AMMONIA
U.S. Gulf/Tampa: No new business was reported last week in the import market, though players were closely watching Yuzhnyy for news of further price drops. With falling phosphate prices, those producers were anxious for any news that ammonia prices would soon follow. In the meantime, there have been rumblings in recent weeks about price negotiations for NOLA barges. Last week there were reports of a new barge sale at the $868/st FOB level, down $12/st from the last done business.
Eastern Cornbelt: The spot anhydrous ammonia market was tagged at $1,015-$1,060/st FOB regional terminals, with the low out of river locations in Illinois. Some suppliers continued to reference numbers north of the $1,100/st FOB mark, but no prompt business was reported in the region. Several suppliers said they’ve fielded lots of inquiries for spring ammonia, but no official prepay numbers were circulating yet.
Western Cornbelt: Anhydrous ammonia remained in the $985-$1,050/st FOB range for spot tons. One Iowa source put the dealer market in the $1,000-$1,025/st FOB range last week, noting a lack of new sales. In Missouri, sources talked of delivered cash market ammonia as low as $980-$1,000/st from southern production points “if you could take it today.”
California: Anhydrous ammonia remained at $890-$935/st DEL, with the low for trucked tons and the upper end for rail-DEL product. Aqua ammonia was steady at $232/st FOB in California. A pricing increase for both products is expected in October.
Pacific Northwest: The ammonia market continued to cover an incredibly wide range in the region, with the low quoted at $900/st DEL by rail and the upper end as high as $1,240/st DEL by truck, based on producer postings. One source also reported reference prices FOB Ritzville, Wash., at the $1,165/st level last week for spot tons, although there was no movement to test those numbers.
Western Canada: Anhydrous ammonia continued to be quoted at $1,584-$1,629/mt DEL in the region.
Black Sea: Asian sources say the market is taking a breather. No new business was reported to indicate a price move up or down.
The Ukrainian government decided last month – or possibly late August – to scrap the Kiev Indicated Price in favor of a new reference price. The old KIP set the lowest price producers could offer. In the recent rising market this was never a problem. However, when the market price began to slide, the government was never able to keep pace with the rate. To drop the KIP too far in anticipation of further price drops upset the producers. Keeping the KIP too high hindered the conclusion of deals just below it.
The new system of offering a range, said one Asian source, gives producers some latitude in pricing. Oddly enough, said one trader, the reference price for October is $800-$810/mt FOB, but so far no one has reported prices that low. At press time, there were reports of new business as low as $840/mt, with buyers hammering for another $20/mt drop.
Middle East: Contract sales continue to flow out of the area for India and points further east. The price remains in the lower end of the $900s/mt FOB based on the Mitsui purchase of tons from IPCC/Iran. Supplies remain balanced with demand.
Asia: As long as the Burrup facility in Australia remains down, the Asian ammonia market will be extremely tight. Sources say buying agents roam the globe looking for tons to cover contracts and occasional spot opportunities. Word is circulating in the area that the Burrup facility will be back up and running by the end of the year.
In the meantime, sources say discussions are still going on within the Mitsubishi organization between the marketers and the engineers. The former want the joint venture in Indonesia to stay open a little longer. The latter says the plant needs to come down for routine maintenance on schedule.
Mitsubishi and Mitsui are both planning to take down KPI and KPA in November for turnarounds.
UREA
U.S. Gulf: Granular urea barges continued to crash last week. Sales were called as low as $508-$510/st FOB by the end of the week. The lower prices worked their way down from last week’s low of $575/st FOB. Sources were divided over inventories. While some said there were relatively low inventories in NOLA with no spot cargoes to speak of, others cited CF being back to full production as well as the regularly scheduled cargoes from importers. CF was reported to have slashed its prices at NOLA and Inola.
Players were also divided over the status of prills. While some argued that they are tracking granular, others said no, they deserve a premium due to industrial use.
Eastern Cornbelt: The granular urea market was reported at $730-$760/st FOB in the region as of midweek, with the low reported FOB Cincinnati to the dealer. Some speculated that lower numbers would be circulating by the end of the week, but nothing was confirmed at press time.
Western Cornbelt: Urea pricing continued to slide “by the hour,” according to one source, although there was little business to actually test the market. Sources quoted the dealer market in the $700-$750/st FOB range out of regional terminals at midweek, with most river locations at the bottom end of that range. Some suppliers said they might make additional downward adjustments late in the week.
