AMMONIA
U.S. Gulf/Tampa: NOLA and Tampa prices remained in place last week, but huge increases in international prices are expected to push Tampa import numbers up soon. Sources were talking about a considerable jump from the last done – $585/mt DEL. Some speculated that Tampa could see a $100/mt DEL jump for August.
U.S. anhydrous ammonia imports were up 17 percent in May to 823,163 st from the year-ago 705,258 st, according to the Department of Commerce. July-May imports were up 6 percent, to 7.96 million st from 7.47 million st.
Eastern Cornbelt: The anhydrous ammonia market was a nominal $1,010-$1,025/st FOB on the low end, based on recent cash market postings from some suppliers. The upper end of the range, however, was reported at a nominal $1,075-$1,100/st FOB, which was still well below newer postings that ranged from $1,130-$1,140/st FOB out of regional terminals in early July.
Western Cornbelt: Spot quotes for anhydrous ammonia were difficult to come by last week. One source put the dealer market firmly in the $1,050-$1,070/st FOB range for prompt shipments, and said the market was going up. Agrium’s most recent ammonia postings, effective July 7, included $1,000/st FOB out of Iowa and Nebraska terminals, while another supplier was referenced at $1,120-$1,130/st FOB in the region in early July.
Northern Plains: Ammonia pricing was up from last report. Minnesota sources tagged the market at $1,075/st FOB terminals for cash market tons to the dealer, while delivered ammonia in North Dakota was reported at the $1,040/st level. Dakota Gasification was referenced at $1,040/st DEL in North Dakota, but sources said an increase was imminent. The company’s Beulah, N.D., plant was down for a scheduled summer turnaround until late July or early August.
Posted prices for ammonia continued to move up. Agrium’s July 7 ammonia postings included $1,000/st FOB Mankato, Minn. Effective July 16, Agrium reposted ammonia at $1,315/st FOB and $1,335/st DEL in the Leal, Velva, Grand Forks, and Beulah sales area in North Dakota, up $71/st from the company’s July 10 postings, $134/st higher than Agrium’s July 4 postings and up a whopping $196/st from Agrium’s July 1 ammonia postings in the region.
Pacific Northwest: Agrium raised its anhydrous ammonia postings again on July 16 to $1,379/st rail-DEL in Oregon, Washington, Idaho, and Utah; $1,399/st truck-DEL in northern Idaho and in Oregon and Washington east of the Cascades; and $1,404/st truck-DEL in Montana and northern Wyoming. Those levels reflect a $71/st increase from the company’s July 10 postings, a $133/st increase from July 4 postings and a $196/st increase from Agrium’s July ammonia postings in the region.
Agrium also announced another aqua ammonia pricing increase on July 16. Postings moved on that date to $350/st FOB Central Ferry and Finley, Wash., reflecting an $18/st increase from July 10 postings, a $33/st hike from July 4 postings and a $64/st increase from Agrium’s July 1 aqua ammonia postings in the region.
Black Sea: Sources report that at least four tanks are empty, representing about 120,000 mt of ammonia that is not ready to be loaded. Asian sources say the resulting shortage and strong demand pushed prices up. Reports are circulating of a July cargo to be loaded at $650/mt FOB. What seems to have happened in this deal is Transammonia reportedly took top-off tons – maybe only 2-3,000 – and was forced to pay top dollar for the privilege.
The price stunned some in the industry, especially when the initial reports were sketchy. Others just groaned and accepted the higher price.
Some in the industry have argued in the past that top-off tons should not drive the market. However, when material is scarce and demand is high, others have argued that any deal at any size needs to be figured into the math to find the new market levels.
Producers are moving on the news and are now looking for closer to $700/mt FOB in the next deal.
The increase in the Yuzhnyy price should portend an increase in the Middle East, but no new public business from that region occurred to test the theory. One observer said logic would dictate that the Middle East price would go up based on the new Yuzhnyy level.
Demand for Yuzhnyy ammonia has stepped up beyond the usual because of the closure of the Burrup facility in Australia. Yara has been looking to grab as many tons as possible to cover its contracts to its Asian buyers.
Sources say the South Koreans are being particularly hurt by the Burrup shutdown. So far, said one source, the contracts are all being met with tons from Yuzhnyy and the Middle East.
One trader commented that the regular demand from Asia, Europe, and the U.S., combined with new demand, will continue to push prices higher.
By the end of the week, sources pegged the Yuzhnyy market at $640-$650/mt FOB, with no ceiling in sight.
Middle East: No new public business was done last week to test the proposition that the price needs to go up to maintain a traditional spread with the Black Sea. The week went by with producers rebuffing buyers with the usual claims of not having material available.
