Trammo took the September business.
The new price put the Middle East ammonia closer to a range that producers have wanted for some time.
Middle East: The FACT/India tender for 7,500 mt that closed Oct. 6 showed that producers are having their way with prices – slowly and surely.
The Qafco offer at $455/mt CFR was lower than Transammonia’s at $459.50/mt CFR. The netback on the Qafco offer is estimated at $415-$425/mt FOB, depending on freight costs. This price range puts Arab producers in the area they have wanted to be for some time.
Mitsui bought a cargo from Iran at $420/mt FOB in the last week of September. While the Arab producers were happy with this price, they could not point to any business of their own at that level.
Most of the Arab business is tied up in contracts that provide sales on a formula basis. As a result, the netbacks to the Arab producers were lower than what they talked about.
The Transammonia tons could have come from a variety of sources, but still from the Arab Gulf. The European trading house could have supplied from Oman or Iran without a problem.
Industry sources said the range for the regional market should reflect both the likely winning offer from Qafco and the higher Trammo price. Once freight is backed off the cargoes, the price range should therefore be $415-$430/mt FOB.
The Pardis I facility in Iran is back up and running, but sources say it will have little impact on the ammonia market.
A majority of the ammonia produced will reportedly go into urea production, said one trader. What remaining tons are made available for export will be snapped up so quickly few will notice the material was even offered up.
Black Sea: Sales out of this region are reportedly edging up in cost. Asian sources say the increase is still incremental, but enough to notice.
Best guesses on the price range at this time, said one Asian trader, is $415-$420/mt FOB, with still more room to go higher.
Domestic demand, as well as steady demand from the U.S. and Europe, is keeping both the price and producers’ expectations up.
Asia: Demand remains strong in the region. Nailing down prices in the region is more a product of triangulating rumors and guesswork, said one trader.
Most of the business in the area is done on a contract basis. Material largely comes from regional suppliers such as those in Indonesia and Malaysia, and the Middle East.
Producers are not anxious to talk about prices because the current deals are below what they think the market should be. And buyers are not willing to talk because they know that the next shipment will be more expensive as the market moves up. They do not want to add to a price increase feeding frenzy by pointing out the incremental increases that are occurring.
UREA
U.S.Gulf: Most last week were still giving a slight premium to barges on the water ready to go upriver – $335-$340/st FOB. A little later, and folks were saying $330/st FOB.
Eastern Cornbelt: Granular urea pricing was quoted at $385-$405/st FOB regional terminals, with the low out of river locations in Illinois and the upper end at inland shipping points in the Ohio market. One source also quoted rail-delivered urea at $415/st in the Ohio market last week.
Western Cornbelt: Granular urea was tagged at $380-$390/st FOB regional terminals. Effective Oct. 6, Koch’s granular urea postings firmed to $390/st FOB Enid, Okla.
Northern Plains: Granular urea was pegged at $380-$390/st FOB the Twin Cities market, and $405/st FOB Carrington, N.D. Effective Sept. 22, Agrium’s granular urea postings firmed to $415/st FOB North Dakota terminals at Alton, Carrington, Colfax, Scranton, and Grand Forks, and $420/st rail-DEL in Minnesota, Wisconsin, and the Dakotas. Those levels reflected a $20/st increase from the company’s Sept. 13 postings.
Northeast: The granular urea market was pegged at $375-$395/st FOB various shipping points in Pennsylvania, with the upper end reported for limited tons FOB Philadelphia.
Eastern Canada: Granular urea was pegged at $450-$475/mt FOB in Ontario in early October.
India: Just as everyone took a deep breath following purchases of about 680,000 mt by MMTC, sources say the Indians are gearing up for another tender. The odds-on favorite time for the next tender is the last week of this month.
Sources say India is short by 1.5-1.8 million mt for this season. For one trader, that means there will be at least three more tenders before the year closes.
The quickness of another tender is determined as much by Indian demand as it is by external forces.
Sources point out that the window for buying Chinese material will close Dec. 31. No one knows what the export policy for 2011 will be until Beijing announces it. And that usually doesn’t happen until mid-December.
In the meantime, buyers have to operate as if the export duty will go up the first of the year.
For India, that means that if it wants to nail down more Chinese cargoes, it has to secure contracts and vessels for its needs by the end of the year. Only tenders called before Nov. 15 will accomplish that goal, said one trader. Another source said the whole process could start the second half of November, but that would really be pushing the limits.
