All posts by hlancey@bloomberg.net

UK to Launch Carbon Tax on Certain Imports

Carbon, Europe, News Briefs

The UK government announced that it will introduce a carbon border adjustment mechanism (CBAM) by 2027, establishing a carbon tax on imported goods targeted at a series of key emissions-intensive industries.

The move is aimed at equalizing the carbon price paid by UK producers with those outside the UK, and avoiding “carbon leakage,” or shifting of production of carbon-intensive goods to jurisdictions with less stringent emissions reduction policies.

The CBAM will initially apply a carbon price to imported goods from sectors including fertilizers, as well aluminum, cement, ceramics, glass, hydrogen, iron, and steel.

The new carbon tax follows a review by the UK government launched earlier this year on potential measures aimed at mitigating carbon leakage, with UK producers in several emissions-intensive sectors subject to the country’s Emissions Trading Scheme (ETS), one of the key tools used by the UK to decarbonize industry.

The European Union (EU) in August also adopted a CBAM to equalize carbon prices on imports with its own ETS system (GM Aug. 25, p. 29; April 28, p. 30).

The Mosaic Company – Management Brief

Management Briefs

The Mosaic Company on Dec. 20 announced that Jody Kuzenko, President and CEO of Torex Gold, has been elected to Mosaic’s board of directors, effective Jan. 1, 2024. Kuzenko joined Torex in 2018 as Chief Operating Officer and was named President and CEO in 2020. She has over 20 years of operational and business experience in mining industries, mainly at Vale (formerly Inco).

“Mosaic’s board will benefit from Jody’s extensive knowledge of mining as well as her deep understanding of the Canadian business and legal environments,” said Gregory L. Ebel, Chairman of the Mosaic Board. “We are pleased to welcome her diverse experiences and counsel as a valuable addition to the Mosaic Board.”

Kuzenko holds a Bachelor of Laws degree from the University of Western Ontario and an Honours Bachelor of Arts from McMaster University. She is a Certified Director from the ICD-Rotman Directors Education Program.

Bion Environmental Technologies Inc

Management Briefs, U.S.

Bion Environmental Technologies Inc, a New York-based developer of advanced livestock waste treatment technology and premium sustainable beef, announced on Dec. 20 that Chris Cook will join Bion’s Advisory Group, where he will provide his expertise on agronomy, crop production, and fertilizers.

Cook has nearly 30 years of experience in production agronomy. The last decade was spent in leadership roles with Syngenta AG, where he focused on business strategy, sales growth, stakeholder relations, and business development. He currently serves as Head of Business Development for Syngenta Seeds, North America, responsible for identifying and developing market opportunities for the North American seeds business and leading the development of the Camelina seeds business and Enogen feed corn commercial sales strategy.

“Chris Cook is exactly the kind of forward thinker Bion needs to align with as we commercialize our opportunity to bring verified sustainability to the beef and livestock industries,” said Bion CEO Bill O’Neill. “His years of experience in state-of-the-art production agronomy will be invaluable as we build out our value chain to deliver both sustainable practices to an industry that needs them and sustainable products to a consumer that demands them.”

Meristem Crop Performance Group LLC – Management Brief

Management Briefs, U.S.

Crop inputs supplier Meristem Crop Performance Group LLC, Columbus, Ohio, in December announced that Iowa agronomic professional Adam Darrington has joined the company as Account Manager and Dealer Coach in Iowa, and Alex Bond has been hired as a Sales Representative for Meristem in Illinois.

Darrington previously worked for Wyffels Hybrids as an Iowa District Manager, and as an Area Sales Manager with Eldon C. Stutsman Inc. Bond spent more than five years as a Territory Manager for Corteva, and also worked as an ag banker for Princeville State Bank and as a Regional Sales Manager for Sound Agriculture.

Ammonia

Ammonia, California, China, Eastern Cornbelt, India, Indonesia, Market Watch, Northwestern Europe, South Korea, Tampa, U.S. Gulf, Western Canada, Western Cornbelt

US Gulf/Tampa:

The Tampa ammonia price for January was concluded at $525/mt CFR, down $100/mt from December’s $625/mt contract. The settlement follows the launch of winter fill and spring prepay prices in the Cornbelt, which were down $100/st or more from the last prompt fall business.