One Asian trader noted the producers really are short on tons. Even offers above the last-done business of $650/mt FOB were rejected. He added the producers may have a much higher number in mind now that $650/mt FOB has been achieved in Yuzhnyy.
No one could confirm the new pricing idea, but a consensus was forming around $700/mt FOB to start talks.
Middle East suppliers are being deluged with requests for extra tons to cover the losses in available ammonia for the Asia market because of the Burrup closing.
One thing helping those looking for a few extra tons here and there are reports that India is not taking as many cargoes as originally expected. Sources say the high cost of producing DAP, along with no agreement on phos acid prices, are keeping the Indians from aggressively going after ammonia. Sources say the buyers are taking just the minimum required by their contracts – and not an ounce more.
With the understanding that the next bit of business publicly done out of the region will show prices closer to $700/mt FOB than the $650s, sources say the market has to reflect the last bit of done business at $640-$650/mt FOB.
Western Europe: Untimely and unexpected shutdowns in Germany and Holland have put more pressure on buyers. Adding to buyers’ grief is the ever-rising price out of the former Soviet Union. With the Yuzhnyy price reported at $650/mt FOB and Middle East suppliers thinking $700/mt FOB is a nice starting point for negotiations, buyers are double-checking their inventories and books.
Sources say the industrial and agricultural users of ammonia are complaining about the higher prices, but seem to have no problem paying up. One source noted the buyers are passing the costs on down the line to end users, who have little choice but to accept the higher prices.
Sources are now putting prices in the low $700s/mt C&F.
Asia: Local media reports – and Asian traders agree – that the Burrup facility in Australia will most likely not be up and running until sometime in December. Optimists say the plant might start turning out ammonia by mid-November. The closure came because of an explosion in the gas infrastructure that supplies the ammonia plant its feedstock. Sources say the owners are using the downtime to conduct routine maintenance, as well as to take a more detailed look at parts of the facility.
Without the Australian tons, Asian buyers and their agents are working overtime to secure the minimum number of tons needed to keep end users happy.
Sources say the joint ventures in Indonesia – KPI and KPA – have no extra tons to spare. The state-owned Indonesian plants have less ammonia available for export because they are focusing on urea production.
The Malaysian facilities are also working at near 100 percent capacity, with no extra tons to spare.
Sources report a deal involving a possible swap of Asian material between a Japanese trading house and Nitrochem to Yara for a Chinese buyer. The price reportedly is $720/mt CFR for 8,500 mt. Nitrochem will make up the swap later.
UREA
U.S. Gulf: If you wanted a deal in San Antonio last week, the advice was to go to the Going Out of Business Sale at the Dillard’s Department Store in the adjoining Rivercenter Mall. One source proudly proclaimed that he made two trips, one for half-priced underwear and another for polo shirts. These were the only bargains reported last week.
Those who remained at the conference hotel were witness to a feverish run-up of urea, UAN, and ammonium nitrate barge prices.
Prices were hotter in the hotel than the 96 degrees on the street. Sources cited three major factors for the spike: India tendered for urea; domestic nitrogen demand and fill; and speculative trading. Regardless, most said prompt granular urea prices quickly worked their way up from $770-$780/st FOB early in the week to $820-$825/st FOB by Thursday. Sellers were reported to be quoting $840/st FOB by the end of the week. Others said $830-$840/st FOB had been done for late August/September.
In the meantime, new prill trades were called $725-$750/st FOB.
Perhaps the good news for buyers was that sources said the U.S. is starting to look like a premium market now for urea, meaning that if prices remain at these levels, more imports may find their way here and serve to soften prices. However, with high prices across the board internationally, they may all be premium prices.
U.S. imports in May were off 44 percent from the year-ago period, to 350,197 st from 625,460 st, perhaps reflecting the premium being paid in offshore markets at the time. July-May imports were up 6 percent, to 6.34 million st from the year-ago 5.97 million st.
Eastern Cornbelt: The granular urea market was tagged in a broad range at $795-$850/st FOB regional terminals to the dealer for spot tons, with reports of some new pricing quotes at the $880/st FOB mark as the week advanced.
Western Cornbelt: Granular urea was tagged at $825-$850/st FOB in the region, with some suppliers quoting a reference price of $880/st FOB as the week advanced. Still others were not offering cash prices last week until they’d had an opportunity to reassess the market. Koch hiked its granular urea posting again on July 17 to $835/st FOB Enid, Okla., up $50/st from the company’s July 12 reference price at that location.
Northern Plains: Sources quoted the urea market last week at $775-$800/st FOB the Twin Cities, but a near-term increase was imminent and reference levels were already much higher. Agrium’s urea postings firmed on July 9 to $805/st FOB Marion, S.D. On July 10, the company’s urea postings at its North Dakota terminals at Alton, Colfax, Carrington, Marion, and Scranton firmed to the $805/st FOB level as well, and to $810/st rail-DEL in Minnesota, Wisconsin, and the Dakotas. Those levels were up $35/st from the company’s July 4 postings, and $70/st higher than July 1 reference levels.
