All posts by hlancey@bloomberg.net

Iraq Reopens Two Fertilizer Plants

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

Iraq has reopened two newly refurbished fertilizer plants in Basra, southern Iraq, according to an Iraq Business report. The official reopening was performed by the country’s Prime Minister, Mohammed Shia’ Al Sudani, on March 9.

The two production facilities, one for DAP and the other for urea, have been out of operation since the US-led invasion of Iraq in 2003. Following the refurbishment work, the urea facility has production capacity for 1,000 mt/d while the DAP plant has capacity for 500,000 mt/y, according to the report. According to the company, production capacity will be ultimately expanded to 1 million mt/y of DAP.

Both plants are managed by the General Company for Southern Fertilizers, which is part of the Ministry of Industry and Minerals.

Two international companies carried out the revamp work. British-Iraqi company AAA Holding Group was contracted to undertake the work on the DAP plant (GM July 28, 2023). The report did not identify the company that undertook the revamp of the urea facility.

Shia’ Al Sudani, as cited by the report, said the output of the new plants will be sufficient to meet the demand of local farmers and will eliminate the need for imports. The new fertilizer supply marks a critical step towards enhancing the support for Iraq’s agricultural sector, which is pivotal for the country’s sustainability and food security, he said.

Phosphate rock feedstock for the DAP plant is reportedly being supplied from domestic deposits in the west of Iraq. The country has the world’s second-largest phosphate reserves, according to Iraqi Geological Survey Commission data posted on the organization’s website.

Last month, Iraq was reported to be planning to renew its request for bids from both local and international companies to build a phosphate plant in the western part of the country in a project estimated to be valued at $3 billion, according to Bloomberg (GM Feb. 23, p. 33).

Highfield Awards Construction Contract

News Briefs, Potash

Junior potash miner Highfield Resources announced on March 12 that it has awarded the contract for the construction of the declines and underground mining infrastructure at the Muga-Vipasca Potash Project (Muga) to the joint venture formed by mining specialist contractors EPOS-Empresa Portuguesa de Obras Subterráneas SA and TUNELAN-Obras Subterráneas SA (EPOS-TUNELAN).

“With progress being made on the remaining funding, we are signing the contract for the construction of the two declines and underground mining infrastructure,” said Highfield CEO Ignacio Salazar. “Our team has delivered another major milestone that is key to allow us to start the construction of the main facilities at Muga.”

Highfield said the EPOS-TUNELAN lump-sum based contract value (€48 million) is in line with the estimated capital cost included in the Feasibility Study published on Nov. 7, 2023. However, the company said a Final Investment Decision needs to be reached by Highfield and funding completed as a condition precedent to initiate any payment under this contract.

“We are working hard to finalize the Civil Works and Urbanization contract,” Salazar said. “And with that, we are well prepared to start construction and build Muga to deliver a new and robust source of a critical fertilizer located strategically in the middle of the western European market.”

Boliden, Hypex Partner on Nitrate-Free Explosives

Carbon Dioxide, News Briefs, Nitrogen, Sweden

Boliden announced on March 8 that it has signed an agreement with the Swedish explosives supplier Hypex Bio regarding the production and delivery of nitrate-free and environmentally-friendly explosives to Boliden’s Kankberg metals mine in Jorn, Sweden. The agreement entails the establishment of a production facility at the mine as well as a delivery and service agreement.

The supply and service agreement for Hypex’s explosives solution spans five years starting in 2024. The production quantity is expected to amount to 400-450 mt, which will largely meet the mine’s annual needs. Boliden touted the climate impact of the explosive, saying it drastically reduces the need for nitrogen treatment of water and reduces CO2 emissions by approximately 400 mt/y.

The collaboration between Hypex Bio and Boliden has been ongoing since 2020, and the nitrate-free explosive has been developed and tested in the mine. Boliden said the technology has met its requirements for safety, performance, environment, and reduced carbon dioxide emissions. Tests have also been carried out in the Garpenberg mine in Sweden and are to be started in the Aitik copper mine.

Boliden Expects Strike Impact

Finland, News Briefs

Boliden acknowledged on March 11 that a number of trade unions have announced a two-week long political strike in Finland, effective March 11, 2024. The company said the strike is politically motivated and does not involve Boliden as a negotiating party.

Boliden said that while the direct industrial actions at its operations are limited, the company is heavily affected indirectly by industrial actions in Finland’s harbors and railroad system. Boliden said it will try to limit the impact on its customers.

If the strike goes through as announced, Boliden estimates its operating profit in first-quarter 2024 will be negatively affected by approximately SEK 300 million, with SEK 100 million due to reduced production and SEK 200 million due to delayed deliveries to customers. The impact caused by delayed deliveries is a temporary effect and is expected to be regained during the second quarter, Boliden said. The negative cash flow impact during the first quarter is estimated at SEK 500 million, mainly due to a temporary increase in working capital.

