AMMONIA
U.S. Gulf/Tampa: Wet weather and anticipated cuts in phosphate production continue to put pressure on the ammonia markets. Sources were talking lower barge prices and June import numbers; however, there was nothing new to actually report last week.
Eastern Cornbelt: The anhydrous ammonia market was tagged at $380-$400/st FOB regional terminals, with the low confirmed in Illinois on a spot basis. Forward contract ammonia for June through August was referenced at $425/st FOB in Illinois and $430/st FOB in Indiana.
The region remained wet last week, prompting one source to refer to things as “a mess” due to sloppy conditions, incessant rainfall, and worrisome planting delays.
Western Cornbelt: Ammonia was pegged at $340-$375/st FOB regional terminals, with the low in Nebraska and the upper end for cash tons FOB Iowa terminals. One supplier was referencing forward contract ammonia for June through August at the $400/st mark FOB in Iowa and Missouri.
Northern Plains: The cash market for ammonia was reported at the $375/st level FOB Minnesota terminals to the dealer on the low end. In North Dakota, delivered ammonia was quoted as low as $430-$440/st FOB, with the upper end for tons shipped from Oklahoma production points. Reference prices in North Dakota reportedly remained as high as $560-$590/st DEL from some suppliers last week.
Eastern Canada: One source estimated the anhydrous ammonia cash market at $686/mt FOB in Ontario, but sales were few and far between to test the dealer market.
Middle East: Product is under pressure as Indian buyers push back against efforts by producers to keep moving the price up. Because of the dearth of public tenders, the price from the area is generally calculated back from contracted tons being sent to India. Sources report Qafco accepted a deal last week at $293/mt CFR. That puts the netback at $260-$265/mt FOB.
Production continues at limited levels in an effort to keep supplies limited.
Helping the producers is steady demand from Asia. Sources say every now and then suppliers to Asian buyers have to look for some extra tons to fulfill contracts. In most cases, the deals are for swaps rather than outright purchases. One trader said it really doesn’t make a difference, because either way ammonia is moving out of the area to an end user.
Black Sea: Sources report no change in the production situation. The high cost of Russian gas, combined with the low international price of ammonia, is keeping many of the producers shut down.
India: Demand continues strong for the phosphate producers. These producers have begun to push back against the Middle East suppliers who have been successful in moving the price up steadily in recent months.
UREA
U.S. Gulf: Barge prices continue to erode with reports of new trades in the $220-$225/st FOB range. Despite arguments of good corn acreage this year, wet weather and delayed movement gave buyers the hammer to continue to beat down prices. Some noted that even forward paper contracts were starting to see higher prices, a move that gave some sellers hope that prompt prices would soon turn around.
Eastern Cornbelt: The granular urea market was tagged at $270-$300/st FOB in the region, reflecting another drop from last report.
Western Cornbelt: Granular urea pricing had reportedly dropped to $265-$295/st FOB in the region. The low was confirmed on a spot basis out of river terminals and the top of the range reflected some single truckload purchases in Iowa and Missouri early in the week, but most sources put the common dealer range at midweek in the $270-$280/st FOB range in the region.
Northern Plains: Urea pricing appeared to be all over the board, but was down considerably from last report. Dealer reference levels in North Dakota remained as high as $325-$340/st FOB, but sources said delivered urea was ranging from $315-$350/st in the state, depending on supplier and time of shipment. The Twin Cities urea market in Minnesota was said to be as low as $250-$255/st FOB last week from at least one supplier. Another supplier was reportedly referenced at the $280/st level FOB Pine Bend, Minn.
Northeast: The granular urea market was pegged at $300-$305/st FOB, with the upper end at Philadelphia and the low reported to the dealer FOB E. Liverpool, Ohio. Delivered urea in southern Pennsylvania was reported at the $315/st level for hand-to-mouth orders. Sources pegged the Savannah, Ga., market at $290-$300/st FOB and falling.
Eastern Canada: Granular urea pricing had dropped slightly, to $603/mt FOB Ontario warehouses to the dealer.
Pakistan: TCP settled its tender with awards for 255,000 mt of urea at $283.75/mt CFR. Traditionally, TCP takes the lowest offer made in tenders as a basis for negotiations with other companies. In subsequent talks, TCP tried to move enough suppliers to its pricing target to cover the country’s immediate needs.
