AMMONIA
U.S. Gulf/Tampa: Tampa ammonia prices dropped over 38 percent last week for November tonnage. The price went from October’s $931/mt DEL to $575/mt DEL. The deal was struck between Yara and Mosaic for all of November. Sources had predicted a large drop, say to $600-$635/mt; however, no one had predicted sub-$600/mt DEL. In the meantime, sources said price ideas at Yuzhnyy had been awaiting the Tampa news, which came late Thursday. As a result, sources were scurrying to see how international players would react to the $356/mt DEL drop at Tampa.
In the meantime, across the Gulf at NOLA, new barge business was reported at $615/st FOB. This came before the new Tampa business, and sources predicted that the new Tampa number would certainly put pressure on any forthcoming sales at NOLA.
Eastern Cornbelt: Although there were no new sales to test the market and plenty of fall prepay tons in position for the fall season, sources tagged the anhydrous ammonia market at $950-$1,000/st FOB regional terminals for cash tons, reflecting another drop from last report. Lower prices are imminent; one regional supplier, noting reports late in the week of new Tampa ammonia business concluded at the $575/mt DEL level, said “we’d take a look at anything” in terms of cash ton offers to buy in the region.
Western Cornbelt: With large volumes of prepay ammonia in place for the fall, cash sales of ammonia were nonexistent in the region. A Missouri source speculated the delivered ammonia from southern production points would be in the $960-$970/st range, while another source reported cash market ammonia as low as $850/st FOB in Iowa. While untested, those pricing levels were down considerably from last report.
California: Calamco raised its anhydrous ammonia price on Oct. 12 to $1,025/st truck-DEL in the California market, with rail-DEL ammonia priced at $1,060-$1,070/st, depending on location. Calamco’s aqua ammonia price also increased on that date to $266/st FOB.
Pacific Northwest: Anhydrous ammonia was quoted by Washington sources at $900-$940/st DEL last week, with little new business to test the market.
Western Canada: Anhydrous ammonia remained at a nominal $1,584-$1,629/mt DEL in the region.
Black Sea: Folks were waiting to see what happens next month in Tampa. Asian sources had said until new November deals are sealed, the price out of Yuzhnyy remains in the low $800s/mt FOB.
Asian sources are talking about prices dropping into the mid $500s/mt FOB to the low $600s/mt FOB by the first week of November.
Despite all the talk, no one could point to one bit of non-Tampa business to back up these new pricing ideas. Sources say the combination of weakened demand and increased production ?Çô as plants come back online from turnarounds ?Çô means the price has to come down.
The price has been gradually sliding since early September, when $900/mt FOB was touched. The market quickly retreated from that level.
The Kiev Reference Price remains at $800-$820/mt FOB – but, say sources, the KRP is now only a reference price instead of the old index price that mandated a minimum level.
Until the November business is concluded, sources say the price remains in the low $800s/mt FOB.
Middle East: Oddly enough, sources say the potential spot market is softening while the contract price is rising. No new public business came up last week, and so the spot price remains in the low-mid $900s/mt FOB.
Asian sources expect to see the spot price come down with the expected Yuzhnyy price slide next month.
The problem in nailing down a spot price is the absence of spot business.
The only tons moving in the past few weeks have been under old contracts, primarily to India.
The price of the contract tons is reportedly edging upward as Indian buyers show a growing – but not desperate – need for ammonia.
Asia: Industrial buyers are holding off on making new purchases. Sources say stockpiles are sufficient for the buyers to hold off in the hopes prices will come down. Buyers point to increased production in Yuzhnyy and the Middle East as plants come off maintenance shutdowns as a reason prices should be softer.
Others, however, say the turnarounds planned by KPI and KPA in Indonesia for most of November will take away a lot of tons normally shipped to area buyers. At the same time, the Burrup facility in Australia is still down. None of these facilities is expected to be up and running until December at the earliest.
UREA
U.S. Gulf: The NOLA barge market found a floor last week for the time being, with a lot of concern that the floor might be shaky and may not hold up for long. Sources reported that prompt granular barges traded as low as $290/st FOB before rebounding. There were reports that CF temporarily offered barges at $310/st FOB, and when they were snapped up, moved their price up to $330/st FOB. By the end of the week sources reported that barges were headed in that direction, with business reported as high as $325/st FOB.
