Brazil:
Citing reports of tight availability, SSP prices in Brazil followed the larger phosphate market higher, strengthening to $210-$235/mt CFR from the week-ago $195-$220/mt CFR. Due to a lack of offers, Rondonopolis SSP prices were unchanged from the week-ago $335-$395/mt FOB ex-warehouse.
California:
The 16-20-0 market in California moved up, with new pricing reported at $510/st FOB Lathrop and $517/st FOB Richvale, reflecting a $20/st increase.
Pacific Northwest:
16-20-0 was quoted at $485/st FOB or DEL for new offers in the Pacific Northwest, up $10/st from last report.
Tunisia:
Compagnie des phosphates de Gafsa (CPG) on July 18 completed the loading of 32,500 mt of phosphate rock at the port of Sfax for Turkey, the third cargo shipped to the same Turkish customer since the start of 2023, Tunis Afrique Presse reported, citing CPG Director of Loading Centres Maher Rouached.
CPG did not disclose the name of the customer nor the total tons shipped to date this year. CPG hopes to increase phosphate rock exports to fertilizer manufacturers in Europe and Asia to 400,000 mt by the end of 2023, according to the report.
Tunisia has exported a total of 155,000 mt of phosphate rock since the beginning of 2023, Rouached said, with cargoes delivered to Europe, Asia, and Latin America, compared with 90,000 mt last year.
The country’s phosphate rock exports continue to be constrained by the limited transportation resources from the mines to the ports, according to the report.
Eastern Cornbelt:
July phos acid postings in the Eastern Cornbelt remained at $9.65/unit rail-DEL. A $0.25/unit increase is scheduled for Aug. 1, however, pushing the regional price to $9.90/unit rail-DEL.
Phos acid postings remained at $9.65/unit rail-DEL in the Western Cornbelt for July tons, but new postings at the $9.90/unit rail-DEL level are on tap for August.
California:
July pricing for phos acid remained at $9.75/unit rail-DEL in California, with MGA referenced at $9.95/unit FOB Lathrop. A $0.25/unit increase is scheduled for Aug. 1, with prices moving on that date to $10.00/unit rail-DEL and $10.20/unit FOB Lathrop.
Pacific Northwest: July phos acid pricing was unchanged at $9.25/unit FOB Pocatello, Idaho, and $9.75/unit rail-DEL in the Pacific Northwest. A scheduled $0.25/unit increase on Aug. 1 will push postings to $9.50/unit FOB and $10.00/unit rail-DEL, however.
Eastern Cornbelt:
10-34-0 fill offers were still on the table at the $450/st FOB level in the Ohio market, sources said.
Western Cornbelt:
10-34-0 was steady at $655-$675/st FOB in the Western Cornbelt for the last confirmed prompt business.
California:
10-34-0 pricing for July was steady at $465-$470/st FOB Helm, with an increase to $474-$479/st FOB slated for Aug. 1. 11-37-0 was also scheduled to move up on Aug. 1, to $516-$521/st FOB from the current $506-$511/st FOB El Centro.
Pacific Northwest:
The ammonium polyphosphate market remained at $440/st FOB for 10-34-0 and $475/st FOB for 11-37-0 in the Pacific Northwest. A $10/st increase on Aug. 1 will push prices to $450/st FOB for 10-34-0 and $485/st FOB for 11-37-0, however.
Western Canada:
A summer reset pushed the 10-34-0 market in Western Canada down to C$700-$710/mt DEL for July-August tons, well below the last prompt spring business at the C$945/mt DEL level.
Yara International ASA reported an 83% drop in adjusted EBITDA for the second quarter, to $252 million from the year-ago $1.48 billion, falling far short of analysts’ average estimate of $537.5 million (Bloomberg Consensus).
The plummet in adjusted EBITDA mainly reflected lower margins with lower selling prices, which offset a decline in energy costs and an improved volume and product mix. Revenue was down 39% year-over-year, to $3.94 billion from $6.45 billion, also missing analysts’ average estimate of $4.47 billion.
Total deliveries for the quarter were 1.5% lower than a year earlier, but with an increased share of premium product deliveries, the company reported. Overall fertilizer deliveries were up 1.6%, to 5.88 million mt from 5.79 million mt in last year’s second quarter.