Agrium announced still-higher urea postings on July 16, with reference levels moving on that date to $845/st FOB Alton, Colfax, Carrington, Marion, and Scranton, and $850/st rail-DEL in Minnesota, Wisconsin, and the Dakotas.
Northeast: Urea pricing continued to firm, although sources reported little movement taking place in the region. Urea was reported in a broad range at $782-$825/st FOB Philadelphia, Pa., and Baltimore, Md., with the upper end quoted as the week advanced. The range was up significantly from last report and reflected the rapidly-firming market, with the low end reported as the dealer price early in the week. One source said Baltimore pricing as of July 8 was still at the $745/st FOB level.
California: Agrium’s granular urea postings moved up again on July 16 to $865/st FOB West Sacramento, $890/st truck-DEL in central California, and $895/st truck-DEL in northern California. Those levels reflect a $40/st increase from Agrium’s July 10 postings, a $75/st increase from July 4 postings, and a $110/st increase from Agrium’s July 1 urea postings in California.
Pacific Northwest: Agrium raised its granular urea postings again on July 16, with reference levels moving to $845-$860/st DEL in Montana and Wyoming; $870/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson; $875/st in Washington, Oregon, Idaho, and northern Nevada; $885/st DEL in northern and central Utah; and $890/st DEL in southern Utah. Those levels reflect a $40/st increase from Agrium’s July 10 postings, a $75/st increase from July 4 postings, and a $110/st increase from Agrium’s July 1 urea postings in the region.
India: The floodgates have opened. IPL called a tender last week for an undetermined quantity of urea to be shipped July and August. The tender closes Saturday, July 19, with validity until July 22.
The tender is slated to validate the prices of pre-tender agreements between IPL and international trading houses. These deals are said to involve 220-230,000 mt. The lowest price was pegged at $730/mt CFR and the highest at $778/mt CFR.
Sources figure India will need close to another 1.5 million mt by March 2009.
In the first blush of the announcement of the tender, sources talked about $820/mt CFR as a top price for a deal to be done. Within 24 hours, however, that number was brushed aside as producers began quoting significantly higher prices.
With $820-$840/mt FOB done in the Middle East and Yuzhnyy at $750-$760/mt FOB concluded, sources say the freight rates alone dictate higher prices to the buyer.
Industry observers have been watching the Indian buyers carefully since the IFA meeting a couple of months ago. The speculation at that time was if IPL and MMTC could hold off into the third quarter, the price might begin to fall enough for the Indians to get a break on prices.
The Yuzhnyy price did come down a bit. That is when some of the trading houses swooped in to grab cargoes. Sources say this grab was enough to move the market back up again.
Now with IPL going public on its tender, observers say the sky is the limit.
One Asian trader noted that with new tons expected to be in the mid-$800s/mt CFR, with continued strong global demand, and with China remaining out of the market, India could see $1,000/mt CFR urea by the end of the year.
Others agreed the math argued that way, but, they quickly added, once the price gets near the $900/mt CFR range, Chinese urea becomes a reasonable play. The re-introduction of Chinese urea to the market could soften prices and establish a hard ceiling.
For now, however, IPL will be faced with several not very attractive situations.
After validating the cargoes it negotiated before calling the tender, sources say offering prices will be in the mid$800s/mt CFR. IPL will need those tons to ensure the urea supplies do not get dangerously low.
At the same time, the amount of money necessary from the treasury to cover the subsidies that come with urea will increase with the imported price.
The treasury complained about the drain on funds when the price was in the $600s/mt.
Efforts to revise the subsidy plan are not expected to happen this year because it is an election year. The ruling party coalition does not want to face angry farmers as well as a discontented middle class.
At the same time, a shortage in urea – real or imagined – will also weaken the government’s efforts for re-election.
Some sources argued that once the 220-230,000 mt are taken from the pre-tender deals, IPL and MMTC might be able to sit and wait until the fourth quarter before coming back in.
At that time the Chinese government may lower the export tariff and make more urea available at lower prices. The price would still be higher than previous years, but lower than the much-dreaded $1,000/mt CFR.
The problem is that few seem to think China will drop its export tariff. Some even argue there may be an increase in the fourth quarter.
Lastly, some of the offering companies might look at the volatility of the market and make their offers only valid for 48 hours instead of three days. The issue at hand will be to see if IPL will allow for the shorter validity time.
Yuzhnyy: The price has edged up, with sources now calling the market $750-$760/mt FOB. By the time the offers are opened in India, some say the price could be even higher.