The Helm price of $283.75 was accepted first by TCP and then by four other companies. Sources noted with interest the award given to Sabic. In its original offer, Sabic came in at $292/mt CFR for 40,000 mt. At the time, the high price and low quantity surprised observers, who had expected Middle East producers to make an aggressive move to secure awards with dramatically low prices. Sabic was the only Middle East supplier to offer.
Once the Helm offer was accepted, Sabic accepted the price and upped the quantity offered. By offering 90,000 mt, Sabic is removing enough tons from its inventory to allow it to argue for higher prices in future deals, such as the impending IPL/India tender.
Awards at $283.75/mt CFR made in the tender follow.
| Offering Company | Source | Quantity (mt) |
| Sabic | Saudi Arabia | 90,000 |
| Transammonia | Open | 80,000 |
| Keytrade | Open | 35,000 |
| Helm | Open | 25,000 |
| Transfert | Open | 25,000 |
Transfert had to make the biggest concession, coming down from an offer of $292.50/mt CFR. Sabic followed from $292/mt CFR, then Transammonia from $288.90/mt CFR, and lastly Keytrade from $287.50/mt CFR.
The Sabic tons will clearly come from Saudi Arabia. Sources speculate the remaining tons will come from the Black Sea.
India: The long wait is over – an Indian company finally called a tender. The IPL tender will close May 20, with validity of only two days. IPL did not indicate how many tons it was ready to buy. Traders speculated IPL could buy as little as 100,000 mt or as much as 500,000 mt. The conventional wisdom seems to be that IPL will seriously look at 200-300,000 mt.
The tender also calls for June shipment, which will eliminate Chinese urea from consideration unless the Chinese urea market crashes. Sources say the Chinese export price might soften, but not enough to be considered in this tender.
Asian sources say IPL called the tender now because India needs to start building its urea reserves for the upcoming application season. One source added that IPL could be setting the groundwork for a campaign for lower prices.
Reportedly, Indian buyers talked to potential sellers during the past month or so. Sources say IPL is talking about a target price of no higher than $273/mt CFR. Rumors also popped up late last week that the buyers were going to push for $250/mt CFR as a final price.
Depending on the offering prices, IPL could just take a few cargoes to ease the pressure of demand in India and wait for lower prices to occur later.
The price drop could come from a variety of forces.
Sources are divided on how desperate India is for tons. Conventional wisdom says the country has enough to start the season, but will need more tons soon thereafter.
Production and capacity is up in the global market. Sources point to the new Oman facility that will have to find a home for about 60,000 mt of granular urea each month. This amount, observers say, is after the plant fulfills its commitment to the U.S.
Chinese urea might become a factor after July 1, when the export duty drops to 10 percent from its current 110 percent. Sources report the Chinese price is softening, but not enough to be competitive just yet.
Just how many tons will be offered in the tender will not only provide an indication of how desperate producers are to sell, but also how much sellers will trust IPL to go through with the deal. A lot of goodwill was damaged earlier this year when IPL just walked away from awards that were issued after the market price began to fall. Sources say more than one trading house was stuck with material at non-competitive prices. More than one trader opined that the May 20 tender might see limited quantities offered because of the uncertainty in the current market, and no one wants to be stuck with a cargo and no buyer.
And while some in the industry deny it, the political situation in India may dictate how many tons are purchased, and at what price.
The results of the Indian national elections will start coming in this week. A shift in the government or in the strength of the existing government could lead to changes in the subsidy program or in the purchasing regime.
Middle East: Producers hoped to use the TCP/Pakistan tender to move the price up at least $10/mt. They failed. Sabic ended up agreeing to $283.75/mt CFR, coming down from its $292/mt CFR offer. The estimated netback on the final deal is pegged in the mid-$250s/mt FOB. Producers had been arguing for weeks that the price should move firmly into the upper $260s/mt FOB, but even the original Sabic offer only moved the price into the mid-$260s/mt FOB.
There is much speculation as to why Sabic accepted the lower price and offered more tons. One idea is that with 90,000 mt committed to TCP, Sabic can claim it is now sold out just as India begins buying.
In the past, such a move would mean the producer might be able to find an extra cargo or two – but only if the price was right. This time around, said one source, it may be that the price may come down even more because of the Indian business. If it does, then Sabic will most likely come out ahead of its fellow Arab Gulf producers.