Out of the Inola market in Oklahoma, sources said urea pricing had dropped to as low as $600/st FOB from a $650/st FOB level earlier in the week. Those numbers were down significantly from the prior week’s $730-$735/st FOB range.
California: As little as two weeks ago, sources pegged the granular urea market firmly in the $895-$900/st FOB range to the dealer. Last week, however, sources quoted an $820-$860/st FOB range, although there was little actual business to test the market. Postings remained at the higher numbers last week.
Pacific Northwest: While growers were contemplating how much fertilizer to put down this fall and how much to put off until next spring, dealers were observing sliding prices for urea. With bins full, however, sources said little spot business was able to be concluded. “The market is plugged up, bins are topped off, so this is all talk and no real action,” said one. “We’re just waiting for it to settle,” added another source. “We know it’s not going back to the levels of three or four years ago, but the recent high numbers were just not realistic. You knew there had to be correction.”
While postings remained unchanged in the upper $800s/st, most sources last week pegged the true dealer market for urea at $730-$800/st DEL in the region, depending on location, with the low end described by one source at midweek as “the best I can do.” Some suppliers were reportedly holding off on naming a price until market conditions settle.
Western Canada: A lack of movement and buying activity kept the fertilizer markets unchanged in the region, but several sources noted the weakness in urea pricing at the Gulf and in other North American regions. “The price lists are unchanged, but who knows what the real market is,” said one dealer.
Granular urea was steady at $985-$1,010/mt DEL in Western Canada last week, reflecting the most recent producer pricing levels.
India: Now that STC has settled with Helm for 300,000 mt, sources say either IPL or MMTC will most likely issue a tender within the next two to three weeks. All told, India needs about 2 million mt by April 1, 2009. While that amount sounds like a lot, traders in Asia are quick to point out that the figure of 2-2.4 million mt has been tossed around so much that the market psychology has already absorbed and digested it. Once the buyers come in, few expect to see any spikes in the global price.
Bets on the next tender say IPL will come in first, and for another 300,000 mt. They might take more, said one trader, if the price is right. Of course settling on “the right price” is the big issue.
Many observers in Asia say the urea market is in a free fall. Already another $50/mt has been shaved from the Yuzhnyy price. Sources add that the Middle East suppliers will have to be very aggressive in any new Indian tender if they are to stay active in that market. Aggressive pricing as of late last week was described as dropping more than $100/mt off the current level.
Industry observers note that the Indian buyers are in the driver’s seat for the next few months. Only India is slated to make large-scale purchases outside of long-term contracts.
Some trading houses were not so much surprised as angered by STC’s unwillingness to speak to only the lowest offering company in its tender. One trader said IPL and MMTC would have at least gone to the three lowest offering firms to work out a new price. STC, however, opened talks only with Helm. Another trader said what STC did was within the strict guidelines of the tender documents. Plus, he added, why buy more tons than needed right away in a down market?
Black Sea: The only one said to be taking tons at this time is Helm, say sources. The purchases are slated for India under an award from STC. Sources report the price from Yuzhnyy has dipped to $570-$580/mt FOB.
Producers protest and say the price is still in the low $600s/mt FOB. However, one source noted that with a firm bid and vessel in hand, $550/mt FOB would be grabbed quickly. The problem would be to find a home for the material.
Reports of prices dropping as low as $500/mt FOB are also circulating, which could account for the reported readiness of producers to accept $550/mt FOB. However, Asian sources say prices have not yet reached the low $500s/mt FOB. They say the low-ball talk is more a result of the expectations of buyers for the next couple of weeks.
Buyers around the globe are watching the price drop and are not yet ready to step up to take a cargo until evidence of a hard floor is seen.
Asian sources refused to point to where the floor might end up.
Sources say European and Latin American buyers are sitting on the sidelines watching the price drop. None of them, observers say, need to buy just yet. The buyers seem to be willing to wait and watch.
Odds are, said one source, the next Indian tender will show an even greater drop in prices. MMTC or IPL is expected back in the market by the end of the month.
Middle East: Sources say some of the producers in the area were upset STC did not open talks after it closed its tender last month. The other two Indian buyers usually give the Middle East suppliers a chance to match the lowest offers made by other suppliers before nailing down the final awards. This time, however, STC just dealt with Helm. That left many Middle East producers with lots of urea and no place to send it.