The drop at Tampa pressured NOLA barge values to a Tampa-equivalent of $477-$478/st FOB, down from the prior $569/st FOB level.

Eastern Cornbelt:

The prior week’s ammonia fill and prepay prices from CF remained in effect, with offers out of terminals in Illinois and Indiana quoted at $600/st FOB for December-February fill tons and $650/st FOB for spring prepay. Koch was reportedly offering prepay tons at the $625/st FOB level on a spot basis in the Eastern Cornbelt.

Western Cornbelt:

Sources reported ammonia prices in Nebraska and Iowa at $600-$620/st FOB for December-February fill tons and $625-$645/st FOB for spring prepay, depending on location. The latest ammonia offers in the Northern Plains slipped to $600-$610/st FOB for fill tons and $630-$640/st FOB for spring prepay.

California:

Anhydrous ammonia was quoted at $795/st DEL in California after an upward pricing adjustment on Dec. 1, with aqua ammonia prices referenced at $217/st FOB Stockton and $227/st FOB Sycamore.

Pacific Northwest:

The last prompt ammonia prices remained at $830-$850/st FOB in the Pacific Northwest, but sources said those offers have been pulled as producers consider a reset based on recent adjustments for fill and prepay prices in other US markets.

Western Canada:

Ammonia pricing remained at the C$850/mt DEL level for December fill in Western Canada, with spring prepay offers quoted at the C$1,000/mt DEL level.

Northwest Europe:  

A sale of Algerian material into Antwerp was rumored at $500/mt CFR, sources said. The price fits with the latest estimate of production costs for European ammonia plants, though some of the players involved disputed the deal’s price.

Despite the uncertainty surrounding Northwest Europe’s first reported spot deal in a long time, most sources put the market in the $500s/mt CFR.

India:

Reports of a Marubeni sale to IFFCO at $500/mt CFR continue to circulate, although neither side has confirmed the deal. Traders remain confident that this represents the market’s current price level, however. The bulk of the business in India continues to be based on long-term contracts and formula-based deals.

January-October ammonia imports totaled 1.97 million mt, Trade Data Monitor reported, a 10% increase on the year-ago 1.8 million mt. Bahrain and Oman combined to send 637,000 mt to India, up from 267,000 mt during the first 10 months of 2022, while Saudi Arabia remained the dominant supplier with 755,000 mt. October imports were 214,000 mt, down slightly from the 218,000 mt received in October 2022.

China:

Imports of ammonia in China stood at 652,000 mt in January-November, according to Trade Data Monitor, a significant increase from 216,000 mt imported during the same period of 2022. November imports were 30,000 mt, rising from 21,000 mt in November 2022.

January-November ammonia exports fell 10% year-over-year, to 181,000 mt from 200,000 mt. Exports were reported at 4,000 mt for November, off sharply from the 75,000 mt shipped last year.

Indonesia:     

Indonesia sent 1.5 million mt of ammonia offshore in January-October, Trade Data Monitor reported, down 9% from the 1.6 million mt exported through the first 10 months of 2022. October exports were 174,000 mt, up marginally from 173,000 mt in October 2022.

South Korea:

Trade Data Monitor reported January-November ammonia imports in South Korea at 1 million mt, off 15% from the year-ago 1.2 million mt. Sources noted reduced ammonia demand earlier in the year, leading to the drop in imports to date. November receipts were up from November 2022, however, at 104,000 mt compared to 66,000 mt.

Urea

Black Sea, Brazil, California, China, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Pacific N.W., Pakistan, South Korea, U.S. Gulf, Urea, Western Canada, Western Cornbelt

US Gulf:

NOLA urea was reported at $292-$308/st FOB for December trades during the week, with January business falling in the $300-$308/st FOB range. Those levels were down from last week’s $295-$310/st FOB range for December-January tons. February business was reportedly concluded at a high of $312/st FOB during the week.

Eastern Cornbelt:

The urea market slipped to $350-$380/st FOB in the Eastern Cornbelt, down from last week’s $355-$390/st FOB, with the upper end at inland terminals and the low reported out of several Illinois river locations for December-January tons. Michigan urea prices were quoted at $390-$400/st FOB and $405-$415/st DEL.