Reports are circulating that some producers are trying to back out of earlier deals with traders for sales to India. What appears to be happening is that producers are acting as if they were cheated out of additional profits by traders who secured tons in the upper $600s/mt FOB just a few weeks ago.
Sources say from what little is publicly known about the nature of the deals, the producers have no legal method of backing out of their deals.
One trader said that India will still need more than a million tons, and there are only a limited number of places buyers can go. The Yuzhnyy suppliers will remain a major source as long as China remains out of the market.
With the $760/mt FOB mark confirmed, sources are now saying $780/mt FOB is the entry point for discussions with the producers.
Until the IPL tender results are released Saturday, sources say the Yuzhnyy market closed out last week with $760/mt FOB topping the rates.
Middle East: If Yuzhnyy moved up on the news of an Indian tender, the Middle East price skyrocketed. Granular had already moved into the low $800s/mt FOB earlier this month. Now producers are saying they want $880/mt FOB for their product. No one has paid that price, but sources say $840/mt FOB was done late last week.
Because the Indian buyers no longer care if the urea is prilled or granular, sources say the Middle East producers will most likely place their prills and granular material at parity – based on the granular price.
Prills had been running $10-$20/mt behind granular on regular business. Now with the IPL tender at hand, sources say producers will milk that event for every cent they can.
Middle East producers offer advantages the Yuzhnyy suppliers cannot.
The buyer deals directly with a producer. No middle man allows for more flexibility in negotiating a price, said one trader.
The nearness of the buyer and seller allows for smaller vessels – instead of the economical panamaxes necessary from Yuzhnyy – to berth in smaller ports. This will allow the buyer to place the imported urea closer to the buyers.
All told, say sources, once the pre-tender material is validated, the most likely winners will be the Middle East suppliers.
Few in the industry think the producers will be generous in their pricing ideas. At the same time, sources say some flexibility may allow for IPL to make the purchases it needs without having to mortgage the country to do so.
Indonesia: The PIM selling tender closed July 14 for 40,000 mt. Buyers were aggressive, but not too much so. The last price paid in a PIM tender was $738/mt FOB a couple of months ago. Some buyers were hoping to inch the price up instead of lighting a rocket under it.
In the end, the price jumped more than $10/mt. One observer noted that a $10/mt increase seems like a small hike considering how the market has been moving in Yuzhnyy and the Middle East.
PIM tender results |
|
| Bidding Company | US$/mt FOB |
| Profeta | 750 |
| Helm | 748 |
| Liven | 748 |
| Summit | 748 |
| Indevco | 748 |
| Ameropa | 748 |
| Diva | 747 |
| Toepfer | 735 |
| Felda | 735 |
| Sojitz | 735 |
Source: Industries
Also bidding were Unitrade, BBSC, and Parna. These companies were disqualified by PIM for not meeting the conditions of the tender documents.
Proferta is an Indonesian trading company. Sources had expected it to parcel out its winnings to international traders. By the end of the week, sources reported Liven and Mekatrade got a piece of the action from Proferta.
Many in the industry figure the Indonesian tons will find their way into the IPL/India tender closing July 19.
Another selling tender is slated for the end of the month.
China: Sources report that some traders are working overtime trying to convince producers to lower their ex-plant price so their urea could be considered in the IPL/Indian tender.
At current prices, the export price would be $890-$900/mt FOB once the 135 percent export tariff is added on. Even in the current overheated market, sources say that is still too much for the Indians to accept.
Beijing does not appear to be willing to ease the export tariff. Sources point to the plant closings because of damage to the infrastructure around at least four major facilities in Sichuan following the earthquake. A handful of other key plants are shutting down by government decree to reduce pollution around Olympic cities. And the application season has not yet finished.
All told, sources say, there is little extra urea in China for export this month.
August supplies might be better because the season will be over, but production levels from the earthquake and Olympic closings will not be anywhere near the levels of last year.
Sources in Asia continue to talk about two possibilities for the fourth quarter. The optimists say China will reduce the export tariff. They add, however, the reduction would most likely be from 135 percent to 100 percent.
Pessimists say Beijing will increase the tariff because of the lost production from the earthquake and Olympics.
Asia: Reportedly, PhilPhos sold a cargo to Transammonia for re-export. Sources say the price was at $775/mt FOB, which could have an impact on the PIM/Indonesia selling tender later this month. One trader noted that PhilPhos most likely needed the cash more than it needed the urea. Another said the urea appears to have been in storage for at least six months, possibly longer.
Sri Lankan buyers will most likely call a tender this week. Sources say the buyers have the money in hand and are able to pay the higher rates that are being tossed about.
A couple of inquiries came out of Vietnam for re-exported material, but the quantities involved – 5-6,000 mt – and the paperwork to get government approval were more than anyone wanted to contemplate.
Offers of the Vietnamese cargoes were said to have been $700-$710/mt FOB bagged.
