Vancouver—Junior mining company Encanto Potash Corp. said Jan. 4 that it has successfully completed the foundation for an evolutionary offtake agreement with the National Federation of Farmers’ Procurement, Processing, and Retailing Cooperatives of India Ltd. (NACOF). The terms of the offtake agreement are summarized in a memorandum of agreement (MOA) that provides for a minimum supply of 5 million mt/y for a minimum 20-year term, pending final negotiations related to the offtake agreement. NACOF is a national farming cooperative under the Indian Ministry of Agriculture, Government of India, representing farmers in 25 states across India. One of their primary goals is to enter into contracts and collaborate for the purchase, production, manufacture, and marketing of raw materials, finished products, and by-products. NACOF also enters into joint marketing and exchange agreements with Cooperative Institutions and Public Sector Undertakings such as Metal Mineral Trading Co. (MMTC). Encanto said the MOA with NACOF now positions Encanto for the transition of the previously announced memorandum of understanding (MOU) between Encanto and MMTC (GM April 15, 2016) into a commercial marketing and distribution agreement to provide for the sale of an additional minimum of 2 million mt/y of potash, as MMTC was appointed Encanto’s exclusive worldwide potash marketing agent. Under the MMTC MOU, MMTC has the ability to sell potash sourced by Encanto into India or beyond. Encanto is exploring third-party sources as short-term supply under the MMTC MOU until such time as its flagship Muskowekwan project is developed to supply potash under the NACOF MOA and the MMTC MOU.
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CF reports start-up of new Port Neal plants; Iowa Fertilizer says it is 98 percent complete
Two new nitrogen projects reported progress toward the end of 2016. CF Industries Holdings Inc. on Dec. 28 announced that the new ammonia and urea plants at the company’s Port Neal, Iowa, Nitrogen Complex have been successfully commissioned and started-up, marking the completion of the company’s capacity expansion projects. OCI NV’s Iowa Fertilizer Co. said its new nitrogen plant at Wever was 98 percent complete as of Dec. 26.
CF said the ammonia plant, which began production in late November, has operated at approximately its nameplate capacity of 2,425 st/d as of Dec. 28. It said at the time that while the back end of the plant (ammonia synthesis) was taken offline to replace a gasket, it was expected to resume production shortly. CF said the front end of the ammonia plant continued to operate and produce carbon dioxide, which is used to feed the new urea plant.
CF said the urea plant, which was commissioned earlier in December, produced granular urea on specification. However, as of Dec. 28, the urea plant was also offline to replace a relief valve and was expected to resume production shortly.
“CF’s capacity expansion projects are complete,” said Tony Will, CF president and CEO. “With projected returns significantly above our cost of capital, we have built the foundation for CF’s growth and greatly increased our cash generation capability.”
Total annual gross ammonia capacity at Port Neal is now 1.2 million st, up from 380,000 st previously. Output from the new ammonia capacity will largely be upgraded to urea. Total annual urea capacity at Port Neal is now 1.4 million st, up from 50,000 st previously. Total annual UAN capacity remains largely unchanged at 800,000 st.
In the meantime, Iowa Fertilizer told the local community Dec. 26 that ammonia plant startup activities began during the last days of 2016, and to expect steam releases, lighting, and natural gas flares as these activities will take place at the plant over the next several weeks and are standard steps in the startup process. The company also announced that it has completed a $10 million road project to access the plant, the startup of the boilers, and air blows of pipe and other equipment. Once production begins, Iowa Fertilizer will produce 1.5-2 million mt/y of nitrogen products.
Neither CF nor Iowa Fertilizer responded to New Year inquiries as to updates on their production.
Despite the progress at the two plants, most industry watchers said the news and production are coming too late to fully meet the needs for the 2017 spring season, especially in light of a 1.2 million st fertilizer year-to-date lag in urea imports. Most last week were predicting firmer urea and UAN prices in the near term.