Sabic is reportedly in better shape because the Saudi and Pakistan governments just inked a new aid package. Under the deal Saudi Arabia will provide $300 million in aid to Pakistan for the purchase of urea.
Some producers also have long-term contracts to fill. The problem under those plans, say sources, is that right now the buyers are taking the minimum required under the terms of the contracts.
Asian observers note that if the producers are to once again make sales into India, they will have to be much more aggressive in their offers. At least another $100/mt will have to come off the price that was offered to STC, say sources. And that is just to keep the traditional gap of $20-$30/mt between Yuzhnyy and the Middle East in place right now. By the time the next tender rolls around, say sources, Yuzhnyy will have dropped even more.
Until a new tender sets a new price, sources say the Middle East market remains at $705-$707/mt FOB, which was the price producers were willing to sell to STC/India.
Asia: Sources say stockpiles for the middle-level buyers are sufficient and that no one has to scramble for tons.
The Philippines, Thailand, and Malaysia are all said to have more than enough tons on hand, largely from “cross-border” material from Vietnam. This material is Chinese urea shipped without the heavy export duty. Sources say about 1 million mt of this cross-border, re-export material will be shipped by the end of the year.
The low price of the Chinese product makes competition from the Middle East or Black Sea nearly impossible.
Indonesia is said to be out of the export business for the rest of the year. Sources said there may be one more export tender, but odds are against it.
Purchases from Australia have also been off. Sources say the drought in the country has led to reduced imports so far this year.
NITROGEN SOLUTIONS
U.S. Gulf: Prices continue to be hard to gauge as sources say inventories are full with no need for new sales, even at lower prices.
Eastern Cornbelt: UAN was quoted as low as $15.18/unit FOB out of Indiana terminals on spot basis, but others in the region continued to report the dealer market in the $15.94-$16.50/unit FOB range.
Western Cornbelt: UAN-32 remained in a fairly broad range at $500-$528/st ($15.63-$16.50/unit) FOB regional terminals for cash tons, down slightly from last report.
California: The UAN-32 market was quoted at $500-$510/st ($15.63-$15.94/unit) FOB, with delivered UAN posted at the $520/st ($16.25/unit) level.
Pacific Northwest: The UAN-32 market remained at $520-$530/st ($16.25-$16.56/unit) DEL in the region. A Washington source pegged the common dealer level last week at $525/st ($16.41/unit) truck-DEL.
Western Canada: UAN-28 was unchanged at $542-$557/mt ($19.36-$19.89/unit) DEL in the region.
AMMONIUM NITRATE
U.S. Gulf: AN prices were slow to follow urea up, and some sources now say there is no need for them to crater in relation to urea’s drop. No significant shifts were reported last week on the barge market.
Western Cornbelt: Ammonium nitrate remained at $560-$600/st FOB in the region.
California: No market was reported for ammonium nitrate in the state. CAN-17 was quoted at $325-$330/st FOB last week.
Pacific Northwest: Ammonium nitrate was steady at $605-$629/st DEL in the region. CAN-17 was quoted at $360-$365/st FOB, which was unchanged from last report.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $495-$505/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was steady at $475-$495/st FOB, with the low in Missouri.
California: Ammonium sulfate was tagged at $430-$435/st FOB in California.
Pacific Northwest: Granular ammonium sulfate remained at $462-$470/st DEL in the region.
Western Canada: Granular ammonium sulfate remained at $555-$560/mt DEL in Western Canada.
PHOSPHATES
Central Florida: With new prompt sales at a standstill and export business lagging, Mosaic announced last week that it would cut production by between 500,000 and 1 million tons. Most of the cuts would occur between the beginning of October and the end of December and could continue into next year, but it was far less clear where or at what facilities the curtailment will happen.
The spring market has been delayed this year and will not get underway until farmers harvest their bean and corn crops and get ready for planting. Even then, dealers will have to begin to move phosphates out of their warehouses to make room, but some dealers were indicating they were in no rush, because they sense a weakness in the market – as do farmers. Nevertheless, farmers have had a good year and will probably make their move before the end of the year to avoid having to pay more for taxes than they otherwise would.
Rumors that Mosaic will make cuts in its prices were premature last week and, instead, may rely on the curtailment of production to firm up the market. However, one of the biggest input costs for phosphate production – sulfur – will take a substantial drop in price for the next quarter, so phosphate producers could make large cuts in prices without reducing their profit margins, if that became necessary.