Ammonia

Ammonia, Black Sea, Brazil, Eastern Cornbelt, Market Watch, Northwestern Europe, South Central, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

US Gulf/Tampa:

Sources reported few truck offers for ammonia out of Gulf Coast terminals in mid-March, with the last business confirmed at $500/st FOB. The Tampa price continued at March’s $445/mt CFR contract level.

Eastern Cornbelt:

A lull in fieldwork due to wet weather allowed some ammonia terminals to restock inventories after a brisk application pace earlier in the month. Sources quoted ammonia pricing firmly in the $625-$635/st FOB range in the Eastern Cornbelt at mid-month, with the low in Ohio and the high reported in Indiana and Illinois.

Western Cornbelt:

Sources continued to report ammonia offers in the $615-$635/st range FOB regional terminals in the Western Cornbelt, depending on location.

Southern Plains:

The latest ammonia prices out of production points in the Southern Plains were quoted at $590-$615/st FOB for very limited offers, with the low reported at Woodward, Okla., and the high in Kansas.

No ammonia offers were confirmed at Verdigris, Okla., during the week. The last truck prices out of Gulf Coast terminals in Texas were pegged at the $500/st level FOB, but sources were unsure if any current offers were on the table during the week.

South Central:

Ammonia was quoted at $525-$625/st FOB for limited offers out of terminals in the South Central region, depending on location. The high was reported for the last sales out of Cherokee, Ala., but sources reported no offers from that location at mid-month, nor from terminals at El Dorado, Ark., Midway, Tenn., Waggaman, La., or Donaldsonville, La.

Northwest Europe:

Imported ammonia prices into Northwest Europe showed no change this week, despite several suggested inquiries from buyers. Natural gas prices remain stable-to-soft at around $8/mmBtu, which imply production costs just shy of $300/mt, excluding CO2, far below the $450-$460/mt CFR range still notionally indicated for offshore tons.

Black Sea:     

Turkey imported 93,000 mt of ammonia in January, Trade Data Monitor reported, down 18% from the 113,000 mt received in January 2023. Algeria sent 38,000 mt, Qatar added 32,000 mt, and Oman shipped 22,000 mt.

Brazil:

Brazil typically sells ammonia on the regional market when it is oversupplied. So far in 2024, the country has exported just 40 mt compared to the 33,000 mt it shipped through the first two months of 2023, according to Trade Data Monitor. February exports totaled 20 mt, down from 19,000 mt in February 2023.

Ammonia imports for the first two months of the year were reported at 74,000 mt, almost double the 38,000 mt that Brazil received during the same period of 2023, with Trinidad and Tobago responsible for 95% of the imports. The country imported 28,000 mt in February, up 21% from 17,000 mt in February 2023.

Urea

Black Sea, Brazil, China, Eastern Cornbelt, India, Indonesia, Market Watch, Mediterranean, Middle East, South Central, Southeast, Southern Plains, U.S. Gulf, Urea, Western Cornbelt

US Gulf:

NOLA urea continued to climb on limited supply and strong, early demand. The market was pegged at a high of $408-$417/st FOB for loaded barge transactions during the week, with full March business quoted at $403-$410/st FOB. Trades were also confirmed in the $382-$385/st FOB range for the first five days of April, with first-half April business reported at $375-$380/st FOB.

Eastern Cornbelt:

Urea was quoted solidly at the $455-$460/st level FOB regional terminals in the Eastern Cornbelt, though some locations were reportedly sold out for March. The Cincinnati, Ohio, market remained at $455-$460/st FOB, unchanged from last week, with most Illinois River terminals pegged in the same range.

The latest urea offers in Michigan firmed to a high of $490-$500/st FOB on a spot basis for March-April tons.

Western Cornbelt:

Urea prices edged up to $445-$470/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo.

Southern Plains:

Urea prices narrowed to a firm $485-$495/st FOB in the Southern Plains, with both the high and low reported at Catoosa/Inola, Okla., during the week, depending on supplier.

South Central:

Urea prices continued to climb in the South Central region, fueled by tight supply and steadily firming NOLA barge prices.

The regional terminal market strengthened to $455-$475/st FOB, up from last week’s broad $425-$460/st FOB range. The low was confirmed at Memphis, Tenn., and out of spot Ohio River terminals in Kentucky, with the high reported in Arkansas.

Southeast:

Urea firmed to $435-$440/st FOB port terminals in the Southeast, up from $410-$435/st FOB the week before. The latest offers in the Northeast were pegged at $440-$450/st FOB Baltimore, Md., and Fairless Hills, Pa., up from $430-$445/st FOB last week.

