All posts by dhouder1@bloomberg.net

K+S Cuts EBITDA Estimate on Brazil Price Effects

Earnings, Germany, News, Potash

K+S Group on July 24 cut its EBITDA guidance again for full-year 2023. It now sees EBITDA at €600-€800 million, versus projections in excess of €800 million in June (GM June 16, p. 25), largely due to potassium chloride price effects in the second quarter, particularly in the Brazilian market.

The latest guidance missed the average analyst estimate of €876.2 million (Bloomberg Consensus). In June, K+S cut its full-year EBITDA guidance from its May forecast of €1.15-€1.35 billion due to depressed potash prices (GM May 12, p. 27).

In addition, K+S now sees adjusted free cash flow at €300-€450 million, down from the previous estimate of €650-€850 million. The group sees preliminary EBITDA for the second quarter at about €24 million due to price effects, which it noted underperforms market expectations.

“In the second quarter, the potassium chloride selling price in the Brazilian market faced a more significant drop than previously expected,” K+S said. “The price recovery, which is currently observed, has also started later than assumed.” For the rest of the year as a whole, the company said it will not be possible to compensate for the EBITDA shortfall of the second quarter.

K+S added that sales-related optimization of the product portfolio will have an impact on production volumes. Furthermore, as a result of the port strike in Canada, the group said negative effects from the still ongoing normalization of supply chains cannot be ruled out.

K+S believes that if the current positive demand impetus and price trends continue for the rest of the year, it would still be possible to achieve the market expectation of about €800 million at the upper end of the guidance range. At the same time, however, K+S warned that a renewed reluctance to buy in key sales regions could lead to negative volume and price effects, in which case full-year EBITDA would be at the lower end of the range at about €600 million.

K+S will publish its second-quarter earnings on Aug. 10.

Water Group Petitions EPA on New WOTUS Rule

News, News Briefs, U.S.

A coalition of 45 agriculture and industry trade groups, including The Fertilizer Institute (TFI), on July 24 sent a letter to the US Environmental Protection Agency (EPA) and Army Corps of Engineers demanding that the agencies include specific language in their rewrite of the Waters of the United States (WOTUS) rule, which is expected to be published on Sept. 1, 2023.

EPA and the Corps are planning to rewrite WOTUS in response to the US Supreme Court’s May 25 ruling in Sacket v. EPA (GM May 26, p. 1), which limited the agencies’ regulatory authority over wetlands under the Clean Water Act (CWA). The ruling countered the “significant nexus” standard that guided EPA’s latest WOTUS definition, which was published in late December (GM Jan. 6, 2023) and went into effect on March 20.

In its letter, the Waters Advocacy Coalition argued that the agencies’ “truncated” timeline for the new rule indicates that public comments will likely not be solicited and the agencies will instead simply strike the “significant nexus” language and the rule’s definition of “adjacent” waters, steps that the coalition said would not be a “defensible response to Sackett or an appropriate approach to this rulemaking.”

The letter further states that the agencies must adhere to the “core holdings” in Sackett as they complete the WOTUS rewrite, including eliminating the standalone interstate waters and interstate wetlands category; adopting an interpretation of “relatively permanent, standing, or continuously flowing bodies of water” that is consistent with Supreme Court precedent; excluding ditches; clarifying the rule’s definition of “adjacent” to clarify that wetlands are jurisdictional only when they are indistinguishably part of another WOTUS; and retaining the rule’s codified exclusions.

The coalition also urged the agencies to maintain that administrative jurisdictional decisions (AJDs) made under the Navigable Waters Protection Rule (NWPR), the Trump Administration’s version of the WOTUS rule, remain valid and cannot be reexamined retroactively.

A series of meetings to discuss amendments to the WOTUS rule are scheduled in the coming days between the Office of Management and Budget (OMB) and interested parties, including the Waters Advocacy Coalition, the American Road and Transport Builders Association, the Responsible Industry for a Sound Environment, the National Mining Association, Edison Electric Institute, the National Association of Homebuilders, the National Stone and Gravel Association, and the American Farm Bureau Federation.

BHP Reports Jansen Stage 1 26% Complete

Canada, News, News Briefs, Potash

BHP Ltd. reported that its Jansen potash project, under development 140 kilometers east of Saskatoon, Sask., is “tracking to the accelerated plan” with first production still targeted for the end of the 2026 calendar year.

All piling activities for the processing mill and storage facilities were completed in the quarter ended June 30, BHP said in its operational review for the year ended June 30, 2023.

BHP said Stage 1 of Jansen is now 26% complete, up from 20% at the end of the quarter ended March 31, 2023 (GM April 28, p. 30). Once fully operational, Stage 1 will have capacity to produce 4.35 million mt/y of potassium chloride.