Pakistan: Pakistan received a grant from Saudi Arabia for $125 million for fertilizer purchases from Sabic. Area sources say that at a rate of $840/mt CFR – the price when the deal was signed – TCP should be able to import about 150,000 mt.
The world price has moved up, with the Middle East suppliers already selling at $840/mt FOB. Asian traders say the increase in the price of urea will mean fewer tons available to Pakistan under the grant.
The grant is for tons to be lifted in the last quarter of the year. Sources say the country needs about 300,000 mt right away. The big question is when will TCP announce its tender.
With India now in the market, area observers say TCP will be hard pressed to argue for lower prices.
The deal is similar to one between the two governments last year. TCP had been delaying calling a tender in the hopes that a similar deal could be done before shortages began to appear in the supply pipeline.
Pakistan’s government remains hopeful that the country will become self sufficient by 2010, when new plants and upgraded facilities come online.
NITROGEN SOLUTIONS
U.S. Gulf: Like urea, UAN barges caught fire and ran up in San Antonio last week as well. By the end of the week, most sources were saying prompt UAN barges had traded as high as $495-$500/st FOB. Sellers were quoting $505-$512/st FOB for the next round of trading. They were also talking $600/mt DEL for the East Coast.
U.S. imports in May were up 11 percent to 284,432 st, up from the year-ago 255,604 st. However, July-May imports were up 50 percent to 3.27 million st, up from the year-ago 2.18 million st.
Eastern Cornbelt: One Indiana source reported picking up some spot UAN-32 tons at the $480/st ($15.00/unit) FOB level during the prior week, but was unsure what the price would be last week. CF’s cash postings for the July 17-18 order and ship period moved up considerably last week, to $17.05/unit FOB Mt. Vernon, Ind.; $17.10/unit FOB Cahokia, Ill.; $17.15/unit FOB Kingston Mines, Ill., Peru, Ill., and Louisville, Ky.; $17.20/unit FOB Albany, Ill., and Cincinnati, Ohio; $17.35/unit FOB Terra Haute, Ind.; and $17.55/unit FOB E. Liverpool, Ohio. Agrium’s July 9 UAN postings ranged from $14.85-$15.15/unit FOB regional terminals.
Western Cornbelt: UAN-32 was pegged at $465-$500/st ($14.53-$15.63/unit) FOB in the region, also up dramatically from last report. One source said $480/st ($15.00/unit) FOB, give or take, was catching most of the spot quotes out of regional shipping points last week.
Northern Plains: The UAN market was on the way up in the region, with sources quoting the cash market firmly in the $14.75-$15.00/unit FOB range last week. Postings were substantially higher. CF’s cash postings for the July 17-18 order and ship period included $17.40/unit FOB Pine Bend, Minn.
Northeast: UAN-30 also covered a wide range as the market firmed on significantly higher replacement values. Sources tagged the dealer market at $403-$425/st ($13.43-$14.17/unit) Philadelphia and Baltimore, with the higher number again reported as the week advanced. Out of terminals in upstate New York, sources pegged the UAN-32 market at $15.00/unit FOB terminals before discounts, with another increase likely in the near term.
Agrium announced new UAN postings, effective July 9, with reference levels moving on that date to $15.05/unit FOB Baltimore, Md.
California: Agrium’s UAN-32 postings firmed on July 18 to $513/st FOB Sacramento, Calif., $535/st truck-DEL in central California, and $540/st truck-DEL in northern California. Those levels represent a $25/st increase from the company’s July 10 reference prices in the state.
Pacific Northwest: Agrium raised its UAN-32 postings again on July 18 to $525/st ($16.41/unit) DEL in Washington, northern Idaho, and Oregon excluding Malheur County; $530/st ($16.56/unit) rail-DEL and $535/st ($16.72/unit) truck-DEL in southern Idaho and Oregon’s Malheur County; and $555/st ($17.34/unit) DEL in Montana and northern Wyoming. Those levels reflect a $25/st increase from Agrium’s July 10 reference levels in the region. Agrium also reposted its UAN-28 postings in Montana and northern Wyoming on July 18 to $486/st 17.36/unit) DEL, up $22/st from its July 10 posting.
AMMONIUM NITRATE
U.S. Gulf: Ammonium nitrate has cast off its sluggish summer performance and is headed up. Most were reporting a new trade last week as high as $500/st FOB, as the industry starts to fill for fall demand. In fact, some fall fill programs are now being priced in the $550-$600/st FOB range, according to sources.
Western Cornbelt: Ammonium nitrate remained at a firm $455-$475/st FOB in the region, but higher numbers are likely based on new replacement costs.
