate and other fertilizer products for the fall season. However, pastureland will not likely see any phosphate applications anytime soon.

Warehouse prices were moving up last week to between $1,075/st FOB and $1,100/st FOB, but those were still below replacement cost, after taking transportation and throughput cost into the equation.

For phosphate producers importing rock from North Africa, the news was not good. Prices have moved up from around $300/st FOB to $450-$500/st FOB. In addition, prices for sulfur and ammonia were also expected to increase – all of which will cut into profits.

Based on new prompt sales, the price range last week moved from $1,010-$1,045/st FOB the previous week to $1,070-$1,075/st FOB. MAP barges were available at prices $25-$75/st FOB more than DAP. Mosaic’s asking price for NOLA DAP barges increased to $1,100/st FOB and $1,1125/st FOB for MAP. CF was seeking $1,070/st FOB for DAP and $1,145/st FOB for MAP for prompt deliveries.

Eastern Cornbelt: Most sources pegged the DAP market last week at $1,075-$1,107/st FOB regional warehouses, with MAP reported at $1,095-$1,145/st FOB to the dealer. Both ranges were up slightly from the previous week. No current dealer prices were reported for 10-34-0 in the region.

Western Cornbelt: DAP was generally quoted at $1,075-$1,100/st FOB regional warehouses, with MAP at $1,095-$1,145/st FOB. One Missouri source tagged the dealer market in his location at $1,085/st FOB for DAP and $1,135/st FOB for MAP, while an Iowa source quoted the market at a firm $1,100/st FOB for DAP and $1,145/st FOB for MAP.

The only current price quote for 10-34-0 last week came from an Iowa source at $1,070/st FOB for very limited spot market tons.

Southern Plains: DAP was quoted at $1,075-$1,100/st FOB the Tulsa market, with MAP tagged at $1,135-$1,140/st FOB. Both ranges were up considerably from last report. 10-34-0 was reported at $1,015-$1,020/st FOB in the region, and remained in very tight supply.

South Central: DAP was quoted at $1,075-$1,100/st FOB regional warehouses, also up from last report. The MAP market was pegged at $1,095-$1,125/st FOB to the dealer. TSP was reported in a broad range at $975-$1,030/st FOB warehouses to the dealer, with most quotes in the upper end of that range as the week advanced.

U.S. Export: India was preparing to cut a deal with Russia last week for additional supplies of both phosphate and potash. PhosChem was reported to have sold two vessels to India.

In Argentina, farmers went back on strike again last week to protest high export tariffs on food products proposed by President Cristina Fernandez, which will have a continuing impact on phosphate sales to that country and export sales out of the U.S.

The export DAP price range was unchanged at $1,160-$1,205 mt.

POTASH

Eastern Cornbelt: Potash was quoted at $800-$850/st FOB regional warehouses on the secondary market, depending on grade and location. Potash barges were reportedly north of the $800/st level FOB the U.S. Gulf. One source said fall tons were being referenced for $885/st FOB for September shipment and up to $925/st FOB for November tons.

Western Cornbelt: Potash was pegged at $795-$830/st FOB regional warehouses for brokered or reseller tons. One source said producer tons are 100 percent allocated through the third quarter.

Southern Plains: The potash market was quoted $755-$800/st FOB regional warehouses, with several sources tagging the market at a firm $780-$785/st FOB on the Arkansas River at midweek. The Carlsbad, N.M., mine price was reported at $705-$710/st FOB for allocated third quarter tons, depending on grade.

South Central: Potash was up dramatically from last report. Sources tagged the warehouse market in an incredibly broad range of $775-$875/st FOB, with the upper end reflecting reference pricing FOB Vicksburg. An Arkansas source quoted the common dealer price at the $830/st FOB level at midweek.

Southeast: Potash was pegged at $635-$650/st FOB regional warehouses based on June producer postings for allocated tons. Regional sources reported no updated numbers last week.

SULFUR

Tampa: At least one phosphate producer confirmed that early negotiations on new prices for third quarter sulfur contracts had begun but were in a very early stage. Although not confirmed, sulfur producers were believed to be seeking an increase from as low as $175/lt to more than $200/lt. Most in the industry said they did not think much progress would be made until at least the Southwestern Fertilizer Conference at San Antonio July 12-16. In what could be an indication the sharp price rises in sulfur may be slowing on the world market, prices at the UAE rose only $20/mt FOB to $820/mt FOB. The previous month, the UAE hiked its price by $80/mt FOB. Those prices were still far higher than those paid in this country.