One source explained that prices had come down to near year-ago levels, and this gave buyers the confidence to step into the market and buy product. Another said he could buy at these numbers and sell forward into next spring and make a profit. Others were optimistic that corn prices will also find a floor, and that 90 million acres of corn will be planted next spring.
Still others were nervous, citing reports that traders were looking at bringing in as many as three Egyptian cargoes in the fourth quarter as a sign that the U.S. market was a target for more imports, a factor that could further erode prices. Others countered that Egypt was finding a home for at least some of its product elsewhere and that another trader was looking at exporting out of NOLA to Mexico, factors that could shore up inventories.
Eastern Cornbelt: Granular urea pricing continued to slide, with sources quoting the dealer market at $380-$450/st FOB in the region last week. The low was reported out of spot river locations in Illinois.
Western Cornbelt: Urea prices continued to fall, though there was virtually no new business to test the markets. “It’s unbelievable how quickly they’ve dropped,” said one source, who cautioned that it was still difficult to gauge what the true Midwest terminal market was for some products. While terminal prices are undoubtedly falling, he noted that drastically lower barge prices do not automatically translate to equally low terminal prices, especially at this late date. One source said at least some barge companies had announced load deadlines of Oct. 20 for barges leaving New Orleans for upriver points.
Urea pricing was reported in the $380-$450/st FOB range out of regional terminals, with the low reported in the St. Louis, Mo., market and the upper end reflecting updated dealer postings in Iowa from some suppliers. One Missouri source quoted the dealer market in his trade area at the $420/st FOB level last week, but acknowledged that lower priced tonnage was definitely out there, even if storage space for new transactions was not.
California: Out of terminals in the state, urea pricing continued to be quoted at the $820/st FOB level, give or take, but sources reported no business. According to one source, suppliers who import urea tons all brought in cargoes at the same time and have roughly the same amount invested, so are hesitant to make any drastic pricing adjustments, particularly since dealer storage levels are full. That said, several sources acknowledged hearing of rail-delivered urea coming into the state from Midwest shipping points at the $600/st level last week.
Pacific Northwest: The granular urea market was dropping rapidly. Most sources quoted the dealer price last week at $500/st DEL in the region, although little buying was taking place due to full dealer inventories. As one source said, most filled at earlier pricing levels “with a seven in front of it.”
Western Canada: Granular urea was pegged at $970-$985/mt DEL, again with no movement reported.
India: At first there were rumors that IPL would scrap its tender because it wanted significantly lower prices than those offered. Then sellers began to relent and the prices came down.
Reportedly, traders with tons from the Black Sea led the way to lower prices. The Middle East suppliers were on the way to being iced out of any business because they did not want to lower prices any further.
In the end, the Arab Gulf producers relented and lowered their offers. Some say the final Middle East price was $345/mt FOB for all suppliers, but others say they just lowered the prices by $5/mt.
The delivered price from other sources came down from $398-$424/mt CFR to $358/mt CFR.
As of press time, about 450,000 mt was awarded by IPL. Sources say the buyer did not accept any of the seller option tons.
IPL tender results |
|||
| Supplier/Source | Price | Quantity | |
| $/mt FOB | $/mt CFR | ||
| Qafco/Qatar | 347 | 60,000 | |
| Fertil/UAE | 347 | 50,000 | |
| Sabic/Saudi Arabia | 346 | 75,000 | |
| PIC/Kuwait | 345 | 50,000 | |
| Toepfer/Egypt | 358 | 40,000 | |
| Eurochem/Russia | 358 | 80,000 | |
| Stirol/CIS | 358 | 40,000 | |
| Transammonia/Open | 358 | 30,000 | |
| Ameropa/Open | 358 | 40-50,000 | |
| CIFC | 358 | 25,000 | |
* Industry sources
Sources say more tons may still be picked up because talks between IPL and some of the offering companies in the tender are still going on.
India will still need another 600-700,000 mt, say sources. Traders are looking for MMTC or STC to come in by the middle of November.
The big fear some traders have is that if the price comes down dramatically in the November tender, IPL may walk away from the awards given in this tender.