Production has already been lost at Mosaic’s Faustina, which was back in production last week, and at Agrifos’ Pasadena plant, which was damaged by Hurricane Ike. Last week Agrifos was still in the process of cleaning and repairing damage, and will be out of the market until at least the middle of October. The company has stopped taking delivery of some of its raw materials, but has not notified customers that it will not be able to fulfill orders.
No surprise, the Central Florida DAP price range last week remained at $1,070-$1,080/st FOB. PCS Sales’s Central Florida reference price was unchanged at $1,070/st FOB for DAP and had a $25/st FOB premium for MAP. Mosaic’s asking price was $1,090/st FOB for DAP and $1,115/st FOB for MAP, but the company was making sales at $10/st FOB less for both products. CF Industry’s price was $1,040/st FOB for DAP, and its MAP was priced at $1,100/st FOB. In Texas, Agrifos’ last price for DAP was $1,050/st FOB for trucks and $1,045/st FOB for rail shipments, but nothing will be available until after production resumes.
U.S. Gulf: Oklahoma, where the season should have taken off nearly a month ago, finally saw some activity out of dealers’ warehouses and terminals last week, although not enough to kick start the market. Even with the loss of production at Faustina and at Agrifos in Texas, prices remained depressed last week. The announcement by Mosaic that it will curtail production by between 500,000 and 1 million st did not act as a stimulant, but may once the season gets underway. The company said it did not plan to idle any of its production plants in Florida or on the river, and would decide when and where the cuts would be made as the market begins to develop.
Although new, prompt sales were virtually nonexistent last week, few barges were available for sale and few offers were made. A few that were offered asked between $905/st FOB and $910/st FOB, but those were essentially done to solicit counter offers from potential buyers. As one trader asked, “Even if I got it, where would it put it?” That was the other part of the supply equation – so much phosphate was purchased early in the year that few have anyplace to put more until product begins to move. As of last week, no one could be certain of what the price of a prompt NOLA DAP barge would be, if one were actually sold.
The financial crisis has not really had an impact on the industry thus far since producers, traders, and dealers made a lot of money early this year and farmers will have one of their best seasons in years, but it was still a concern. Almost no one was certain that the proposed rescue/bailout plan will work, but almost everyone agreed that something needed to be done, regardless of whether or not it will work.
Although supplies remained tight, demand was trailing. Export sales have dropped to zero for weeks and there were no real prospects in sight, so the only factors that have a chance to get prices and the market moving were Mosaic’s curtailment and the beginning of the spring season.
Meanwhile, corn prices fell last week to below $5.00/bushel, but much of the crop was pre-sold at higher prices, so farmers should still be in good shape. Warehouse prices in the river system were trending down last week, but not significantly.
Despite rumors, Mosaic did not issue new prices on Oct. 2, and may not by the end of the week.
The NOLA DAP barge price range was unchanged last week at $910/st FOB. MAP barges were $25-$60/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 were scheduled to increase $10/st FOB. CF was seeking $1,050/st FOB for DAP and to $1,110/st FOB for MAP for prompt deliveries. As of last week, asking prices meant little to the market.
Correction: Pasadena’s capacity is 50,000 st/m, and Mosaic’s Faustina plant makes 5,000 st/d. This corrects information in last week’s issue.
Eastern Cornbelt: Sources continued to speculate about reductions in fall application rates, particularly for phosphates and potash. Several already noted rate reductions on winter wheat ground this fall, as well as stepped-up soil testing programs and heavier lime applications for preplant wheat and plowdown work.
High input costs will also play into planting intentions for 2009. “At these kinds of input prices, there’ll be some resistance to planting corn,” said one Indiana dealer. “I’m expecting planting intentions to show a low of bean acres, not so much corn, and that might in turn get these markets turned around to where the corn prices go up.”
DAP pricing continued to slide, although spot business was limited due to full inventories in advance of the fall season. Sources quoted the DAP market at $1,000-$1,040/st FOB regional warehouses, with one source quoting a $1,044/st rail-DEL price for brokered tons last week. MAP was pegged at $1,020-$1,060/st FOB to the dealer.
10-34-0 was steady at $1,200-$1,250/st FOB /st FOB for very limited tons.