Yara posted a net loss attributable to shareholders of the parent of $300 million for the second quarter versus a net profit of $664 million the previous year. Analysts had estimated net profit would come in at $205.3 million (Bloomberg Consensus). Yara shares slumped as much as 5.8% on the Oslo stock exchange following the earnings release, the biggest drop since June 13.
“Second-quarter results are impacted by the falling price trend we’ve seen so far in 2023, pushing the industry into a low-margin environment,” said Yara International President and CEO Svein Tore Holsether.
The company noted that the steep price declines generated position losses, including new inventory write-downs. Yara said recent price developments suggests stronger demand going forward, however. “The European nitrogen industry saw a recovery of volumes during the second quarter, and season-to-date deliveries were in line with a year-ago,” Holsether said.
“Given supply overhangs from last season, this indicates an increase in application rates this season. For the new season, recent price developments indicate stronger demand and a tighter urea market going forward, despite substantial recent capacity additions,” he continued. “Together with healthy farmer incentives and low producer stocks in Europe, this creates a positive backdrop for nitrate markets. Based on the latest price developments also for phosphate and potash, margin recovery is likely in the third quarter.”
Second-quarter European deliveries were 32% higher year-over-year, to 2.07 million mt from 1.57 million mt. Americas deliveries, however, were 11% lower, to 2.69 million mt from 3.01 million mt, mainly reflecting lower Brazilian deliveries (-23%) and offsetting slightly higher deliveries in North America (+6%) and to Latin America excluding Brazil (+6%).
Yara’s production curtailments were largely discontinued due to stronger order books, leaving second-quarter curtailments of finished fertilizers at 0.4 million mt, 10% of the company’s European capacity, with more than half related to urea. Curtailed finished fertilizers capacity is now down to some 7% of the company’s European capacity, Yara said.
The company said 0.2 million mt of ammonia production (17% of its European capacity) was curtailed during the quarter, and it continued to use its global sourcing and production system to import ammonia.
As of mid-July 2023, Yara had curtailed an annualized capacity of 0.5 million mt of ammonia and 1.2 million mt of finished fertilizers. Yara produced 1.42 million mt of ammonia and just under 4.4 million mt of finished fertilizers in the second quarter, down 16% and 1.5%, respectively, from second quarter 2022.
European natural gas prices are now down about 90% from their August 2022 high, the company said. Based on current forward markets for natural gas as of July 12 and assuming stable gas purchase volumes, Yara sees its gas cost for the third quarter at an estimated $800 million lower than a year ago.
Yara posted a 74% decline in six-month adjusted EBITDA, to $740 million from last year’s $2.82 billion. Six-month revenue was down 34% year-over-year, to $8.10 billion from $12.37 billion. The company made a half-year net profit attributable to shareholders of the parent of $1.61 billion, versus $2.78 billion in the first half of last year.
Bloomberg cited Norne analyst Tomas Skeivys as saying this is the second quarter in a row that Yara posted a major miss to estimates. He noted that earnings have yet to stabilize after last year’s “super profits,” while “uncertainty is very high after major volatility and unpredictability” in recent quarters.