Pacific Northwest: While no current ammonium nitrate prices were available in the region last week, Agrium’s CAN-17 postings firmed at mid-month to $365/st FOB Kennewick, Wash., up $25/st from the previous level. Agrium’s 20-0-0 ammonium nitrate solution postings firmed again on July 18 to $322/st FOB Kennewick, up $16/st from the company’s July 10 posting at that location.
U.S. imports in May were off 53 percent, perhaps reflecting the low prices and sluggish demand at the time. May imports were only 49,792 st, down from the year-ago 100,569 st. July-May imports were off 7 percent, to 972,031 st from the year-ago 1.05 million st.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was quoted at $435-$475/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate pricing was up to $435-$475/st FOB regional terminals.
Northern Plains: Granular ammonium sulfate was reported at $440-$475/st FOB in Minnesota, with the upper level reflecting reference levels. Dakota Gasification was referenced at $435-$445/st DEL in the region last week, but a near-term increase was planned.
Agrium’s July 11 granular ammonium sulfate postings included $440/st DEL in Minnesota, Wisconsin, and the Dakotas. The company announced an additional increase last week, with the reference price moving on July 16 to $460/st DEL in Minnesota, Wisconsin, and the Dakotas.
Northeast: Granular ammonium sulfate was pegged at $442-$475/st FOB in the region, with the upper end of that range also quoted for delivered pricing based on new reference levels. Effective July 14, Honeywell’s list prices moved to $475/st FOB warehouse or rail-DEL for granular ammonium sulfate, and $460/st FOB or rail-DEL for midgrade sulfate.
Pacific Northwest: Agrium’s granular ammonium sulfate postings firmed again on July 16 to $455/st FOB the warehouse in Idaho, Washington, Oregon, Utah, and Nevada, and $460/st DEL in those states plus Montana and Wyoming. Those levels reflect a $20/st increase from the company’s July 11 postings, and a $40/st increase from July 1 reference levels.
U.S. Import: May imports were up 6 percent, to 49,260 st from the year-ago 46,772 st. July-May imports were up 15 percent, to 436,654 st from the year-ago 378,899 st.
PHOSPHATE
Central Florida: Virtually everyone at the Southwestern Conference at San Antonio last week was afflicted with a perpetual smile, and the diagnosis was high profit margins. Although urea was the hot topic and biggest trader, phosphates were in a comfortable position and some deals were done. Prices into the fall were generally seen as firm or increasing somewhat. Most were convinced the rocketing prices of fertilizers would not fizzle and only continue to rise.
Mosaic was busy in the Central Florida phosphate market last week, making railcar sales of prompt DAP at $1,080/st FOB and MAP prompt sales at $1,105/st FOB. Its sales for October through December were done at a higher level, $1,105/st FOB for DAP and $1,130/st FOB for MAP.
However, Central Florida DAP railcar sales by a broker were done at a lower price – $1,025/st FOB.
The Central Florida DAP price range last week changed from the previous week’s range of $1,025-$1,070/st FOB to $1,025-$1,080/st FOB. PCS Sales’s Central Florida reference price was unchanged at $1,070/st FOB for DAP. Mosaic’s asking price for October and November increased on July 18 from $1,070/st to $1,080/st FOB for DAP and $1,105/st FOB for MAP. In Texas, Agrifos’s DAP price increased from $1,075/st FOB to $1,100/st FOB for trucks and from $1,070/st FOB to $1,095/st FOB for rail shipments.
U.S. Gulf: Optimism was widespread at the Southwestern Fertilizer Conference last week, and the only ones who were not thrilled with the current phosphate market were those involved with cattle and pastureland, who simply cannot afford the high prices. Buys and sales were vigorous at the conference.
However, one source issued a note of caution. “Everyone feels like it’s a bull run – spend money and build the world, but I get a little nervous when that happens.” The source pointed out the decline in corn prices during the past couple of weeks, and said that if farmers get burned, fertilizer prices could take a tumble. In addition, he pointed out that the export market had stagnated and domestic prices were at approximate parity, which was a change from most of the past year. Most, though, had a much more positive outlook. “It was a wild meeting,” said one. “It was the most buying I’ve ever seen at a conference.”
Some at the conference were both buyers and sellers, and large dealers came with a shopping list of their needs.
Warehouse prices continued to be lower than replacement costs, but most of the product in the bins was purchased at lower than the current barge price range. In addition, many dealers have already filled their needs. Overall, phosphate inventories dwindled in June – according to The Fertilizer Institute, about 79,000 st – but production declined even more, by around 140,000 st.
Mosaic sold barges on both a prompt and future basis last week. Prompt DAP barges brought $1,080/st FOB and sales for September were done at $1,095/st FOB, while MAP sales were done at $1,105/st FOB on a prompt basis.