Late last week the Indian government released its estimates of urea need, production, and import requirements. The government said the total need for the current application season is about 15.4 million mt. Of that amount, 10.8 million mt will come from domestic sources, leaving 4 million mt to imports.
So far this fiscal year – April through September – India imported 2.5 million mt of urea.
Middle East: Some private sales out of the Arab Gulf have moved up the price. Traders say deals for granular are currently at $355-$365/mt FOB, with prills trailing by $10/mt. The reports of these deals are seen by some observers as a way for the producers to seriously get the market moving in their favor.
The only public pricing ideas from the region have come from tender awards to Iran and the offers made by Arab producers in the recent Indian tenders.
The Iranian prices have not been where the Arab producers want prices, and all the Arab offers were rejected by Indian buyers.
Most of the cargoes heading out of the region are covered by long-term contracts with prices set on a formula basis. As a result, many in the industry have had to estimate netbacks based on sales to the U.S. and other buyers.
Based on U.S. NOLA and reports of Latin American deals, the price had earlier ranged from $315/mt FOB to $340/mt FOB. Now, sources are confident in calling the market at the new levels of $355-$365/mt FOB for granular and $345-$355/mt FOB for prills.
Black Sea: While the Arab Gulf producers are able to add a few extra dollars to their prices, material out of Yuzhnyy is sliding. Rumors were circulating last week that the price had dropped to $315/mt FOB. Then the talk was that bids were at $315/mt FOB, with offers at $320/mt FOB.
Asian traders dismiss anything under $320/mt FOB. One trader said some were shorting the market at $325/mt FOB, while others were spending a lot of time talking about cheaper deals that are not going to happen any time soon.
The simple argument for a softer market in Yuzhnyy is supply and demand. Sources say that some are arguing that since Yuzhnyy has been shut out of the most recent set of Indian tenders it has more tons looking for a home.
Unfortunately for that argument, however, others say that there is more than enough business with Turkey and South America to keep the producers satisfied.
Some are even arguing that there is some life in the market.
As September closed, many in the market were calling the high end of the price range at $330/mt FOB. Last week, however, there were reports of $335/mt FOB being done.
The sources who talked about the $335/mt FOB material were clear that the tonnage was small. Larger cargoes are said to be in the low $330s/mt FOB or upper $320s/mt FOB.
For now, the consensus seems to be a market at $325-$335/mt FOB.
Indonesia: The Indonesian government has issued new export permits totaling 492,000 mt for the major urea producers. The move was expected as the global urea strengthens and as domestic demand wanes.
Until the new allotments were issued, none of the producers would have been allowed to sell their excess tons until the 2011 licenses were issued. Allocations for export are as follows.
| Company |
Tonnage |
| Kaltim |
256,000 |
| Pusri |
152,000 |
| PIM |
40,000 |
| Kujang |
35,000 |
All of the material must be shipped by the end of the year.
Kaltim jumped right in and called a tender to sell a minimum of 20,000 mt of granular material. The tender closes Oct. 12.
Sources say the company will most likely try to move out 50-70,000 mt with this tender. Otherwise, said one trader, the company will not be able to move out its full quota by the end of the year.
Reportedly, Pusri is also ready to call a tender.
China: The country is slowly coming back to work after taking off Golden Week for China’s National Day. Sources say activity in the ports will get very busy as ships begin arriving in the next 14-30 days to start loading urea for India under terms of the most recent tender.
These vessels will have to compete, however, with other ships that are lining up to accept tons sold during the previous window of lower export duties from earlier last month.
For now, traders are only looking at what business they can do with China up to the end of the year.
Under the official export duty plan, the duty is supposed to jump back up to 110 percent Jan. 1. In the past two years, however, Beijing extended the lower rate into early February.
Sources say no one is willing to gamble that the government will do the same for 2011.
In the past the change in the low-rate window occurred late in December. Area traders are expecting another last-minute decision from the leadership in Beijing.
Bangladesh: BCIC has issued a tender to import 12,500 mt of prilled urea in bags on a C&F Chittagong liner terms basis under cash foreign exchange, respectively. Offers will be received up to Oct. 25, and will be valid for 30 days from the bid closing.
Meanwhile, separately, BCIC has extended the required quantity for import of prilled urea to 200,000 mt from the 100,000 mt in its tender issued on Sept. 8. Other terms and conditions are same. The last date for receiving bids is Nov. 2, and offers should be valid up to 30 days from the date of closing bids.