India: 

Rashtriya Chemicals and Fertilizers Ltd. (RCF) called the long-awaited urea tender on March 15. The tender will close on March 27 with a shipping deadline of May 20. The buyer did not specify a quantity it was seeking in the tender, though sources previously speculated that the final take would land below 1 million mt.

Sources said there are enough urea reserves on hand in the country to cover India’s seasonal needs without a large purchase. Previous tenders in April/May provide little guidance as to what will happen this year. The tonnage has ranged from 375,000 mt in April 2019 to 1.6 million mt in May 2022. 

The long shipping period could allow for some Chinese urea to be included in offers. There are expectations that China will allow urea to be exported beginning on May 1. There is still some question whether the government will allow large quantities for export or if it will restrict offshore sales to smaller lots for regional buyers.

If China limits the amount of urea available for India, the tender will have to depend on product sourced from the Arab Gulf and Russia, with smaller lots possibly coming from Southeast Asia.

Getting product from Russia can go one of two ways. One will require transiting the Suez Canal and the Gulf of Aden. Many ship owners are reluctant to send their vessels into the area, and those that do are on the hook for massive insurance charges. Alternatively, vessels can take the longer route around the southern tip of Africa.

In both cases, the shipping costs are high enough that any Black Sea provider will have to take a serious reduction in their netback to be competitive with the Arab Gulf suppliers.

Black Sea:     

Prilled urea out of the area was quoted down to $290-$300/mt FOB. Sources reported a granular sale from Azerbaijan at $350/mt FOB loading from Poti, in the far eastern end of the Black Sea. The price range for Black Sea granular is now pegged at $300-$376/mt FOB. Poti has become a major source of urea from the region, as it is well clear of the Ukraine-Russian war zone.

Turkish urea imports fell slightly in January, Trade Data Monitor reported, to 280,000 mt from 298,000 mt in January 2023. Egypt led suppliers with 112,000 mt, followed by Oman with 105,000 mt and Turkmenistan with 39,000 mt.

Mediterranean:

Spanish and French urea buyers are reportedly well-covered, resulting in minimal new import demand. Offers into Italy at $405-$410/mt CFR did not garner much interest either, and one sale below $400/mt CFR was suggested but could not be confirmed.

Offers in nearby Romania were reported at $400/mt CFR. Based on these reports and amid muted demand and illiquidity, granular urea prices in the Mediterranean slipped to $400-$410/mt CFR, down from last week’s $405-$420/mt range.

Once Mediterranean buyers decide to step back into the market, they are likely to be met with sufficient North African availability, with Egypt still understood to have up to 30,000 mt not yet committed for March.

Indonesia:     

A lack of new business from Indonesia left traders talking about the impact of recent prilled urea sales on the granular market.

Last week’s $355/mt FOB sale of prilled urea led sources to estimate the market’s granular urea price at $365-$370/mt FOB, some $15-$20/mt below the price achieved in the last granular tender, but matching what many market players were already talking about for the next granular sale out of Indonesia.

With Gurun and Bintulu still down in Malaysia and Brunei committed for March, supply in Southeast Asia remains snug.

Middle East: 

The withdrawal of Vietnam and Australia as major buyers has led to a slump in Middle East pricing. While no new deals have been confirmed, some smaller deals have reportedly caused the low end of the market to dip to $370/mt FOB, leaving a range of $370-$380/mt FOB.

The paper market reflected an even more dramatic fall, with March prices quoted at $350-$365/mt FOB and April at $327-$340/mt FOB.

The Egyptian market remained quiet during the week. While sources did report a 30,000 mt granular sale to Argentina, no prices were attached to the deal. Producers are struggling to keep price discussions above $380/mt FOB, traders said, representing a significant drop from the last-done $406/mt FOB price out of Egypt.

The paper market backed up the idea of softer prices. March quotes came in at $360-$370/mt FOB, and April quotes at $345-$350/mt FOB.

China:

Reports are circulating that China is allowing some producers to talk with traders about urea exports. Nothing firm has been announced as to when the exports will be allowed, however, nor regarding how many tons will be permitted to ship.

Sources continue to expect an official announcement in early April indicating that the official export paperwork may begin on April 15, but with nothing allowed to ship until May 1.

Until actual export deals are secured, sources have been looking at the price of domestic urea either from the factory gate or regional warehouses. Based on these values, the estimated export price for prilled urea has edged up to $360-$370/mt FOB. Traders stressed that these numbers represent an intellectual exercise, as no deals have concluded and no urea has been sold for export.

Brazil:

Brazil urea prices declined 6.3%, to $365-$375/mt CFR from last week’s flat $395/mt CFR, with tons arriving in April setting the bottom of the range. Product originating from sanctioned countries transacted at $350-$355/mt CFR against bids reported at $340/mt CFR.