The price range last week increased from $1,071-$1,075/st FOB to $1,070-$1,095/st FOB. MAP barges were available at prices $25-$75/st FOB more than DAP. Mosaic’s asking price for NOLA DAP barges was $1,100/st FOB and $1,125/st FOB for MAP, and its prices for October and November will increase $10/st FOB. CF was seeking $1,070/st FOB for DAP and $1,145/st FOB for MAP for prompt deliveries, if available.
Eastern Cornbelt: DAP out of regional warehouses continued to be quoted at $1,075-$1,120/st FOB for DAP and $1,100-$1,150/st FOB for MAP. One Ohio source pegged the dealer market for MAP at the $1,132/st level FOB E. Liverpool last week. 10-34-0 remained at a firm $1,075-$1,100/st FOB based on the most recent available spot pricing values, but spot tons were scarce.
Western Cornbelt: DAP remained at $1,075-$1,100 FOB regional warehouses, with MAP at $1,100-$1,145/st FOB. One Iowa source tagged the dealer market last week at $1,080-$1,085/st FOB for DAP and $1,100-$1,110/st FOB for MAP. 10-34-0 remained at $1,070-$1,100/st FOB, but tons were very tight.
Northern Plains: The DAP market was tagged at $1,100-$1,150/st FOB regional warehouses, with MAP quoted at $1,143-$1,195/st FOB. 10-34-0 was reported in a very broad range at $1,000-$1,150/st FOB, with the low for black product and the upper end quoted for very limited tons of green 10-34-0.
Northeast: MAP pricing was quoted at $1,120-$1,158/st FOB Philadelphia and E. Liverpool, Ohio. DAP, where available, was reported at $1,100-$1,125/st FOB. The 10-34-0 market had reportedly firmed to $1,080/st FOB shipping points in upstate New York.
Eastern Canada: MAP was quoted at $1,325-$1,377/mt FOB regional warehouses last week.
U.S.Export: Brazil purchased 55,000 mt of DAP last week at $1,202/mt FOB, which could be a positive development for future business in that country. Also last week, India’s MMTC Ltd. issued another tender seeking 100,000 mt for delivery in July to September. Bids were due on July 17.
The Fertilizer Institute released its report on export sales in June last week. It was not a surprise that India was the biggest customer, but it was a surprise how much of the total it received. Of the 553,308 mt exported in June, India accounted for 523,500 mt. Exports of DAP increased 48.9 percent over a year earlier. Japan was a distant second at 11,023 mt, followed by 6,923 mt taken by Ecuador. For the calendar-year-to-date, India was still the big dog at 1,257,478 mt, with Japan second at 172,022 mt and Mexico third at 134,361 mt. The total so far this year was 2,263,224 mt, an increase of 18.1 percent over the previous year.
TFI said Canada was the biggest buyer of exported MAP at 45,189 mt, with Brazil next at 29,762 mt, and the Ivory Coast at 14,988 mt. MAP exports for the month declined to 115,548 mt, a decrease of 11.2 percent compared to 2007. For the calendar-year-to-date, Canada was still in the lead at 257,958 mt, followed by Australia at 193,434 mt, and Brazil third at 189,912 mt. Total MAP exports amounted to 879,019 mt, a decrease of 23.6 percent in comparisons to last year.
The export DAP price range last week was $1,202-$1,205/mt FOB.
Australia: Incitec Pivot Ltd has returned its Phosphate Hill phosphate plant in Queensland to production, according to the local press. The outage will reportedly cost the company some A$49 million, which includes both cost of repairs and lost production. The plant went down June 19. The cost and repair time were less than originally expected (GM June 23, p. 7).
India: RCF has issued a tender for 325,000 mt of DAP closing on July 28, 2008, for shipment August thru November, 2008. Offers are to remain valid for 30 days from bid date.
In its last attempt, RCF had bought 2 lots ex U.S. from Kisan at US$1,075/mt CFR India.
JPMC, the Jordanian phosphate rock mining operation, has hammered out a new set of deals with Indian fertilizer companies after it invoked the force-majeure clause in its supply agreement effective from July 1, 2008. The new deals have been struck at $300/mt FOB. All such annual contract prices have been reviewed to take into account the new pricing. Sources said that even at these higher prices, the cost of domestically produced phosphoric acid will be significantly cheaper than the imported material.
Sources claim that domestically produced phos acid will be cheaper than imported acid, even with the higher rock cost. The current imported cost of phos acid is now being called as high as $2,200/mt. Against this, the cost of domestically produced phos acid will be significantly lower when the costs of rock ($300/mt) and sulfur ($760/mt) are taken into account.
POTASH
U.S. Gulf: Barges were reported to be moving up last week and were called $900-$912/st FOB. As a result, some suggested that yet another round of inland price increases may come sooner than later.