The precedent was set when IPL told at least one trading house it did not want the tons scheduled to be shipped from a June tender. Sources say IPL was ordered to walk away from the older deals by the Finance Ministry because of the dramatic drop in prices.
Sources say there will most likely be a drop in price in a future tender, but not the 50 percent cut seen recently. Already some sources are talking about the Yuzhnyy price sliding to $270/mt FOB.
The sub-$300/mt FOB price is seen as just so much talk, say traders. No one could point to any specific business at that level. In fact, said one observer, with freight rates coming down, the Yuzhnyy equivalent for the tons just booked in the IPL tender indicates a price closer to $330/mt FOB than sub-$300/mt FOB.
Sources say there are still enough tons available for the rest of this year and early next year that Indian buyers do not have to worry about a spike in prices for the rest of this buying season.
Black Sea: Prices continue to soften. Thanks to the newly negotiated price in the IPL tender, sources say the high end of the market range has come down to no more than $330/mt FOB.
Talk is beginning to circulate that the market should move to $270/mt FOB by this week.
Industry observers can defend a range of $300-$330/mt FOB, saying freight rates in the low-$30s/mt to India for panamax shipments take the price into the $320s/mt FOB.
One Asian trader noted that producers are working to clear out the port-side warehouses. At the same time, they are reportedly trying to hold off shipping more material to the quay in the hopes of stemming the slide in price.
Sources say, however, that a continued price slide is inevitable.
Traders point to limited purchases by Latin American countries and reduced interest from European buyers, all in the hopes of snagging better prices once they really need to buy tons.
Add to that the problems of securing credit.
The global financial crisis is drying up credit sources. Traders report that some banks backing existing letters of credit are now teetering because of the tightening of the credit markets. At the same time, the strengthening U.S. dollar is making dollar-based deals more expensive.
Buyers are now willing to wait until they absolutely need to buy material. The resulting delay in purchase orders is a growing stockpile of urea in the hands of the producers.
One observer noted that anytime the producers have more tons than they can sell, the price comes down.
Middle East: Area producers were almost excluded from doing business with IPL in the last tender.
Sources report that IPL had asked for at least a $10/mt reduction in the offering prices in the low $350s/mt FOB. The producers balked at any price reduction. They noted that the previous offer to an Indian tender was $707/mt FOB. The offer to IPL was, therefore, already a significant reduction.
Once reports of IPL nailing down lower prices for Yuzhnyy material and rumors of the tender being scrapped arose, sources say the Middle East producer counter-offered a $5/mt reduction. IPL took it.
Sources say buying from the Middle East has a number of advantages. There are no middlemen involved in the deal, so once an agreement is reached there is no need for back and forth discussions to finalize the arrangements.
Sources add that shipping from the Middle East to India is more flexible. Shipments can vary in size, depending on the final port of unloading. Changes in delivery ports can be arranged with little fanfare. This makes it easier for the buyer to have tons delivered closer to the end user if necessary.
Asian sources were pleased to see the Middle East price come down, but caution that the current price level is good only for India.
One trader noted that smaller, less regular customers may have to pay as much as $40-$50 more per ton. Plus, said one source, granular buyers are still expected to pay a premium of $5-$10/mt.
The industry will also be watching the delivered price into the United States. NOLA prices should soften significantly based on the IPL results.
Indonesia: PIM scrapped its selling tender that closed Oct. 20. Sources say the bidding prices were too low for the producer. The only three bids were submitted with prices ranging from $335 to $354/mt FOB.
Reportedly, PIM said the price was too low to cover their production costs. Others in the industry, however, say the government pulled the plug on the deal because they did not like the prices being offered.
The 20,000 mt that was offered in the tender will now go to the domestic market.
Reportedly, this was to be the last tender for the calendar year. Industry watchers say until the global price of urea strengthens, no further tenders from Indonesia should be expected.
NITROGEN SOLUTIONS
U.S. Gulf: No new business was reported, and sources said it would be hard to find a place to put it. The last done business was put in the $300-$350/st FOB range.
Eastern Cornbelt: UAN-32 was quoted at $425-$450/st ($13.28-$14.06/unit) FOB regional terminals to the dealer, reflecting another sizable drop from the previous week.