During FY2024, BHP plans to transition from civil works at Jansen into steel and equipment installation on the surface and underground, as well as continuing with equipment procurement. It said port construction will continue. BHP is investing a total of US$5.723 billion in the Jansen Stage 1 project.

BHP said the feasibility study for Jansen Stage 2 continues to progress and is on track to be completed during FY2024. The company in February announced that it had accelerated the Stage 2 feasibility study (GM Feb. 24, p. 1), a year earlier than previously expected (GM Sept. 9, 2022). Stage 2 could add another 4 million mt/y of capacity.

Russia to Honor Grain, Fert Commitments to Africa

Africa, News, News Briefs, Russia

Russia will continue honoring its commitment to supply grain and fertilizers to African countries after the termination of the Black Sea Grain Deal, the Russian state news agency TASS reported, citing Valentina Matviyenko, the speaker of the Federation Council, the upper chamber of the Russian legislative assembly.

Moscow announced on July 17 that it had terminated Russia’s participation in the agreement, further heightening uncertainty over global food supplies (GM July 21, p. 1).

Russia “will perform its obligations, and we have the tools and abilities to do so, and will supply grain and fertilizers, including on a commercial and on a free-of-charge basis, to African countries acutely needing them,” Matviyenko said at a July 25 press conference.

PhosAgro to Increase Exports to Africa in 2023

Africa, News, News Briefs, Russia

PJSC PhosAgro plans to increase fertilizer exports to Africa by 15-20% this year, according to reports by Interfax and TASS, citing Mikhail Sterkin, PhosAgro’s Deputy CEO for Sales, Marketing, and Logistics.

The group accounted for 540,000 mt of the 1.6 million mt of fertilizer that Russia exported to Africa in 2022, Sterkin said. In the next five years, he said PhosAgro intends to increase exports to Africa to 1 million mt, noting that most popular types of fertilizer in Africa are ammonium nitrate, urea, MAP, and NPK fertilizer.

PhosAgro said it currently exports fertilizer to 21 countries in Africa and it plans to expand the geography. The company’s largest markets in the region are South Africa, Senegal, Ivory Coast, Mozambique, and Tanzania.

Ameropa Completes Refinancing of RCF in Romania

Eastern Europe, News, News Briefs

Swiss-based Ameropa AG said it has completed the full refinancing of its main Revolving Credit Facility (RCF) in Romania for the amount of €542 million (approximately $600 million at current exchange rates). Ameropa said the new RCF is supported by nine banks, adding five new banks to the facility.

The RCF is a substantial increase on the prior facility of €347 million, and will support the ongoing working capital needs of Ameropa-owned fertilizer companies in Romania, including Azomureş SA, which is the country’s biggest fertilizer producer, and Chimpex SA, as well as at Constanța-based Ameropa Grains, Ameropa said in a July 21 statement.

SABIC Ships Low-Carbon Urea to New Zealand

Green Urea, News, News Briefs, Saudi Arabia, Urea

Riyadh-based SABIC Agri-Nutrients Co. Ltd. has completed its first-ever global shipment of low-carbon urea to New Zealand. The company said the 2,700 mt consignment of urea arrived in Timaru on New Zealand’s South Island on July 21 for fertilizer cooperative Ravensdown.

SABIC Agri-Nutrients, which is 50.1% owned by Saudi Basic Industries Corp., said in a statement that it has partnered with New Zealand as part of its strategy to be the world’s leading clean hydrogen hub. SABIC has already delivered shipments of low-carbon ammonia to several markets such as Japan, South Korea, India, and Taiwan (GM June 9, p. 28).

“The collaboration with SABIC Agri-Nutrients is key to ensuring we meet our commitment to reduce carbon emissions by 50% by 2023,” Ravensdown CEO Garry Diack said.

Iraq to Double DAP Production Capacity

DAP/MAP, Middle East, News, News Briefs, Phosphate Rock

UK-based AAA Holding Group Ltd. (AHG) is doubling DAP production capacity at the Southern Fertilizer Complex in Khor al Zubair in Iraq’s southern Basra governorate.

The new unit is already under construction and will expand DAP capacity at the plant from the current 500,000 mt/y to 1 million mt/y, according to AHG CEO Amet Selman. The plant produced Iraq’s first DAP in July last year. The three existing lines have a total capacity of 1,500 mt/d, or some 500,000 mt/y.

The new unit is targeted to be completed by the end of September this year. The additional output, as is the existing output, will be bought by Iraq’s Ministry of Agriculture under contract, according to Selman.

Phosphate rock feedstock for the plant is supplied from domestic deposits in the west of the country, where, according to local media reports, there are plans for “major investments” in phosphate mining.

DAP/MAP

Brazil, California, Central Florida, China, DAP/MAP, Eastern Cornbelt, India, Market Watch, Pacific N.W., U.S. Exports, U.S. Gulf, Western Canada, Western Cornbelt

Central Florida:

DAP trucks loading from Central Florida were posted at $500/st FOB, $30/st above the prior level. MAP trucks were offered at $550/st FOB, increasing $50/st from one week earlier. North Florida MAP postings continued at $600/st FOB, sources said.