Inventories of sulfur appeared to be slightly improved last week. The priller at Galveston was again receiving some supplies. Refineries have been using increased amounts of heavy crude oil, which produces more sulfur that the preferred light crude. In addition, a source said flooding in the northern Midwest had stopped some shipments of sulfur and that those producers were having difficulty finding a market despite offering sulfur at prices between $300/lt and $400/lt, although it was not clear what the transportation situation was for those producers.

Some industrial customers were said to be balking at high prices, but the amount consumed by them amounts to only a fraction that used by the phosphate industry.

Vancouver: A new contract with South Africa called for prices of $830/mt FOB, which was a stiff hike from the $300/mt FOB paid by that country under the previous contract.

PCT, one of the large sulfur docks at Vancouver, will be shut down for turnaround and maintenance beginning July 8 and will remain closed until the beginning of August.

China, which has restricted the amount of imported sulfur until sometime after the Summer Olympics, was still in negotiations for new a contract.

Correction: Last week, Green Markets reported Valero Energy was building a $600 million sulfur recovery unit at its Benicia refinery. However, the entire project, which involves a scrubber and not a recovery unit, will cost approximately $600 million.

MARKET NOTES

India: The government has brought two fertilizers – TSP and ammonium sulfate – under the concession (subsidy) scheme, fixing their maximum retail prices at Rs7,450 and Rs10,350 pmt, respectively. TSP, a cheaper substitute for DAP, is expected to provide an alternative supply of phosphate even as it helps save on the subsidy bill.

A new concession scheme has also been approved for DAP that would compensate domestic manufacturers on the basis of import parity price. The pricing of phosphorous (P) in DAP, which was hitherto determined on the basis of the price of input (phosphoric acid) as negotiated by the industry, will henceforth be arrived at through a “normated” price based on the delivered cost of imported/indigenous DAP.

The policy also introduces an “outlier” concept for computation of final rates of concession on phosphate and potassium fertilizers. In the event of an importer contracting at a price lower by five percent or $30 a mt vis-a-vis the industry average, such an “outlier” concern will be entitled to 65 percent of the difference between the higher industry average and the lower outlier price. The remaining 35 percent share would go to the government. The government said the change will encourage the industry to seek long-term supplies at lower prices. The overall reduction in subsidy outgo from the scheme would be Rs11.63bn. The policy also envisages maintaining buffer stocks of 350,000 mt DAP and 100,000 mt MOP.

The new scheme will come into effect retroactively from April 1, 2008, based on a revised framework.

Welcoming the government decision, the Fertilizer Association of India (FAI) said that the new scheme, by and large, meets the expectations of the industry. “Industry is equally keen that the subsidy dues are disbursed without any delay. Since the farmer is paying only 15 percent of the actual cost of fertilizer, the rest has to come from the government if the companies are to avoid working capital crunch,” said Satish Chander, director general, FAI.

The CCEA also sanctioned Rs4.29bn for a centrally sponsored scheme on a “national project on management of soil health and fertility.” The main components of the scheme will be for the strengthening of soil testing.

Bangladesh: BCIC has told the local media that it plans to spend US$147 million to modernize existing urea plants in order to produce some 500,000 mt more urea. BCIC said that it had to raise the price of urea more than 100 percent at the beginning of last month to meet the ever-growing expenditure due to marketing the agricultural input at subsidized rates. BCIC said the official rates of urea remained unchanged for the last 11 years despite the fact that the price of natural gas, electricity, tariff, salary and wages, and other expenditures had gone up sharply during the period, causing huge losses to the factories. BCIC said currently the combined production capacity of six urea factories – Chittagong Urea Fertilizer Factory Ltd. (CUFFL), Jamuna Urea Fertilizer Factory Ltd. (JUFFL), Zia Urea Fertilizer Factory Ltd. (ZFFL), Urea Fertilizer Factory Ltd. (UFFL), Natural Gas Fertilizer Factory Ltd. (NGFFL), and Polash Urea Fertilizer Factory Ltd. (PUFL) – has now virtually fallen bellow 1.4 million mt from their original capacity of over 2.2 million mt. In line with the modernization program, the annual production will increase by 500,000 mt mt of urea over next four years, of which 200,000 mt is being added in fiscal 2008-09.