Western Cornbelt: UAN-32 pricing continued to slide in the region. Sources pegged the dealer market at $420.80-$425/st ($13.15-$13.28/unit) FOB most river terminals to the dealer, with the low again confirmed in the St. Louis market.
California: The UAN-32 market was quoted at $485-$490/st ($15.16-$15.31/unit) FOB, while dealer postings remained as high as $520/st ($16.25/unit) FOB or DEL in the state.
Pacific Northwest: A lack of new sales to test the market left the UAN-32 range in the $520-$525/st ($16.25-$16.41/unit) DEL in the region.
Western Canada: UAN-28 was unchanged and untested at $542-$557/mt ($19.36-$19.89/unit) DEL.
AMMONIUM NITRATE
U.S. Gulf: Ammonium nitrate continues to have a mind of its own, according to sources, who say it has seen little shift in pricing. Last week sources were calling it $480-$500/st FOB.
Western Cornbelt: The ammonium nitrate market was reported at $525/st FOB regional terminals to the dealer, reflecting a drop of some $20-$40/st from the previous week. Sources said a switch to nitrate from urea in some areas of the Midwest and Southern Plains regions has resulted in nitrate supplies being a bit tighter.
California: No market was reported for ammonium nitrate in California. The CAN-17 market remained at $325-$330/st FOB.
Pacific Northwest: Ammonium nitrate remained at a nominal $605-$629/st DEL in the region. CAN-17 was steady at $360-$365/st FOB.
AMMONIUM SULFATE
Eastern Cornbelt: Honeywell announced new postings for ammonium sulfate on Oct. 20 that reflect a drop of more than $300/st from previous levels. The company’s new postings for granular ammonium sulfate in the region plunged to $200/st FOB Amherst Junction, Wisc., Byron, Ill., and Danville, Ill., or rail-DEL in Illinois, Wisconsin, Arkansas, Kansas, Mississippi, western Kentucky, and Tennessee, down from the previous list price of $505/st FOB or higher in those locations. Honeywell’s mid-grade ammonium sulfate price dropped on Oct. 20 to $180/st rail-DEL or FOB Byron and Danville.
Western Cornbelt: The granular ammonium sulfate market plunged to $200/st FOB in the region last week following a drastic price reduction from Honeywell. The company on Oct. 20 reposted granular sulfate at $200/st FOB Dubuque, Iowa, Omaha, Neb., St. Louis, Mo., and Roseport, Minn., reflecting a drop of more than $300/st from the previous list price at those locations. Mid-grade ammonium sulfate postings were lowered to $180/st FOB Omaha and Roseport. On a rail-delivered basis from Hopewell, Va., granular and mid-grade were reposted at $200/st and $180/st, respectively, to Iowa, Missouri, Nebraska, Minnesota, and Kansas.
California: List prices for standard grade ammonium sulfate remained at the $430/st FOB level in the state. While some sources reported granular sulfate being delivered into some western U.S. locations for as low as $220-$230/st FOB from eastern U.S. shipping points, no numbers that low were confirmed in the California market last week.
Pacific Northwest: The ammonium sulfate market was reported in a wide range at $385-$475/st DEL in the region, depending on source, with the upper end reflecting the dealer reference price from several regional suppliers.
Western Canada: Granular ammonium sulfate was steady at $555-$560/mt DEL in the region.
PHOSPHATES
Central Florida: The outlook for phosphate products in Central Florida and in all other major markets continued to soften last week, and all driving factors were going in reverse. Crop prices for corn continued to slide backwards, and much of the crop had yet to be harvested. Farmers were not buying or prepaying, but have the money, and held a strong belief prices will continue to decline. One source pointed out farmers do not want to pay taxes and will buy fertilizers to reduce their tax rate, but buying phosphates now could cost them more than they would save in taxes. On the next level, dealers were not buying and were comfortable waiting until growers come in for fall applications, before they even think about buying more. Many may let their bins run empty before they make a move. Traders, for the most part, have no place to put additional supplies and no place to put more phosphates. Producers, especially Mosaic, were curtailing production as activity in all markets shrinks. Meanwhile, inventories continue to build.