Sources expect to see Middle East material offered in the IPL tender. How many tons, and at what price, is a matter of much discussion with no consensus.
Black Sea: Sources estimate the netback from the IPL/Pakistan tender to be in the mid- to low-$230s/mt FOB. Industry observers had hoped to see the price move up on the TCP tender, knowing that Indian business was close at hand. Now, say sources, the Pakistan business appears to have stalled any upward movement.
Sources say the Indian buying idea in the mid-$270s/mt CFR could mean a further slide in prices. Shipping costs are edging upward with oil prices. At the same time, the availability of ships to be in the right place at the right time is a large question mark for some in the business.
China: While many dismiss the rumors, sources say whispers continue that Beijing may end up removing all export duties on urea come July 1. At present, the plan is for the export duty to drop from the current 110 percent to 10 percent on July 1. Traders with regular dealings with Chinese companies say the urea producers remain convinced the original schedule will be maintained, and that the duty will only drop to 10 percent.
Even if all export duties are erased, say sources, the price of Chinese urea will have to come down further from its current level in the mid-$280s/mt FOB to be competitive in the global market.
Industry observers noted that Indian buyers talked to a number of Chinese producers and traders in the past few weeks. One view is that the current IPL tender is a message to the Chinese that India is ready to buy – but only at the right price. Sources say the message is that if Chinese producers want to get rid of the excess material that is building in their warehouses, the producers will have to drop their prices.
Bangladesh: The Bangladesh Parliamentary Standing Committee on Industries Ministry decided to reopen three urea factories within the shortest possible time. These factories, including the Chittagong Urea Fertilizer Ltd (CUFL), the Polash Urea Fertilizer Factory, and the Ghorasal Urea Fertilizer Factory, were closed to divert gas to power plants. As a result, it is estimated that the country will import 200,000-300,000 mt of additional urea. Officials of the Industries Ministry said last year they had to import 1.4 million mt of urea, but this year they may have to import about 1.7 million mt of urea.
NITROGEN SOLUTIONS
U.S. Gulf: Like urea, UAN barges are under pressure. Some last week were calling them as low as $150/st FOB. Finding an actual trade or a place to put any excess product was difficult.
Eastern Cornbelt: UAN was pegged at $6.82-$7.30/unit FOB regional terminals, although one source described dealer-to-dealer sales as a “Dutch auction, name your price.” The low end of the range was reported FOB Cincinnati. One supplier was referencing forward contract UAN-32 at $224-$233.60/st ($7.00-$7.30/unit) FOB regional terminals for June, but July-August forward pricing was as low as $184-$193.60/st ($5.75-$6.05/unit) FOB for limited quantities.
Western Cornbelt: The UAN-32 market was pegged at $220-$232/st ($6.88-$7.25/unit) FOB regional terminals. One source quoted the market FOB Missouri River shipping points in the $225-$230/st ($7.03-$7.19/unit) FOB range last week.
Northern Plains: UAN pricing in the region was down from last report. Sources tagged the market at $7.25-$7.60/unit FOB regional terminals, depending on location, with most sources quoting the Pine Bend dealer market at roughly $7.50-$7.60/unit FOB. Delivered UAN-28 in central North Dakota was pegged at $250-$265/st ($8.92-$9.46/unit).
Northeast: The UAN-30 market had reportedly dropped to $192-$202/st ($6.40-$6.73/unit) FOB Baltimore, with continued downward pressure. Out of terminals in upstate New York, UAN-32 was quoted at $7.50-$8.00/unit FOB to the dealer, with good movement reported.
Eastern Canada: The UAN market remained at $14.22-$14.39/unit FOB Ontario warehouses to the dealer. Sources also reported direct UAN-28 sales to the grower taking place at the $395/mt ($14.11/unit) level in Ontario from one farmer cooperative, while other dealers were referencing $450/mt ($16.07/unit) FOB as a retail price at mid-month.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate was steady at $265-$270/st FOB in the region.
Eastern Canada: Ammonium nitrate remained at $655/mt FOB to the dealer.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $225-$245/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate pricing remained at $225-$245/st FOB.
Northern Plains: The granular ammonium sulfate market was quoted at $245/st FOB and $255/st DEL in the region and in relatively tight supply. One Minnesota source said ammonium sulfate movement has been brisk in his trade area this spring.