Western Cornbelt: Most sources reported the DAP market at the $1,000-$1,020/st FOB level to the dealer, with some claiming spot deals might be had at lower numbers in unique cases, but no actual business was confirmed to test those levels. MAP to the dealer was tagged at $1,025-$1,050/st FOB, which was down again from last report.
10-34-0 remained at $1,200-$1,250/st FOB in the region, with most quoting the upper end of that range.
California: Super phosphoric acid (SPA) and merchant grade acid (MGA) remained at $25.00/unit DEL in California. Both Simplot and Agrium announced that planned pricing increases in October would not take effect. Agrium published a new price list showing SPA and MGA continuing at the $2,500/st rail-DEL level for November and December as well, instead of an originally scheduled hike to $2,550/st in October and $2,600/st rail-DEL in November.
DAP and MAP were pegged at $1,175-$1,180/st FOB or DEL in California, down slightly from last report, although there was little movement to test those markets. 16-20-0 pricing remained at $675-$690/st FOB, and 10-34-0 was tagged at $995-$1,015/st FOB in California.
Pacific Northwest: DAP and MAP were quoted at $1,170-$1,080/st DEL in the region, which was down slightly from last report. “Phosphates are under pressure, and some demand destruction is also playing into it,” said one source. “People will exhaust inventory before they come back in for more.” One Washington source said he expects some fall phosphate movement on orchards and wheat, but rate reductions are likely.
10-34-0 was pegged at $1,025-$1,050/st FOB in the region, down slightly from last report, with several sources claiming that postings at the $1,072/st FOB level were never reached. 16-20-0 remained at $675-$685/st DEL to the dealer, with the upper level reflecting the posted price.
SPA and MGA remained at the $25.00/unit DEL level in the region as of Oct. 1. Both Simplot and Agrium chose to leave September pricing levels unchanged in the region, with Agrium also issuing an updated price list showing both products at $2,500/st rail-DEL for November and December as well. Both companies had originally planned posting hikes for October and November.
Western Canada: MAP was quoted at $1,335-$1,370/mt DEL in the region last week.
U.S. Export: India has issued a tender seeking 145,000 mt, but considering how low phosphate prices were running lately, PhosChem and other U. S. vendors appeared unlikely to make an offer.
No sales were made last week, and the market will probably not starting moving again for another couple of months.
No new sales meant no change in the static export market’s price range last week, which remained at $1,160-$1,215/mt FOB, based on the most recent deals.
POTASH
Eastern Cornbelt: One regional dealer said he’s expecting significant reductions in fall potash applications, noting that fall rates could be dropped to a third of normal in his trade area. The potash market remained firmly in the $900-$930/st FOB range, depending on location, grade and time of delivery.
Western Cornbelt: Potash was steady at $900-$935/st FOB regional warehouses, depending on grade and location.
California: Muriate of potash remained at a firm $875-$900/st FOB and $875-$950/st DEL in the region.
Sulfate of potash continued to increase, with sources pegging the California market at $1,105-$1,195/st FOB, depending on grade and supplier.
Potassium nitrate was reported at $1,310-$1,380/st FOB in the state, with the low for bulk and the upper end for bagged product.
Pacific Northwest: Potash was steady at $900-$910/st FOB regional warehouses to the dealer, with delivered product reported in a $875-$920/st range in the region last week. Intrepid Potash’s most recent postings have 60 percent granular muriate at $800/st FOB Moab, Utah, and $818/st FOB Wendover, Utah, and 60 percent standard at $794/st FOB Moab and $812/st FOB Wendover.
Western Canada: No current prices were reported for potash in Western Canada.
SULFUR
Tampa: Prices on the world market continued to dive last week, and that was not an inducement for phosphate producers to ease on their demand for a sharp reduction for fourth quarter contract prices. Unless the market stabilizes, don’t expect a quick settlement. If anything, phosphate producers may seek even bigger drops than they already have.
The oversupply situation in the U.S. was different. On the Gulf Coast, many refineries were still not producing sulfur after being shut down as a result of Hurricane Ike. That should begin to change during the next week.
Mosaic announced last week that it was planning to curtail phosphate production, and that means it will require less sulfur, which will help to build inventories – and, possibly, drive prices downward.
China continued to sit it out as of late last week and will probably continue to do so as long as the world market remains in freefall.
As Green Markets went to press came word that at least one phosphate producer had started settling contracts, down $300/lt from last quarter.
Vancouver: Inventories were said to be building and prices were trending down as of last week. Expect that situation to continue.