Pakistan: The Pakistan government on Oct. 7 assured urea manufacturers that gas curtailment to the fertilizer sector would end as soon as the gas situation improves. The gas curtailment of 10-20 percent is scheduled to end on Oct 31. The decision was taken by Federal Minister for Industries and Production Hazar Khan Bijarani while presiding over a Ministerial Committee on Fertilizer. The meeting also decided that the subsidy to the fertilizer sector will continue in the post-flood scenario since country-wide agriculture productivity depends upon the access and affordability of agriculture inputs.
NITROGEN SOLUTIONS
U.S. Gulf: Barges were called $270-$280/st FOB ($8.44-$8.75/unit).
Eastern Cornbelt: UAN pricing was generally quoted at $10.00/unit FOB market to the dealer last week, both in Illinois and Ohio out of river locations. One source pegged rail-delivered UAN-32 at the $335/st ($10.47/unit) level in the Ohio market.
Western Cornbelt: UAN-32 remained at $310.40-$320/st ($9.70-$10.00/unit) FOB regional terminals, with the low out of spot river locations in the Iowa market.
Northern Plains: UAN-28 was quoted at $280/st ($10.00/unit) FOB in Minnesota for limited prompt tons on the low end, with spring prepay reported at the $298/st ($10.64/unit) FOB level. North Dakota sources pegged delivered UAN-28 at $295/st ($10.54/unit) for prompt and $310/st ($11.07/unit) for spring.
Northeast: UAN-30 was quoted in a broad range at $285-$298/st ($9.50-$9.93/unit) FOB Baltimore, with the low reported for tons shipped in November or December and the high end for very limited prompt ship tons. A Delaware contact quoted UAN-32 at $323/st ($10.09/unit) FOB a local terminal, while UAN-32 out of tanks in upstate New York had strengthened to $344/st ($10.75/unit) FOB.
Eastern Canada: The UAN-28 market had firmed significantly, to $290-$298/mt ($10.36-$10.64/unit) FOB Ontario terminals. One source pegged the dealer market for UAN-32 at the $338/mt ($10.56/unit) mark last week.
AMMONIUM NITRATE
U.S. Gulf: November price ideas remained at $300/st FOB and above, with the last done still called in the $290s/st FOB.
Western Cornbelt: Ammonium nitrate was quoted at $315-$325/st FOB in the region, with the upper end in the Iowa market.
Eastern Canada: Ammonium nitrate was referenced at the $425/mt FOB level in Ontario in early October.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was quoted at $220/st FOB and $230/st rail-DEL in the region, based on updated postings. Mid-grade ammonium sulfate postings from Honeywell included $210/st FOB and $220/st rail-DEL in the region.
Ammonium thiosulfate (12-0-0-26) postings from Tessenderlo Kerley firmed on Oct. 2 to $270/st FOB Walton, Ind., Ohio terminals at Maumee and Morral, and Webberville, Mich.
Western Cornbelt: Granular ammonium sulfate was pegged at a firm $220/st FOB in the region. Honeywell was listed at $220/st FOB and $230/st rail-DEL for granular ammonium sulfate in the Midwest, with mid-grade at $210/st FOB and $220/st rail-DEL.
Ammonium thiosulfate (12-0-0-26) postings from Tessenderlo Kerley firmed on Oct. 2 to $270/st FOB Iowa terminals at Fort Madison and Montrose.
Northern Plains: Granular ammonium sulfate was tagged at $220/st FOB and $225-$230/st DEL in the region. Effective Sept. 27, Honeywell’s warehouse prices for ammonium sulfate FOB Roseport, Minn., moved to $220/st for granular and $210/st for mid-grade. The company’s rail-delivered postings moved to $230/st for granular and $220/st for mid grade in Minnesota.
Northeast: Granular ammonium sulfate had reportedly firmed to $200-$205/st FOB and $220/st DEL in the region.
Eastern Canada: Dealer reference prices for granular ammonium sulfate had firmed to $320/mt FOB in Ontario.
PHOSPHATES
Central Florida: Although producers were working hard loading orders from contract and earlier sales, very little was left for traders to make spot deals out of Central Florida.
Mosaic was negotiating with the Sierra Club and other opponents in an effort to iron out differences over the mining of wetlands in the 10,000-plus acre expansion of its South Fort Meade Mine. If an arrangement is agreed upon and the federal judge approves it, rock will begin flowing from the mine again. No word on any progress was available due to the judge’s confidentiality order imposed on the talks.