Northeast: Delivered ammonium sulfate was pegged at $253-$265/st in the region, depending on location, with the upper end reported in New England. Sources pegged the dealer market FOB Philadelphia at the $223-$225/st level last week.
Eastern Canada: The granular ammonium sulfate market was quoted at $508/mt FOB in the region, reflecting a slight drop from last report.
PHOSPHATE
Central Florida: With the spring season nearly at an end and too little time left to reach potential end users, the market continued to slump in Central Florida, with the exception of truck deliveries.
The areas of the country served by rail from Florida were generally too wet for farmers to work their fields, so less corn could be planted than the U.S.D.A. previously estimated. More rain was anticipated late last week, and only a couple of weeks remain before farmers will have to make a decision on whether to switch to soybeans instead of corn. With the price of corn relatively high and the price of fertilizers low, the crop would be more profitable than it was a year ago.
New curtailments in the production of phosphate continued to float throughout the industry last week, and that seemed almost a sure bet. However, the largest producer, Mosaic, had not made announcements of plans to cut back. A rumor that Mosaic was beginning “rolling turnarounds,” was not substantiated. The company has said it was running at a reduced capacity, but no numbers have been issued.
The Central Florida DAP price range was static at $295-$315/st FOB, but the top of the range was shaky and price declines appeared likely. PCS Sales had no published price. Mosaic’s price was $315/st FOB for DAP and $325/st FOB for MAP, but DAP was sold last week at $295/st FOB. CF dropped to $295/st FOB for DAP and $10/st FOB higher for MAP. The price from Agrifos remained at $350/st FOB for trucks and $340/st FOB for rail shipments.
U.S. Gulf: By the end of last week rain had fallen daily in Oklahoma, and the Arkansas River was both high and fast – too much for barges to navigate and unload. Supplies of both phosphate and urea were rapidly vanishing, although no serious effects were felt from the shortage because the season there had come to an end.
Ohio, Indiana, and Illinois were still so wet only a small part of the corn crop was in the ground, and time was running out to complete the job – only about two weeks remained. Farmers will then have to make the critical decision on whether to switch to planting soybeans instead. If they do, and there may not be much choice, less phosphate will be sold. That could spell trouble for the industry for the fall season, because dealers will still have product left over.
On the western side of the Cornbelt, the corn crop was mostly already in the ground and the odds were good it will be done or close to complete in time for maximum yields. If the other areas are unable to get theirs planted, the already healthy price of corn for 2010 will become even more robust.
The general consensus in the industry held that fall should be a big improvement over the past year. It should be. It would be hard to be much worse in terms of sales, but some areas that have been unable to move phosphate due to weather may not be major players.
Rumors became reality last week. Sales of NOLA DAP barges sagged as low as $250/st FOB, but most of the deals were for export, according to sources. At least one was for local consumption, but that was made early in the week when the weather was drier. Once the rains became heavy again, those types of sales stopped.
Warehouse sales tended to be down last week, and the range was as low as $325/st FOB on the Arkansas to $340/st FOB on the upper Mississippi and Ohio rivers.
The NOLA DAP barge range fell last week from $268-$300/st FOB to $250-$255/st FOB. Both Mosaic and CF had a $10/st FOB additional charge for MAP.
Eastern Cornbelt: DAP was reported at $330-$340/st FOB regional warehouses to the dealer, with MAP $10/st higher. 10-34-0 was steady at $625-$700/st FOB, with the low in Illinois and the upper end in Ohio.
Western Cornbelt: The DAP market was pegged at $325-$340/st FOB regional warehouses to the dealer, with the low end reported FOB St. Louis and Inola, Okla. MAP was $10/st higher than DAP. 10-34-0 remained at $575-$660/st FOB in the region.
Northern Plains: DAP was pegged at $330-$350/st FOB in the region, with MAP roughly $10/st higher. One North Dakota dealer reported delivered MAP at the $425/st level last week. The 10-34-0 market was pegged at $625-$650/st FOB in Minnesota, and $625-$630/st DEL in North Dakota.
Northeast: MAP was pegged at $360-$385/st FOB, with the low FOB Philadelphia. DAP was $10/st under MAP, where available. 10-34-0 pricing had reportedly fallen to $700-$770/st FOB in the region, with the low in Pennsylvania and the upper end out of terminals in upstate New York. Sources reported cutbacks in liquid phosphate movement this spring.