Yara Production and Deliveries (‘000 mt)
| 2Q-2023 | 2Q-2022 | 1H-2023 | 1H-2022 | ||
| Production* | |||||
| Ammonia | 1,418 | 1,688 | 2,799 | 3,411 | |
| Finished fertilizer and industrial products (excluding bulk blends)* | 4,398 | 4,466 | 8,441 | 9,328 | |
| Yara Deliveries | |||||
| Ammonia Trade | 412 | 404 | 828 | 847 | |
| Fertilizer | 5,880 | 5,789 | 10,527 | 11,912 | |
| Industrial Product | 1,642 | 1,862 | 3,141 | 3,663 | |
| Total Deliveries | 7,934 | 8,055 | 14,496 | 16,422 | |
| * Includes Yara’s share of production in equity-accounted investees, excluding Yara-produced blends |
Yara Deliveries (‘000mt)
| Crop Nutrition Deliveries | 2Q-2023 | 2Q-2022 | 1H-2023 | 1H-2022 |
| Urea | 1,284 | 1,317 | 2,332 | 2,695 |
| Nitrate | 1,171 | 871 | 2,137 | 2,232 |
| NPK | 2,050 | 2,050 | 3,805 | 4,134 |
| CN | 446 | 417 | 768 | 836 |
| UAN | 337 | 314 | 522 | 616 |
| DAP/MAP/SSP | 186 | 192 | 252 | 294 |
| MOP/SOP | 159 | 300 | 228 | 512 |
| Other Products | 247 | 329 | 482 | 592 |
| Total Crop Nutrition Deliveries | 5,880 | 5,789 | 10,527 | 11,912 |
| Europe Deliveries | 2,074 | 1,566 | 3,744 | 3,815 |
| Americas Deliveries | 2,687 | 3,014 | 4,688 | 5,810 |
| North America | 884 | 833 | 1,608 | 1,738 |
| Brazil | 1,355 | 1,760 | 2,277 | 3,248 |
| Latin America excluding Brazil | 447 | 421 | 803 | 824 |
| Africa & Asia Deliveries* | 1,119 | 1,209 | 2,095 | 2,287 |
| Asia | 836 | 966 | 1,554 | 1,835 |
| Africa | 283 | 243 | 541 | 452 |
| Industrial Solutions Deliveries | 1,642 | 1,862 | 3,141 | 3,663 |
| *Includes Oceana |
The U.S. District Court for the District of North Dakota has granted a stay in a multistate lawsuit against the Environmental Protection Agency and US Army Corps of Engineers over the Biden Administration’s Waters of the United States (WOTUS) rule, dealing a blow to a coalition of agriculture and industry groups who filed a motion in June asking that the rule be vacated nationwide.
“The court has carefully reviewed the motion and the entire record and finds the federal defendants have demonstrated good cause for the grant of a stay,” U.S. District Judge Daniel Hovland said in the order.
The stay will remain in place, according to the court’s order, until a new final WOTUS rule is published in the Federal Register, which the federal agencies said they intend to do by Sept. 1, 2023. After the Federal Register publication occurs, the court said it will give parties in the case another 21 days to submit proposals for further court proceedings.
The ag and industry coalition had sought a court order to vacate the rule nationwide (GM July 7, p. 1) in the wake of the US Supreme Court’s May 25 ruling in Sacket v. EPA, which limited the agencies’ regulatory authority over wetlands under the Clean Water Act (CWA).
According to the 5-4 Supreme Court decision, the CWA extends only to “wetlands with a continuous surface connection” to water bodies that are already protected as permanent and directly connected to a traditional navigable water (GM May 26, p. 1). The ruling countered the “significant nexus” standard that guided EPA’s latest WOTUS definition, which was published in late December (GM Jan. 6, p. 1) and went into effect on March 20.
Judge Hovland in April issued a temporary injunction blocking the new WOTUS rule in 24 states, however, saying it posed a threat to the states’ sovereign rights and amounted to irreparable harm (GM April 14, p. 1) “The states involved in this litigation will expend unrecoverable resources complying with a rule unlikely to withstand judicial scrutiny,” he said. Injunctions against the rule are currently in effect in Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.
Belarus this week reiterated its plans to export 8 million mt of potash this year, the state-run news agency BelTA reported, citing Belarusian First Deputy Prime Minister Nikolai Snopkov following a meeting with the country’s president on July 18.
Russian Transport Minister Vitaly Savelyev reported in late June that Belarusian potash transshipment through Russian ports could increase to 8.4 million mt this year, up from 3 million mt in 2022, according to an Interfax report (GM June 23, p. 29).
According to Snopkov, as of mid-June more than 4 million mt of Belarusian potash had been transported via Russian ports since the start of 2023. Snopkov said Belarus “prioritizes potash volumes over its price,” and he believes the global potash market “is not yet [at] the price bottom.”
Snopkov told Belarusian media that state-owned potash producer Belaruskali OAO is operating “in the black” and has injected Br600 million (approximately $237 million at current exchange rates) in investments in the first six months of this year.
Belarus was forced to reorient the transshipment of its potash exports after Lithuania’s government in January 2022 terminated the railway transit contract between the country’s state-owned railway company Lietuvos Geležinkeliai’s (LTG) and Belaruskali over national security concerns (GM Jan. 14, 2022).