Until very lately, the export market was gobbling up inventories from Central Florida; that situation has changed, however, because the export market was paying less than the cost in Central Florida. A recent deal done in Brazil by OCP resulted in an FOB price of about $523/st, which was slightly higher than Central Florida.
CF was still posting a price of $515/st FOB, but had nothing available at that price. Mosaic was not posting a price and had nothing available, either.
Phosphate producers were in the early stages of negotiations with their major sulfur producers last week, but an early settlement appeared unlikely. There was no question that the price for the fourth quarter will go up – only about how much. Best guess was $50/lt or more.
Based on recent sales and posted prices, the Central Florida DAP price range changed from $515-$525/st FOB the previous week to $515-$520/st FOB last week. Prices will probably stall somewhat this week. CF posted a price of $515/st FOB for DAP. Mosaic had no posted prices, but was loading railcars for customers under contract and charging the market rate. PCS was making sales at “competitive prices.” Agrifos was asking $545/st FOB for DAP trucks and $540/st FOB for railcars. It had no MAP available for sale.
U.S. Gulf: Barges on the river were in short supply last week, and if any were in position near a hungry warehouse, it could have brought a premium over the current range. That happened at least once last week.
A trader sold a NOLA DAP barge well above the previous week’s high – $565/st FOB – but the barge was nearby, which added about $10/st FOB to the price.
However, the action last week was at the warehouse and terminal level. Several traders said they were completely empty last week, and they had little hope of being resupplied before the season was over. Prices for DAP at terminals was running between $585/st FOB and $590/st FOB.
“For the first time ever, farmers may have to wait until spring to put P (phosphate) on ground,” one trader said.
Prices for forward NOLA DAP barges were $15-$20/st FOB less than for prompt deals. With the exception of the southern reaches of the Midwest, few areas could use phosphate in November or December.
Corn took a tumble late last week, but recovered somewhat toward the end of the period. Corn for December 2010 was $4.88/bushel. Although that price was somewhat lower, it was still more than enough to refill farmers’ bank accounts.
Based on sales and asking prices last week, the NOLA DAP barge price range held steady at $550-$565/st FOB last week. Prices for NOLA DAP barges will probably not rise – or not much – in the near future, unless it is near the customer’s warehouse. MAP was bringing a premium of about $10/st FOB last week.
Eastern Cornbelt: Terminal outages were becoming more common, particularly for phosphates and potash. One source said Illinois River inventories were virtually tapped out for dry phosphate products in early October.
DAP had reportedly firmed to $595-$605/st FOB regional warehouses, with MAP $15/st higher, where available. 10-34-0 was steady at $440-$460/st FOB in the region.
Western Cornbelt: Sources said warehouse inventories were short nearly everywhere in early October, particularly for phosphates. Several suppliers reported “getting a lot of calls” from buyers well outside of their normal sales territory. “Lucky for us we have a decent supply – at least for a few days,” said one source.
Fall fertilizer movement had also kicked into high gear in the region. “With the current commodity prices, if they hold for the most part and it stays dry, we will have the best fall in a long time,” said one source, adding that his fall tonnage had already eclipsed fall movement in 2009 and 2008 combined.
DAP was pegged at $580-$595/st FOB regional warehouses, with MAP roughly $15/st higher. The low end was reported out of spot river locations, with the upper numbers inland. The 10-34-0 market remained at $430-$440/st FOB in the region, with the low in Nebraska and the upper end quoted in the Iowa market.
Northern Plains: Minnesota sources quoted the DAP market at $585/st FOB the Twin Cities on the low end for limited tons. MAP was reported at $600-$605/st FOB in Minnesota and $615-$620/st FOB Grand Forks, N.D. North Dakota sources pegged the 10-34-0 market at $450-$455/st DEL from Canadian shipping points, up some $20-$25/st from last report.
Northeast: With terminal inventories of dry phosphates all but tapped out in the region, sources quoted rail-delivered prices ranging from $600-$630/st for DAP and MAP tons from Florida last week, depending on the product and location. 10-34-0 pricing had firmed to $425/st FOB terminals in upstate New York.
Eastern Canada: MAP pricing had firmed to $680-$710/mt FOB in the region, up $40-$60/mt from last report, with the upper end reflecting the dealer reference level in Ontario.