Eastern Canada: The MAP market was quoted by Ontario sources at roughly $690/mt FOB the warehouse to dealers, well below the previous range. Sources reported no market for DAP or TSP, noting that very little of those products are used in the region.
U.S. Export: India was still making DAP buys last week, but the source was China and not the U.S. Gulf Coast. Based on current freight rates, the price netted back about $305/mt FOB to Tampa, well below the current price there, which has been untested of late.
Latin America remained as a potential market for phosphate, but activity there has been lax as well.
With no new sales last week, the DAP export range continued unchanged at $337-$339/mt FOB. Prices will be lower on the next sale, predict most sources.
Bangladesh: BCIC has issued a tender to import 15,000 mt (72 percent BPL minimum) of phosphate rock on a C&F Chittagong basis. Offers will be received up to June 17. The offers should be valid up to 30 days from the date of closing bids.
BCIC has issued a tender to import 10,000 mt of phos acid (P205 52-54 percent) in bulk in one lot on a C&F Chittagong basis. Offers are to be up to June 17, and be valid for 30 days.
India: China’s Guizhou Kalin Co. Ltd., with manufacturing facilities in South China, has reportedly expressed interest in a long-term DAP off-take agreement with Kribhco. A team from the company met DOF officials. The possibility of importing 350,000-400,000 mt of DAP for 2009-10 is being investigated. Kribhco has now formed a committee to evaluate the proposal and also to visit China to see the facilities. The company is 100 percent owned by the Provincial Government of China.
In the meantime, Kribhco has reportedly agreed to the supply by Dreymoor Fertilizers Overseas Pte. Ltd., Singapore, of 40,000 mt DAP in one vessel at $379 pmt CFR at the Mundra port and to Campagnie Indo Francaise De Commerce Pvt. Ltd., New Delhi, for the supply of 80,000 mt at $383 pmt CFR at the Tuticorin and Vizag ports.
POTASH
Eastern Cornbelt: Sources quoted the potash market at $630-$680/st FOB warehouses from brokers and resellers.
Western Cornbelt: The potash market was tagged at $610-$640/st FOB regional warehouses, with the upper end reported for white granular potash in Missouri. An Iowa source pegged the red granular potash market at the $630/st FOB level last week.
Northern Plains: Potash pricing FOB Saskatchewan mines remained at reference levels of $767/st FOB for standard, $780/st FOB for soluble, $772/st FOB for granular, and $780/st FOB for white granular. Delivered potash in North Dakota was pegged at $750-$775/st, although reference levels remained as high as $830/st DEL. Sources reported no new business to test the potash market last week.
Northeast: Sources continued to report better pricing on truck-delivered potash from Midwest suppliers. The range was quoted at $690-$750/st truck-DEL, depending on grade and location, which compares to reference levels as high as $840-$850/st rail-DEL from producers.
Eastern Canada: Potash remained at posted levels of $988-$1,023/mt FOB the mine, with the upper end reflecting reference pricing FOB Sussex, N.B. Out of Ontario warehouse locations, sources quoted red granular potash at $1,025/mt FOB and white granular at $1,034/mt FOB.
The K-Mag market was quoted at $600/mt FOB in Ontario, down slightly from last report.
Sulfate of potash remained at $1,075/mt FOB for reference pricing to the dealer.
SULFUR
Tampa: Most refineries were cranking out as much fuel as possible in preparation for the summer driving season, which meant more sulfur was being produced. Estimates held driving was on the increase.
Meanwhile, prillers on the Gulf were said to be “running hard, but not at capacity,” so at least a portion of the sulfur had a home. Storage was less of a problem than it was a month or two ago, but indications were the phosphate industry may begin curtailing production to a greater degree, because of a lack of activity both domestically and in the export market. Phosphate producers were already taking less than they had agreed to take, and a slowdown could mean sulfur inventories would soon become a problem – again.
China has been the primary buyer for sulfur, and some in the industry feared that could change sometime soon. If that happened, the two remaining customers would be Brazil and Morocco, which were described as “brutal buyers, who push prices down.”
West Coast: Negotiations for second quarter contract prices for the West Coast continued last week, but no final agreements were reached.
Bangladesh: BCIC has issued a tender to import 15,000 mt of rock sulfur on a C&F Chittagong basis. Offers will be received up to June 17. The offers should be valid up to 30 days from the date of closing bids.