If the hold-off on buying continues until the spring season, bins will be empty, prices will be low, and everyone will attempt to buy at the same time. That isn’t going to happen. Curtailments will mean less has been produced and will not be available, and – even if an adequate supply exists – logistics will crush the effort of re-supply. There will not be enough railcars and barges to haul the material to customers, and prices will go back up. Waiting may be buyers’ best strategy to save money, but not for too long or it will be self-defeating.
The cost of raw materials to produce DAP will drop sharply during the next month. Phosphate producers were in the process of finalizing contracts with their sulfur suppliers for the fourth quarter at $150/lt, which was a savings of $465.50-$467.50/lt, and ammonia prices were off over 38 percent at Tampa to $575/mt DEL, so the cost of production will be down and producers’ margins will suffer little, if any.
CF took the bold step of lowering its asking price significantly, down to $765/st FOB for Central Florida railcars, while Mosaic has stopped posting its asking prices altogether. PCS Sales’ Central Florida reference price was unchanged at $1,070/st FOB for DAP. Agrifos was asking $825/st for DAP by trucks and $820/st FOB for railcars.
U.S. Gulf: Phosphate prices for NOLA DAP barges were trending the same direction as the national economy – down, and that probably won’t change for some time for either one. Just how low they will go was often the subject of educated but wild guesses last week. The reality was no one was even close on the way up and the same will be true on the way down – but it will be down.
Traders with contracts tied to the market’s price range were being caught in a bind last week, actually for the past several weeks. The stock they currently have in their warehouses was purchased at a higher price – in some cases much higher – than the current market, but because of a lack of sales a new range had not been established, so they are paying a premium for the phosphate they were receiving under contract and losing money on what they already have.
Meanwhile, farmers, the consummate business people, were in no hurry to buy. They had no reason to do so. Offered prices were several hundred dollars below what they were a little over a month ago, and the longer they wait, the weaker the price will get. At the same time, the price of corn was still sinking, so buying now could result in losses for the next season. Because much of the crop was sold before the drop in grain prices began, they will have money in their pockets. Prepaying would be an option, if the price of phosphates hits bottom or close to it. However, it was unclear when that will be or how low it will go. Most people were guessing buying would start around the end of November, but earlier they said by the beginning of October, so who knows.
As the price of offers continued to deteriorate last week, a buyer emerged in the market seeking multiple barges. By late last week, the offers were almost universally $700/st FOB to that buyer, and several others reported offers at the same level. The buyer seeking multiple barges was in the process of putting an export deal together for a panamax-sized load, which had still not been concluded.
Mosaic continued its curtailment plan at both Central Florida and at Donaldsonville, and with the stagnation of new sales there was no reason to change. Inventories continued to build.
Most pegged the NOLA DAP barge range last week at $700-$720/st FOB due to the multiple offers in that range. Mosaic stopped posting its offering price, which had been unrealistically high.
Eastern Cornbelt: The DAP market continued to slide as well, with dealer pricing reported last week in the $860-$890/st level FOB regional warehouses. MAP was $25/st higher than DAP. One Illinois source reported the dealer market in his trade area at $875/st FOB for DAP and $900/st for MAP. 10-34-0 remained at $1,150-$1,200/st FOB in the region.
Western Cornbelt: At the farmer level, attention remained focused on harvest and not on fall fertilizer movement. One Missouri dealer said he expects to see some plowdown applications later in the fall, weather permitting, but he has no doubt that fall volumes will be well off the normal pace. “A lot of guys seem to be willing to wait till next spring, come what may,” he said. Eying the late harvest, another source said,” We’ll have to have a great November or we’ll be screwed.”
DAP was pegged at $840-$875/st FOB regional warehouses last week, with MAP at $865-$900/st FOB. The 10-34-0 market was quoted at $1,150-$1,200/st FOB in the region.
California: Even though postings remained at $1,180/st FOB or DEL for DAP and MAP in the California market, sources said spot tons could be had at $1,120/st DEL last week, though new sales were nonexistent. There were even reports of rail-delivered dry phosphate tons coming in to the Arizona and California markets from Midwest shipping points for as low as $900/st in mid-October, but business at that level was not confirmed last week. As one source said, “I hear all kinds of numbers out there.”