US Gulf:

Sources noted NOLA DAP trades in the $470-$500/st FOB range, increasing from last week’s $445-$470/st FOB. Short-covering by MAP buyers was reported pressuring the NOLA market to $535-$585/st FOB, up from the week-ago $480-$530/st FOB.

US Exports:

Export prices remained at $470/mt FOB on reports of limited third-quarter availability.

Eastern Cornbelt:

Surging NOLA barge values pushed the DAP market to $540-$550/st FOB in the Eastern Cornbelt, up another $20/st from last week, with the high reported at Cincinnati. Some suppliers reportedly pulled terminal pricing until the market settles.

MAP jumped to $595-$625/st FOB in the region, up $45-$55/st from the prior week, with the high confirmed at Cincinnati. “It seems everyone is talking about extreme tightness in MAP this fall,” commented one regional source.

In the Northeast, new levels FOB East Liverpool, Ohio, included $610/st for DAP and $645/st for MAP.

Western Cornbelt:

DAP pricing firmed to $540-$560/st FOB in the Western Cornbelt, up sharply from last week’s $495-$525/st FOB range, with the St. Louis market pegged at $540-$555/st FOB during the week.

MAP moved to $590-$630/st FOB for new offers in the region, up some $65-$70/st from the previous week. Both the high and low were reported at St. Louis over the course of the week, with the upper numbers confirmed late on July 27.

In the Southern Plains, DAP and MAP pricing at Catoosa/Inola reportedly jumped to as high as $560/st FOB and $640/st FOB, respectively.

California:

After firming to $640/st last week from an earlier low of $625/st, MAP prices moved up again in California, climbing to $690-$710/st FOB or DEL during the week.

Pacific Northwest:

MAP jumped to $670-$680/st FOB or DEL in the Pacific Northwest in late July, up from last week’s $620-$630/st range and a low of $600-$610/st earlier in the month.

Western Canada:

MAP pricing in Western Canada strengthened to C$845-$895/mt FOB and C$890-$900/mt DEL for August-September offers, up from the prior C$815-$830/mt FOB and C$810-$825/mt rail-DEL levels.

“It’s been a tough week for price discovery, with most pulling offers end of last week when NOLA moved up aggressively,” reported one contact.

China:

Producers are now offering DAP at $470/mt FOB with no takers, a large jump from the last business reported in the $420s/mt FOB. Producers were reportedly halting talks with traders unless discussions started at the $470/mt FOB level.

DAP exports were up 86% in the first half of 2023, according to Trade Data Monitor, lifting to2.4 million mt from the year-ago 1.3 million mt. India took 1.6 million mt, followed by Japan with 149,000 mt.

China exported 929,000 mt of DAP in June, leaping from 197,000 mt in June 2022. Second-quarter sales also firmed significantly from the previous year, to 1.8 million mt from the 555,000 mt reported in April-June 2022.

MAP exports were more subdued in the first half of the year, falling 1% to 927,000 mt from the prior year’s 940,000 mt. Brazil received 318,000 mt, while Australia bought 132,000 mt. June exports were 49,000 mt, off from the year-ago 317,000 mt, while second-quarter sales dipped to 393,000 mt, down from the 738,000 mt logged in April-June 2022.

India: 

Buyer efforts to push down Chinese DAP prices hit a brick wall, as producers announced a major leap in pricing rather than accepting lower bids. No new spot business was concluded into India, leaving prices in the low-$430s/mt CFR.

Brazil

MAP climbed to $480-$490/mt CFR, up from $470-$475/mt CFR at last report. A limited amount of Russian tonnage was reportedly priced at the top of the range, while offers for material of North African origin set the low. Players expect the next round of discussions to lift above the $500/mt CFR mark.

MAP prices at Rondonopolis continued to strengthen on low availability, firming to $605-$650/mt FOB ex-warehouse. Sources reported shortages in meeting the final needs of the 2023-2024 crop.

TSP

Brazil, Eastern Cornbelt, Market Watch, Triple Superphosphate, U.S. Gulf, Western Cornbelt

US Gulf:

NOLA TSP trades were reported in a wide $400-$443/st FOB range, an increase from the prior $380-$385/st FOB range.

Eastern Cornbelt:

TSP firmed to $485/st FOB Cincinnati, up $5-$10/st from last report.

Western Cornbelt:

TSP pricing was steady at $450-$460/st FOB St. Louis.

Brazil:

TSP prices in Brazil rose to $385-$395/mt CFR. Players reported strong demand from the northern and southern regions of Brazil, even with product loading later in the season than usual. Limited TSP offers at Rondonopolis were indicated at $510-$530/mt FOB ex-warehouse.