The Lithuanian government’s decision came in the wake of European Union and US sectoral sanctions on Belarus, which included, among other things, a ban on the trading and transit of potash. Without the Lithuanian rail route, Belaruskali was unable to export potash or NPKs via the Lithuanian port of Klaipėda, effectively blocking the producer’s key export route.
Before the imposition of Western sanctions, Belaruskali and its marketing/export arm, Belarusian Potash Co. (BPC), shipped 10-11 million mt of potash annually through Klaipėda. Since the loss of the Lithuanian rail route, Belarus has been reorienting transshipment of its potash exports via Russian ports, as well as railing increased volumes to China.
Snopkov on July 18 told local media that Belarus transported “almost 6 million mt” of cargo through Russian seaports so far this year, up from 1.5 million mt in the first half of 2022, according to BelTA. Of this year’s total, around 97% of the volume comprised chemical mineral fertilizers, oil, and petroleum products, he said.
Snopkov said work to redirect transshipment of Belarusian potash through seaports in Russia’s northwest and southern regions began in April 2022. Today, he said about 1 million mt of Belarusian products can be transshipped per month. Snopkov said Belarus shipped 2.7 million mt of potash via Saint Petersburg region ports in the first six months of 2023.
Belaruskali signed a contract in June 2022 with St. Petersburg-based operator Keystone Logistics LLC to transship 2 million mt of potash in containers via the Bronka terminal through 2023, according to Bloomberg, citing a Kommersant report (GM June 24, 2022). Belarus in March was reported to be using the Bronka terminal to transship its “main export items” (GM March 3, p. 27).
Belaruskali has also increased its exports to China by rail since sanctions were implemented. Belarus railed more than 1 million mt of potash to China in 2022, according to an Interfax report in January, citing Belarus Transport and Communications Minister Alexey Avramenko (GM Jan. 6, p. 28).
US Gulf/Tampa:
Tampa ammonia for July remained at $285/mt CFR, with the NOLA market at a Tampa-equivalent of $259/st FOB. Sources reported no news on Tampa pricing for August.
Eastern Cornbelt:
A new round of fall prepay prices for ammonia were announced on July 17 at $445-$455/st FOB terminals in Illinois and Indiana, up from the prior week’s $425-$430/st FOB offers, which were reportedly pulled late on July 14. The new prepay prices reflect a $90-$95/st increase from the summer fill prices launched in mid-June at $350-$365/st FOB.
Western Cornbelt:
Prepay ammonia prices edged up to $410-$435/st FOB in the Western Cornbelt, depending on location. The prior week’s prepay offers at $390/st FOB in Nebraska, $410/st FOB in Iowa, and $415/st FOB Palmyra, Mo., were reportedly pulled on July 14.
Southern Plains:
Ammonia fall prepay pricing was quoted at $375-$395/st FOB in the Southern Plains, depending on location, up from the $290-$325/st FOB summer fill level. Sources reported steady ammonia movement in parts of western Kansas on winter wheat ground during the week.
South Central:
The ammonia market was quoted at $260-$325/st FOB in the South Central region, with the lower end reported for truck tons out of Gulf Coast production points. Other prices for the last confirmed offers included $300/st FOB Cherokee, Ala., and $325/st FOB Memphis, Tenn. Sources said no truck prices were being offered at El Dorado, Ark., or Midway, Tenn.
Northwest Europe:
Sources reported spot ammonia tons coming in for BASF at an undisclosed price. Sources estimated prices at $320-$340/mt CFR, however, more than $20/mt above the previously reported contract levels.
Traders said it was unclear whether the tonnage was brought in due to an increase in demand from BASF or because the company had issues with its own production. The situation may become clearer if additional tons are secured in the near future.
EuroChem received shipments into Antwerp from its Russian operations. The ammonia came via a Saint Petersburg facility where product is moved from trucks to a ship anchored in the port, which serves as a floating storage facility. From there the ammonia goes to a vessel for shipment. Sources said three cargoes have been shipped so far using this process, including two to Antwerp and one to Turkey. The system has been operating since June.
While the system allows for Russian ammonia to be shipped, sources said the long loading process does not make it a viable substitute for the loss of Russian access to ammonia terminals in Lithuania and the Black Sea. One trader said it takes about two weeks to load a ship for export.