U.S. Export: No new sales were made by U.S. producers last week, but OCP was believed to have made a sale into Brazil in a range of $580-$585/mt. The price was promising, but U.S. producers were having a hard time just keeping up with the orders they already had. With low inventories and prices at or below domestic levels, there was no urgency to push for offshore deals.
Based on earlier sales, the export DAP price range last week was $570-$575/mt FOB, which was up from the previous range of a flat $530/mt FOB. Export DAP prices will likely increase on the next sale.
India: The Indian government released the DAP numbers for the current application season. According to the fertilizer ministry, DAP demand is pegged at 5.2 million mt. Domestic production can only cover 1.8 million mt of that demand.
Stockpiles on hand when the season began were only pegged at 500,000 mt.
The government estimates it will have to import 2.8 million mt to ensure proper coverage for the season.
In the April-September period, importers were already ahead of demand with 5.8 million mt of DAP on the books.
Bangladesh: BCIC is seeking to import 15,000 mt of phosphate rock (65.5 percent BPL Min.) on a C&F Chittagong liner terms basis under cash foreign exchange. Offers shall be received up to Nov. 2, and should be valid for up to 30 days from the close of bids.
POTASH
Eastern Cornbelt: Potash remained at $430-$440/st FOB regional warehouses, with rail-delivered postings at the $450/st level in the region.
Western Cornbelt: Potash was tagged at $425-$440/st FOB regional warehouses, with the upper end reflecting producer postings to the dealer. The low end of the range was quoted out of river terminals in southern Missouri.
Northern Plains: Minnesota sources quoted the potash market at $430-$440/st FOB last week, with the low from resellers and the upper end reflecting producer postings. North Dakota sources quoted the potash market at $430-$440/st DEL, based on a $400-$405/st FOB Saskatchewan mine price.
Northeast: Potash spot quotes ranged from $440-$450/st FOB in the region, depending on grade and location, with the low reported in western Pennsylvania and the upper end in the Baltimore market. Delivered potash ranged from $435-$455/st in the region.
Eastern Canada: Potash out of regional warehouses had reportedly firmed to $510-$540/mt FOB, depending on grade and location. One Ontario source pegged the market firmly at $510/mt FOB for red granular and $520/mt FOB for 62 percent white granular potash last week
K-Mag was up some $50-$90/mt from last report at $386-$425/mt FOB, depending on location. No current prices were reported for sulfate of potash (SOP).
India: The Indian government estimates it will need 2.5 million mt of MOP this application season. It is counting on imports to cover the whole amount. The country started the season with only 250,000 mt of MOP on hand.
Imports for the fiscal year so far – April through September – were put at 2.65 million mt. This not only puts the country ahead of its current needs, but also begins to build reserves for the next season.
SULFUR
Tampa: Negotiations for new fourth-quarter molten sulfur prices were moving at the typical snail’s pace, but a settlement in another week or so seemed likely.
Sources said phosphate producers were more likely to push for some kind of guarantee on the amount of sulfur to be delivered in this tight market than they were about the price.
Phosphate producers were more interested in keeping their plants up and running, because the profit on DAP and MAP sales could easily accommodate a higher sulfur price.
Sulfur producers have the ability to send as much as 12,000 mt a day to prill operations if they cannot get the price they want. That was not likely, but would be a devastating blow to the phosphate industry, which normally consumes about 75 percent of the sulfur produced.
China was said to have given up trying to hold the price of sulfur to $150/mt DEL and was doing deals at $165/mt DEL. Prices from the Middle East to India were in the $170-$190/mt DEL.
At least four refineries in the Midwest were down last week on turnarounds, and Canada had nothing extra to ship south. Industrial customers of the sulfur industry were also seeking additional supplies of sulfur.
Refineries in the U.S. were operating at 85.8 percent, which was up from the previous week’s 83.1 percent. No transportation issues were found last week.
MARKET NOTES
India: MMTC is bullish about the prospects of a surge in the import of fertilizers, intermediates, and raw materials in the coming years, and is increasing its fertilizers business in the current financial year accordingly. In its annual report for 2009-10, the company points out that the gap between the demand for fertilizers and indigenous production is increasing, thereby resulting in a rise in imports. Moreover, the county is largely dependent on imported raw materials and intermediates such as sulfur, rock phosphate, and phosphoric acid. It also meets its entire demand for potash through imports.