There has been much speculation on what will happen to nitrogen prices once a new entrant – Iowa Fertilizer – joins the market. When the plant was seeking approval in the state, farmers were promised that it would bring lower fertilizer prices, and some have predicted that will be the case. However, sources reported that to date, the ammonia prepay product the company has offered into the market so far has not been at “market buster” prices. “They have a new plant to pay for and I doubt they’ll go rogue,” said one source last week. “It will be interesting to see how all this pans out.”
Canpotex approves new methodology; Rocanville to be first to benefit
The Canpotex board of directors reported Jan. 4 that it has approved a new methodology for determining the amount of increased productive capacity resulting from such completed major mine expansions as its producers may independently decide to undertake. The aggregate productive capacities of Canpotex producers are used in determining their respective export sales entitlements through Canpotex.
Until now, Canpotex producers have had to demonstrate increases in productive capacity of existing mines from completed major mine expansions through an independently audited sustained production run of 90 operating days, scheduled at the producer’s discretion.
The new methodology will instead rely on an independent engineering firm and approved protocols to calculate productive capacity. Audit protocols employed by the independent engineer will consider historical data and designed increases tested against a set of detailed parameters. Both conventional and solution mine audit protocols will also include a short 10- to 14-day production run scheduled at the producer’s discretion to validate audit results.
Although the new audit procedures are intended to replace the need for a more sustained production run to determine increased productive capacity resulting from a completed major mine expansion, the organization said a Canpotex producer that is dissatisfied with the engineering audit results will still be able to thereafter elect to revert to the audited 90-day run procedure and have those operating results used to calculate the increased productive capacity of its mine resulting from the major mine expansion.
The new procedures also will not apply to such major mine expansions that have previously completed a 90-day production run to demonstrate the mine’s increased productive capacity, or which may be in the process of conducting a 90-day production run.
Potash Corp. of Saskatchewan Inc. said last week that its Rocanville mine will be the first Saskatchewan mine to use the methodology. It said the new process is anticipated to reduce costs and improve efficiencies, and is expected to be applied in first-half 2017. The corresponding change in sales entitlement is anticipated to take effect July 1, 2017.
PotashCorp’s current share of Canpotex shipments is 51.6 percent. The company told Green Markets last week that it could not speculate on where its share would be after Rocanville is included, as those calculations have not yet been done. The Mosaic Co.’s Canpotex share is 38.1 percent, while Agrium Inc.’s is 10.3 percent.
Ammonium Sulfate
U.S. Gulf: Price ideas for ammonium sulfate barges were generally up, with sources now calling the market in the $175-$180/st FOB range.
Eastern Cornbelt: The ammonium sulfate market was firming in the Eastern Cornbelt, although sources continued to report a sizable gap between imports and domestic product.
The low end of the regional range was reported at $213/st FOB Cincinnati for imported tons, but domestic product was reported at the $240/st FOB mark at that location. Pricing out of Burns Harbor, Ind., was quoted at $235/st FOB for prompt and $240/st FOB for prepay, with another increase reportedly on the horizon.
AdvanSix’s postings for granular ammonium sulfate moved on Dec. 23 to $240/st FOB Illinois terminals at Byron, East Dubuque, and Granite City, with pricing out of Danville, Ill., moving to the $250/st FOB level. The company’s mid-grade postings included $210/st FOB Byron and $215/st FOB Danville.
Ammonium thiosulfate was pegged at $275-$290/st FOB in the Eastern Cornbelt, depending on location and time of delivery, with the upper end quoted for spring prepay
Western Cornbelt: Granular ammonium sulfate was pegged in a broad range at $220-$255/st FOB in the Western Cornbelt, depending on location, with the upper end reflecting the Dec. 23 list price from AdvanSix FOB Sioux City, Iowa.
Sources pegged the St. Louis ammonium sulfate market at $220/st FOB for prompt and $225/st FOB for prepay, while Iowa sources quoted the river terminal market commonly at the $240/st FOB level for fill tons in early January.
The ammonium thiosulfate market was quoted at $265-$275/st FOB in the region.