Rondonópolis references fell to $505-$510/mt FOB ex-warehouse, narrowing from last week’s $500-$520/mt FOB. Negotiations for the 2025 second corn crop have advanced in the Nova Mutum, Lucas do Rio Verde, Tapurá, and Sorriso regions of Mato Grosso, sources said, but remained inactive in other parts of the state. According to reports, the deals were done on a barter basis using corn harvested during the 2024 second corn crop.

January-February urea imports to Brazil totaled 1.2 million mt, according to Trade Data Monitor, up 17% from the year-ago 1 million mt. Nigeria accounted for about one-quarter of the imports with 286,000 mt, while Qatar supplied 197,000 mt and Oman sent 165,000 mt. February imports were 490,000 mt, a 40% increase from the 349,000 mt received one year earlier.

UAN

Eastern Cornbelt, France, Market Watch, South Central, Southeast, Southern Plains, U.S. Gulf, UAN, Western Cornbelt

US Gulf:

NOLA UAN remained at $270-$280/st ($8.44-$8.75/unit) FOB for the last confirmed barge business. Inland values continued to climb, however, with many locations pulling offers due to limited inventory.

Eastern Cornbelt:

The UAN-32 market remained at $310-$325/st ($9.69-$10.16/unit) FOB regional terminals, with the low confirmed at Mt. Vernon, Ind., for prompt tons. Most terminals on the Illinois and Ohio Rivers fell in the $315-$325/st ($9.84-$10.16/unit) FOB range at mid-month.

UAN-28 prompt offers were steady at $283-$287/st ($10.11-$10.25/unit) FOB in Ohio and up to $305-$310/st ($10.89-$11.07/unit) FOB Michigan terminals.

Western Cornbelt:

UAN-32 firmed to $300-$320/st ($9.38-$10.00/unit) FOB terminals in the Western Cornbelt, depending on location and time of shipment, up from last week’s $285-$315/st ($8.91-$9.84/unit) FOB range. The St. Louis market was quoted firmly at the $315-$320/st ($9.84-$10.00/unit) FOB level for limited tons at mid-month.

Southern Plains:

Recent UAN-32 offers in the Southern Plains jumped to $300-$320/st ($9.38-$10.00/unit) FOB for limited offers at regional terminals and production points, with the low reported at Woodward for April-May tons and the high at Coffeyville, Kan., for limited prompt material. The latest offers at Pryor, Okla., and Dodge City, Kan., were pegged at the $315/st ($9.84/unit) FOB level for April-June.

South Central:

UAN-32 prices in the South Central region were up in the wake of the firming urea prices, with “extremely tight” supply feeding the upward momentum.

Terminal prices moved to a firm $300-$315/st ($9.38-$9.84/unit) FOB in the South Central region, up from the prior week’s $285-$310/st ($8.91-$9.69/unit) FOB, with the low reported in Louisiana and the high in Kentucky.

Southeast:

UAN-32 prices in the Southeast firmed to $280-$300/st ($8.75-$9.38/unit) FOB regional terminals for the latest offers, up from $270-$280/st ($8.44-$8.75/unit) FOB at last report, with the low confirmed in Georgia and the high at Wilmington, N.C. UAN-32 also inched up in the Northeast, to a reported high of $305/st ($9.53/unit) FOB Fairless Hills.

France:

UAN application in France is ongoing, but growers are generally covered and any restocking needs are minimal, causing a near standstill in the spot market.

With pressure building, UAN prices slipped to €235-€245/mt FCA, down from the prior week’s €240-€250/mt range. Expectations are that prices will continue to move lower in the coming weeks until they converge with new-season prices, which have been suggested in the €210-€220/mt FCA range.

Ammonium Nitrate

Ammonium Nitrate, Brazil, Market Watch, South Central, Southern Plains, Western Cornbelt

Western Cornbelt:

Ammonium nitrate remained at $400-$420/st FOB terminals in Missouri.

Southern Plains:

The latest ammonium nitrate offers firmed to $370/st FOB in Oklahoma, up another $20/st from last report.

South Central:

The ammonium nitrate market firmed to $340-$370/st FOB in the South Central region, up from the prior $310-$340/st FOB range, with the low reported out of spot river terminals in Kentucky and the high at El Dorado. Sources said no current offers were available out of Yazoo City, Miss.

Brazil:

January-February ammonium nitrate imports stood at 61,000 mt, Trade Data Monitor reported, a roughly 54% decline from the 132,000 mt received through the first two months of 2023. Russia supplied 60,000 mt. Brazil imported 1,000 mt in February – all from Mexico – down sharply from the 45,000 mt received in February 2023.