India:
Trammo was the only company to offer tons in FACT’s latest call for product. While FACT requested prices on two 7,500 mt cargoes, Trammo offered just one cargo at $380/mt CFR. A new call is expected for the second lot.
The price FACT accepted is dramatically higher than where sources think the market should be. At $380/mt CFR, the netback to the Arab Gulf is in the $320-$330/mt FOB range, about $100/mt higher than the region’s last estimated price. Traders said that while FACT did agree to this price, the amount is significantly above what any other market could handle.
Most of the ammonia flowing into India is priced under long-term contracts, which sources estimate at around $295-$310/mt CFR. One trader noted that the contracted tons are shipped in larger quantities than FACT’s 7,500 mt request, and usually require stopping at only one port.
The small quantity requested by FACT typically requires a supplier to combine the order with a second spot buyer in India so that a reasonably sized ship can be secured for the delivery. Sources said finding other buyers on the spot market is difficult, however.
Middle East:
The netback from the recent ammonia sale to FACT/India was put at $320-$330/mt FOB. While sources said this level is too high for any other market, it was the only spot deal to conclude. Most of the tonnage shipping out of the region is sold under long-term contracts, with sources estimating prices closer to $235-$260/mt FOB.
Demand from Southeast Asia has reportedly prevented any possible build-up of surplus product in the Arab Gulf. However, the Pilbara plant in Australia, expected to restart at the end of July, will resume supplying much of Southeast Asia’s needs. At the same time, plants in Indonesia and Malaysia will continue to turn out ammonia for their neighbors.
Once these plants are all shipping product, Southeast Asian orders to suppliers in the Arab Gulf will wane. The resulting cut in demand is expected to quickly produce a surplus of material unless producers drop their pricing ideas, said sources.
South Korea:
Trade Data Monitor reported January-June ammonia imports at 559,000 mt, down 20% from the 697,000 mt imported in first-half 2022.
Second-quarter imports were pegged at 264,000 mt, off from 289,000 mt received in April-June 2022, while June imports of 102,000 mt were up 60% from the year-ago 64,000 mt. Saudi Arabia led June suppliers with 70,000 mt, followed by Indonesia with 22,000 mt.
US Gulf:
NOLA urea moved higher on reports of firming international prices and escalating tensions in Ukraine. July barges were reported at $335-$365/st FOB, up from last week’s $315-$330/st FOB, with loaded barges quoted in the $341-$365/st FOB range for confirmed trades. August tons were reported at $335-$352/st FOB for the week.
Eastern Cornbelt:
Urea strengthened to $395-$420/st FOB in the Eastern Cornbelt in the wake of firming NOLA barge prices, up from the prior week’s $380-$400/st FOB range. Both the high and low were reported at Cincinnati, Ohio, during the week.
Western Cornbelt:
Urea prices firmed slightly to $370-$400/st FOB in the Western Cornbelt, up $10/st from last week, with both the high and low confirmed at St. Louis, Mo.
Southern Plains:
Urea was pegged at $370-$410/st FOB in the Southern Plains, with the low confirmed at Houston, Texas, and the high reported at Catoosa/Inola, Okla., for limited tons. The Catoosa/Inola market was up from last week’s $380-$390/st FOB range.
South Central:
Firming NOLA barge values pushed urea terminal prices to $385-$415/st FOB in the South Central region, up from $350-$400/st the week before. The low was confirmed at Convent, La., with other regional terminals ranging from $390-$415/st FOB, depending on location.
Southeast:
Urea prices tightened to $400-$410/st FOB port terminals in the Southeast, down slightly from the previous $400-$425/st FOB range.
Black Sea:
The price of prilled urea from the area widened during the week. Sources now report the market at $295-$330/mt FOB.
India:
The lack of a tender call this week disappointed many in the industry. Sources now say the tender could be called as late as mid-August.
The Department of Fertilizers (DoF) is reportedly concerned with the rising price of urea. Sources estimate that India will need to take 1.2-1.5 million mt in the upcoming tender. The DoF may be hoping that by delaying the tender for another week or two, sources said, surpluses will build up in the urea market, forcing prices down.