Northern Plains: Sources reported the last offers for prepay ammonium sulfate tons in the $240-$245/st DEL range in the Northern Plains, but at least one supplier was reportedly sold out through spring. The market FOB Minneapolis remained at the $235/st FOB level at the low end. AdvanSix reposted granular ammonium sulfate on Dec. 23 at $240/st FOB Roseport, Minn., with mid-grade referenced at the $210/st FOB level at that location.
Sources reported a very broad range of pricing for ammonium thiosulfate in the Northern Plains. The dealer market was quoted as high as $325/st FOB in Minnesota, but North Dakota sources said fill ton offers were available for as low as $230/st FOB and $245/st DEL in early January.
Great Lakes: Granular ammonium sulfate pricing out of Michigan terminals was pegged at $255/st FOB for prompt and $260/st FOB for prepay. In the Wisconsin market, AdvanSix’s postings for granular ammonium sulfate moved on Dec. 23 to $250/st FOB Amherst Junction and $240/st FOB Prairie du Chien.
Ammonium thiosulfate pricing was actually down from last report, with sources quoting the regional market at $275-$295/st FOB for take or prepay, depending on location.
Northeast: The granular ammonium sulfate market was reported at $225-$250/st FOB in the Northeast, depending on location, with the upper end quoted at East Liverpool. Delivered tons were tagged in the $250-$260/st range in the region.
Ammonia
U.S. Gulf/Tampa: While nothing new was reported in the Tampa market since it moved up $25/mt just before Christmas to $250/mt, a NOLA barge trade was reported to have occurred in the meantime at $257/st FOB, up from the previous $245/st FOB.
January NYMEX natural gas price rolled off the board at a high of $3.930/mmBtu. By Jan. 5, however, February was not following that trend, and was back down at $3.273/mmBtu.
Eastern Cornbelt: The big news on the fertilizer pricing front in the Eastern Cornbelt was the release of updated spring prepay prices for ammonia and UAN, which reportedly prompted a lot of phone calls as the week progressed.
Early in the week, several sources reported limited offers for ammonia prepay at the $390-$410/st FOB level in the region, depending on location, with the lower numbers reported out of Lima, Ohio. Ammonia prepay prices ratcheted up from there, however.
By Jan. 5, the bulk of spring prepay programs for ammonia were reported in the $415-$425/st FOB range in the Illinois market, although sources were quick to note that no sales had been concluded at those new levels. Sources were in agreement, however, that the aggressive fill tons offered by some suppliers in December in the low- to mid-$300/st FOB were now completely sold out and no longer available.
Western Cornbelt: Sources quoted spring prepay ammonia at $360/st FOB in western Iowa, $385/st FOB Fort Dodge, Iowa, and up to $400/st FOB Washington, Iowa, but, as one source put it, “people are not buying at that value.” Fill tons offers at much lower levels had reportedly been cleaned up by the first of the year, but prepay ammonia in the Nebraska market continued to be pegged at the $350/st FOB level, give or take.
“There are lots of unknowns at this time with Wever and Port Neal starting up,” said one regional contact. “Will they build enough inventory by spring to impact the supply/demand equation?” Sources noted that a few spring prepay tons have been offered out of Wever, but at similar or slightly lower levels to other suppliers in the Eastern Iowa market.
Northern Plains: Sources reported “limited” spring prepay offers for ammonia available at $390-$395/st DEL in North Dakota and at the $365/st FOB level out of Minnesota terminals, although several regional suppliers had withdrawn their spring pricing offers for the moment.
There were reports as well of prompt fill tons still being offered for as low as $325/st DEL in North Dakota and $300/st FOB in Minnesota.
Great Lakes: The anhydrous ammonia market was quoted at $390-$410/st FOB in the Great Lakes region for take or prepay, with the low quoted by Wisconsin sources from only “one supplier” as others remained out of the market following some brisk December fill business. The upper end of the regional market was reported by Michigan sources for new sales FOB Huntington, Ind. Sources said no quotes were being offered for new ammonia sales FOB Courtright, Ont.