16-20-0 pricing remained at $675-$690/st FOB, and 10-34-0 was steady at $995-$1,015/st FOB in California.
Super phosphoric acid (SPA) and merchant grade acid (MGA) remained at $25.00/unit DEL in California.
Pacific Northwest: Producer postings for DAP and MAP were holding at the $1,180/st DEL level in the region, but several sources said tons could be had from Midwest shipping points for around $1,100/st DEL. No buying was taking place, however, and others said they expect a fill program from regional producers in November at numbers well under the current list prices.
10-34-0 remained at $1,025-$1,050/st FOB in the region. 16-20-0 was unchanged 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, also unchanged from last report.
Western Canada: MAP pricing remained in the $1,335-$1,345/mt DEL range, though some sources said they anticipate softer prices by Nov. 1, when some potential buyers may be back in the market for spring prepay.
Sources said lots of dealers in the region have high inventory levels of dry products and are nervous about slipping prices and the weakening Canadian dollar. The lack of activity, however, has kept the regional markets generally unchanged. “We’ve had no movement and no calls,” said one source last week, noting buyer resistance to the high prices at the retail level. “It’s just a slow market.”
U.S. Export: No new export sales were made last week. However, a trader was in the process of putting a deal together for a panamax-sized load, probably for India, and was lining up NOLA DAP barges. As of late last week, the deal had not been completed.
In Morocco, OCP announced it was shutting down for 30-40 days to reduce its production of P205, which may help ease the growing world inventories of phosphates. If the acid was all converted into DAP, it would amount to around a million mt or so. Russia may soon also join in curtailing production.
Export markets were in the same boat as the U.S. domestic market last week, which was sinking in rocky waters. India continued to be the world’s best customer, and Pakistan was in the process of approving a subsidy for 150,000 mt of phosphate. Ethiopia was getting ready to act on an outstanding tender, and planned another for 150,0000 mt.
The export DAP price range remained at $1,013-$1,015/mt FOB, which was probably overly optimistic but based on the most recent sales.
POTASH
Eastern Cornbelt: The potash market was pegged at $860-$900/st FOB in the region, reflecting another pricing drop from last report although new business was nonexistent.
Western Cornbelt: Potash was reported at $850-$900/st FOB in the region, depending on grade and location. A Missouri source reported the dealer market last week at $855/st FOB for red granular and $860/st for white granular.
California: Muriate of potash was quoted at $849-$900/st FOB and $875-$925/st DEL in California. Sulfate of potash remained at $1,105-$1,195/st FOB, depending on grade and supplier. Potassium nitrate was steady 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 pegged at $840-$900/st DEL in the region. Sources talked of localized deals from retailers rumored to be taking place at much lower prices to generate cash flow, but no business was confirmed at these numbers.
Western Canada: No current prices were reported for potash in Western Canada.
SULFUR
Tampa: Last week, PotashCorp settled all of its remaining contracts at a new fourth-quarter price of $150/lt. Mosaic was in the process of doing the same, but still had more to go, so the price range will not change this week – barring a very late development.
The initial contract signed by PotashCorp at a price $300/lt below the previous quarter will remain in effect, although all of the others will be at the lower price. That one contract accounts for around 7 percent of the company’s sulfur needs, and sources said it was most likely an offshore supplier Galveston-area refineries were back in production last week and the rail service to the area had been restored, after repairs were made following the recent hurricane damage.
Transportation fuel surcharges were falling last week, as the price of fuel dropped sharply. The truck surcharge went to 35 percent from 49 percent, and rail was falling by around 20 percent from current surcharge prices.
World sulfur prices continued to plummet and spot deals as low as $50/mt DEL were done, a big drop from the $800-plus/mt just a couple of months ago. China had not signed any new agreements as of late last week.
West Coast: Sulfur producers and priller operators on the West Coast were watching the export market to make sure prillers could continue to operate without taking a loss. Additional reductions in prices, possibly before the end of the current quarter, were possible.
Vancouver: China had not signed new agreements with Canadian suppliers and may not anytime soon. Instead, the Chinese, who do not need the material at this time, were watching as prices on the world market were collapsing. Space for additional supplies of sulfur at Vancouver was severely limited last week, and stockpiling was resuming in Alberta.