Eastern Cornbelt: Potash was quoted in a broad range at $795-$875/st FOB regional warehouses for brokered or reseller tons, depending on grade and location.
Western Cornbelt: The potash market was reported at $800-$885/st FOB regional warehouses to the dealer, with the upper end reported for confirmed spot sales in Iowa on the secondary market. PCS Sales’s potash postings for the Sept. 1-Nov. 30 period included granular at $815/st FOB St. Louis.
Northern Plains: Potash remained at $585-$590/st FOB Saskatchewan mines for allocated July tons, depending on grade. Minnesota dealers reported warehouse pricing on the secondary market as high as $850/st FOB.
PCS Sales announced on July 8 that it will raise its North American potash postings across the board by $250/st FOB, effective Sept. 1 through Nov. 30. The company’s Saskatchewan mine prices for that period will move to $767/st FOB for standard, $780/st FOB for soluble, $772/st FOB for granular, and $780/st FOB for white granular.
Northeast: Potash was quoted in a broad range at $612-$693/st DEL for allocated tons from producers, depending on grade and location. Sources pegged the E. Liverpool potash market at $807/st FOB or higher last week for brokered or reseller tons.
Eastern Canada: Potash pricing out of Ontario warehouses was pegged at$731-$740/mt FOB, with the low for red potash and the upper level for white potash.
Sulfate of Potash: Great Salt Lake Minerals Corp., a subsidiary of Compass Minerals, on July 17 announced a $255 per ton price increase on all sulfate of potash (SOP) specialty fertilizer products effective with shipments on Aug. 15, 2008. The new list price for standard, non-granulated SOP will be $988/st and granular SOP will be $1,000/st at the company’s solar evaporation plant at Ogden, Utah. A price list for Great Salt Lakes Minerals’ SOP products is posted on its website at www.gslminerals.com.
U.S. Import: May imports were up 2 percent to 1.19 million st, up from 1.16 million st. July-May imports were up 10 percent to 11.43 million st, up from 10.37 million st.
Russia: Sinkhole problems are again plaguing potash supplier Silvinit in Russia’s Perm Region. According to local officials cited in The Moscow Times, the rail link carrying potash in the region may have to be shut down in coming weeks due to the expanding sinkhole. Reportedly, the sinkhole is some 100 meters from the rail link, and local officials said the link would be closed once the sinkhole is within 75 feet. Officials had said the hole had been growing at the rate of 10 meters per week, but had stopped during the week of July 4.
A new rail line away from the sinkhole is reported to be in the planning stages. Officials say it could take three months to build. One local official was hopeful any disruption would be for only a few weeks, as opposed to a few months. However, a new line will have to be built quickly before the old line has to close.
Any disruption would obviously impact the already strong international potash market. Sinkhole problems in the area last October caused PotashCorp to pull prices off the table until the matter was more certain.
By late Thursday, there was no further word on the status of the sinkhole’s growth. The last word was still that its growth had stopped or slowed.
Silvinit reported that its total production in 2007 was 5.47 million mt. In the first quarter it was 843,172 mt.
Asia: Prices in Asia were moving up. BPC was reported to have sold new product into Malaysia at $1,005/mt DEL. In the meantime, Canpotex reported that it has concluded fourth quarter business in Asia at $1,000-$1,025/mt. It said these prices now apply to Brazil and Latin America as well.
SULFUR
Tampa: Discussions on a price hike for third-quarter sulfur contracts went on at the Southwestern Conference last week, but the two sides were said to be far apart. Sources said the phosphate industry was balking at the offers by sulfur suppliers, which were said to be between $150-$225/lt initially, then settling a bit to $175-$185/lt. However, phosphate was said to be offering to pay between $100/lt and $125/lt more, taking a hard line.
A factor in favor of the sulfur industry, i.e. big oil, was that world prices are $250-$350 mt higher than the Tampa molten price, so an increase in the range of $200/lt would put the price in line with the world market.
However, the run-up in the world price has softened during the past few weeks and the phosphate industry does not think prices will be out of line, if the trend continues.
There were no signs the impasse will be breached anytime soon, and negotiations could drag on into August – or until accountants on both sides push for a settlement of any kind.
U.S. Import: May imports were up 10 percent to 188,509 st, up from the year-ago 171,500 st. July-May imports were up 45 percent to 2.03 million st, up from 1.4 million st.
MARKET NOTES
India: Fertilizers and Chemicals Travancore (FACT) will re-start all the production plants by the end of the month. FACT says the units have been down due to raw material shortages. The ammonium phosphate plant at the Udyogamandal division had already restarted, and caprolactam, ammonium sulfate, and phos acid plants should be up by end of July. FACT is now getting phos acid from Sterlite and phosphate rock and sulfur from Indian Potash Ltd. Sterlite is to supply 6,500 mt of phos acid on a monthly basis.