Black Sea: Sources said there is no sign of a prompt restart of OPZ, which went down in late December. This shutdown has tightened the market, moving up prices. Sources now peg the market at $250-$260/mt FOB, with the emphasis on the higher end of the range. A deal for 6,000 mt to Turkey at $280-$290/mt CFR confirms those levels for a netback in Yuzhnyy.
Ukraine’s government continues to look for ways to get some money back from OPZ after two attempts to sell the facility. Now, sources are reporting the government is looking for someone to lease the production operations rather than buy them. So far, there are still no takers.
Middle East: Arab producers continue to claim the price is $240-$250/mt FOB. A sale from Saudi Arabia to OCP appears to have a netback that justifies this price. The tightness in the market is expected to keep moving up the price, however.
India: Buyers are facing a tighter market. One trader noted that the current Arab Gulf price range of $240-$250/mt CFR is expected to hit Indians with a price closer to $290/mt CFR. While some cargo is being purchased about $10/mt lower right now, sources said that lower-priced product will soon disappear in favor of the higher rates.
Ammonium Nitrate
U.S. Gulf: Sources were now calling ammonium nitrate barges $180-$190/st FOB, with domestic product reportedly being quoted now at $200/st FOB.
Western Cornbelt: Ammonium nitrate remained at a nominal $245-$255/st FOB in the Western Cornbelt.
Ma’aden eyes another plant
Riyadh—Saudi Arabian Mining Co. (Ma’aden) has announced that it is developing its third project for the manufacture of phosphate fertilizers. The project is expected to be implemented in phases and eventually will add a further 3 million mt/y of production capacity. Costs are currently estimated approximately at 24 billion Saudi Riyals, and full capacity could be reached in 2024. This project is subject to the completion of feasibility studies and necessary consents. The company said further information will be released in due course. Ma’aden’s existing two plants each have a capacity of approximately 3 million mt/y. Neither Ma’aden or The Mosaic Co. responded to inquiries as to the ownership stakes in the proposed plant. Mosaic has a 25 percent stake in Ma’aden’s second plant, Ma’aden Wa’ad Shamal Phosphate Co. (GM Aug. 12, 2013).
Pryor NH3 back online, urea not
Oklahoma City—LSB Industries Inc. said Oct. 19 that its Pryor, Okla., ammonia plant resumed production Oct. 8. The company had announced Oct. 5 (GM Oct. 7, p. 15) that the plant was down, as a scheduled turnaround had been extended to perform additional work on both the ammonia and urea plants in order to increase their reliability going forward. It earlier said the plant was expected back up by Oct. 10. LSB expects Pryor’s urea plant to return to service by Nov. 1, which will enable the facility to resume production of UAN. On Oct. 5, LSB had expected the urea plant to be back up by Oct. 15, however, it said the delay was a result of the inspection process by the welding contractor’s Authorized Inspector (AI), which is responsible for ensuring that work on pressure vessels meets federal and state codes. In addition to addressing the increased scope of work dictated by the AI related to corrosion in the urea plant’s pressure vessel and liner, LSB has elected to implement design changes to the vessel’s liner in order to minimize future corrosion and related downtime. LSB expects the additional downtime related to this work on Pryor’s urea plant to have little to no impact on LSB’s fourth quarter 2016 EBITDA above what was disclosed Oct. 5.
New ammonia plant complete
Australia’s Incitec Pivot Ltd. has announced the completion of performance testing and handover of the Waggaman, La., anhydrous ammonia plant. IPL will take over management and operation of the plant Oct. 19. The company said the project remains within the original budget of U.S. $850 million.
IPL said the plant is expected to operate at an average of around 80 percent of capacity over
the coming 12 months as it ramps up to full annual production rates. Nameplate capacity is
of 800,000 metric mt/y. It is located at the existing Cornerstone Chemical Co. complex.