While this strategy worked in the past, the number of potential suppliers for the tender has been reduced. Sources noted that China will not be able to provide large quantities of urea due to delays built into its export approval process, while Russian product is also not readily available for large quantities of exports.
Indonesia is also expected to stay out of the export market well into August, leaving the Arab Gulf as the only large supplier able to support offers into the tender.
South Korea:
January-June urea imports totaled 399,000 mt,according to Trade Data Monitor, a 29% decline from last year’s 561,000 mt. Second-quarter imports were counted at 133,000 mt, off 43% from the year-ago 234,000 mt. Chinese urea accounted for 82,000 mt, while Qatar supplied 38,000 mt.
South Korea received 31,000 mt in June, down slightly from 36,000 mt in June 2022. China dominated the June market, sending 30,000 mt.
Middle East:
No urea spot sales were reported from the region, leaving the price just under $320/mt FOB. The price should be about $10/mt higher, sources said, based on the historical pattern of Arab Gulf and Chinese export urea prices holding roughly even.
With the July 17 shipping deadline from the previous Indian tender now passed, producers are turning attention to their other contracts. Most production is reportedly going into storage, however. These reserves are expected to represent the bulk of offers into the next Indian tender.
At midweek, sources put the Egpyt paper market at $415/mt FOB for August. That price was quickly passed, however, as producers satisfied strong demand from both domestic buyers and European traders.
The week started with Kima selling 10,000 mt at $389/mt FOB, about $10/mt up from the close of the prior week. Abu Qir then came in with a sale at $400/mt FOB, quickly followed by MOPCO, selling 6,000 mt at $411/mt FOB.
Before the end of the week, MOPCO pushed the price further, selling cargoes of 5,000 mt and 3,000 mt at $420/mt FOB. Not to be outdone, Abu Qir added a 7,000 mt granular urea sale at $422/mt FOB, along with a 7,000 mt sale of prilled urea at $400/mt FOB. All of the cargoes were slated for August loading.
Prices may have also received a boost from a government request that producers cut output by about 30% for a short period. The government wishes to divert the natural gas from industrial use to consumer use. Sources speculated that the high temperatures plaguing the Mediterranean are increasing the use of air conditioning, putting a strain on the country’s power grid. Natural gas is needed to help produce enough electricity to avoid brownouts and power failures.
The production cutback is not expected to interfere with the fulfillment of existing sales agreements, producers said. Future deals could be more expensive, however, and for limited tonnage.
China:
Export prices are moving up, sources said. Prilled urea is now pegged at $330-$340/mt FOB, with granular at $340-$350/mt FOB. No one has been able to confirm deals at these levels, however.
One trader noted that a $320/mt FOB bid for a prilled cargo went unanswered. At the same time, reports indicated small lots of granular being sold in containers at $380/mt FOB.
Limited requests for small tonnage from Southeast Asian buyers currently account for the bulk of the market’s business. Traders are hesitant to secure large lots of urea for the upcoming Indian tender until the shipping window is known. Sources said that if the deadline is early, such as end-September, it may be difficult to ensure the tonnage can clear the export approval process in time.
While a shipping deadline of mid- or late October could ease concerns, industry watchers seem convinced the shipping deadline will fall in September.
Brazil:
The urea price continues to move up under steady demand, with sources putting the market at $370-$385/mt CFR, a $20/mt jump from the previous week. Players reported low-cost offers of sanctioned material available in the market, with no takers confirmed so far.
Urea traders expect more price increases to come. Russia’s withdrawal from the Black Sea grain deal could push prices as high as $400/mt CFR, some said. At that level, traders said buyers should be expected to step away, forcing prices back down.
Sellers suspended their price lists this week due to the ever-shifting market. Suppliers tried to push more sales for the Safrinha season but failed to secure any new deals. The stalemate left the Rondonopolis price at $480-$515/mt FOB ex-warehouse. However, sellers may soon make a push for $550/mt FOB ex-warehouse.
Argentina:
January-May urea imports fell 53% year-over-year, Trade Data Monitor reported, to 95,000 mt from 201,000 mt. May imports were reported at 61,000 mt, down from 97,000 mt in May 2022. Nigeria shipped 45,000 mt for the month, while Russia sent 9,400 mt.