Ammonia from the facility will go to IPL’s Dyno Nobel subsidiary, Cornerstone and Trammo Inc.
Sulfur
Tampa: Sources reported a slow domestic sulfur market heading into next week’s TFI World Fertilizer Conference in San Diego.
Few surprises were expected in the lead-up to fourth-quarter Tampa negotiations. Most market players expected a rollover or small increase from the current $65/lt DEL contract, but differed on which factors might carry the most weight in the upcoming talks. The domestic market’s overall supply landscape, Mosaic’s solid sulfur melter, the U.S. Gulf export price, and the strength of the Chinese and Middle Eastern markets were all touted as potentially important in determining Tampa values.
The second- and third-quarter 2016 negotiations prioritized the U.S. Gulf price over international market strength, some argued, while other recent quarters often looked toward the Eastern markets for guidance.
The changing domestic supply landscape remained a hot topic of conversation as well, with Canadian producers now said to be offering more tons offshore via Vancouver than to U.S. buyers tied to the Tampa index.
Other sources, however, minimized the effect of supply on negotiations. “Not sure why supply/demand would affect pricing (now),” said one trader. “It hasn’t for some time.”
“The Tampa price is now more influenced by the U.S. Gulf price and the price Mosaic can import cargoes to Tampa for their melter,” added another supplier.
Others looked to the world’s largest sulfur buyer for direction. “China will ripple to all the markets,” commented one observer.
The third-quarter contract price of molten sulfur delivered to Tampa was $65/lt.
U.S. refinery utilization fell for a second consecutive week, according to data from the Energy Information Administration (EIA). Refiners operated at 92.0 percent capacity for the week ending Sept. 16, a 0.9 percent decline from the prior week’s 92.9 percent, but ahead of both the year-ago 90.9 percent and the 90.8 percent five-year average.
Daily crude inputs also fell, EIA data revealed. Average daily crude inputs were calculated at 16.587 million barrels/d, a 143,000 barrel/d drop from the last reported 16.730 million barrels/d.
U.S. Gulf: Valero Energy Corp. ratcheted up unit shutdowns as part of a planned turnaround at its 335,000 barrel/d Port Arthur, Texas, refinery last week, sources said.
The plant’s 268,000 barrel/d crude distillation unit was shuttered for four weeks starting Sept. 19, and a 100,000 barrel/d coking unit powered down on the same day and is slated to remain offline throughout October.
Sulfur sold from the U.S. Gulf was quoted at $60/mt FOB in recent trading, unmoved from the prior week.
Vancouver: Vancouver market traders continued to call offshore spot business at $65-$70/mt FOB based on sales to Mexico and Australia. Short-term contract rates kept pace with spot at $65-$70/mt FOB.
The Chinese market was steady at $81-$82/mt CFR despite rumored firming, sources said. Recent port inventories were calculated at 1.8-1.9 million mt.
Alberta producers saw netbacks of (-)$55-$20/mt FOB.
West Coast: A wide-ranging Southern California power outage shut down the PBF Energy Inc. refinery at Torrance, Calif., on Sept. 19, according to local reports.
The outage triggered early-morning flaring followed by an unplanned production stoppage, and a full restart of the 155,000 barrel/d facility is expected to require “multiple days,” sources said. A February 2015 explosion at the refinery forced production down to approximately 20 percent capacity for the following year.
The West Coast prill market was called flat at $60-$65/mt FOB. Sources noted third-quarter molten contracts in the $50-$75/lt FOB range.
ADNOC: ADNOC formed sulfur was quoted at $77/mt FOB Ruwais for the month of September, $7/mt above the $70/mt FOB August price.
Aramco: Saudi Aramco cargoes for September loading were quoted at $74/mt FOB Jubail. The August price was $66/mt FOB, $8/mt below current levels.
Tasweeq: The September official selling price from Qatar’s state-owned Tasweeq was $74/mt FOB Ras Laffan, a $9/mt increase from $65/mt FOB in August.