Western Cornbelt:

Urea prices were down in the Western Cornbelt, falling to a broad $345-$390/st FOB range in late December, with the low confirmed at St. Louis, Mo., and the high in Iowa on a spot basis.

California:

Prilled urea in California was reported at $580/st FOB San Diego, down $20/st from last report. Granular urea remained at $510/st FOB Stockton, with reports of rail-DEL pricing down to the $420/st level in Northern California.

Pacific Northwest:

Urea continued at $425-$430/st FOB in the Pacific Northwest, with the low reported at Rivergate, Ore. Delivered pricing remained at $450-$474/st in the region, depending on location.

Western Canada:

The latest urea offers in Western Canada dropped to C$635-$650/mt FOB and C$660-$670/mt DEL, down from the prior C$660-$685/mt DEL range.

India: 

India’s National Fertilizers Ltd. (NFL) called a urea tender to close on Jan. 4, 2024, with a shipping deadline of Feb. 29. Offer envelopes will be opened on Jan. 5.

The tender call surprised sources in Asia, who until last week remained firm in the belief that the tender would not happen until mid-January at the earliest. Sources pointed to large reserves of urea and reduced demand due to flooding to support the view that the tender could be delayed until 2024.

Brazil sources had been raising the possibility that the tender could be called before the end of the year, however. At the same time, observers noted that the Indian government has previously authorized tenders to be called in the last week of the year, just as most traders wind down for the holidays.

Players had argued that calling the tender in February would make more sense. The first draft of the FY2024/25 budget will be released by then, one trader noted, giving buyers a better sense of how much the government will dedicate to urea subsidies.

Sources put the tender’s expected take at 500,000-600,000 mt unless prices are more favorable to the buyer, leading to speculation that the market price will come down. Without a purchase nearing 1 million mt or more, said one trader, there could be a surplus of material on the global market weighing down prices.

January-October urea imports totaled 6 million mt, Trade Data Monitor reported, a 19% drop from the 7.4 million mt received through the same period of 2022 The amount does not include the 1.7 million mt purchased in the Oct. 20 Indian Potash Ltd. (IPL) tender.  October imports were 1.7 million mt, a considerable increase from the 573,000 mt received in October 2022.

Pakistan:       

Pakistan has been unable to secure the tonnage it needs to cover its urea deficit solely through the country’s government-to-government deal with Azerbaijan, sources said.

Initial government estimates showed a 200,000 mt shortfall of urea for the current application season. Trading Corporation of Pakistan (TCP) was ordered to secure the tonnage, either through a public tender or government-to-government negotiations. After talks with several urea suppliers, the government announced a deal with Azerbaijan.

The latest estimates now put the deficit at 220,000 mt. TCP is reportedly once again in talks with urea suppliers around the world to ensure a plentiful supply for the season. The search for more urea comes on the heels of a government announcement raising the price of urea by about 4%, to Rs5,550 per 50-kg bag ($19.58).

Black Sea:     

Prices have fallen in line with the international urea markets. Sources now put the Black Sea price at $270-$280/mt FOB for prilled urea.

Indonesia:     

No awards appear to have been issued in Indonesia’s latest granular urea selling tender, as Pupuk was reportedly unsatisfied with the highest reported price of $321.50/mt FOB. The holding company continues to talk with bidders in an effort to move the price closer to the market’s previous $342/mt FOB level, sources said.

Current market conditions do not allow for a return to the higher price, one trader said. At the same time, the trader conceded that it must have been difficult for Pupuk to report to the government that its product price had dropped $20/mt in just one week. There are rumors that buyers might be willing to accept a slight price increase, but nothing that would approach the prior level. For now, price discussions remain at $321/mt FOB, sources said.

Demand for Southeast Asian urea is stepping up from buyers in the West Coast of Latin America, as the slowdown in the Panama Canal has prompted a shift in sourcing from Russia to Asia. The $342/mt FOB product sold in early November is being sent to Mexico’s West Coast for unloading, sources said, while the tonnage in the most recent tender was also expected to go to a West Coast port.

Trade Data Monitor reportedJanuary-October urea exports at 956,000 mt, down 41% from the 1.6 million mt shipped in January-October 2022. October exports were noted at 118,000 mt, off 29% from last October’s 165,000 mt.

Middle East:

Producers are busy covering contract sales, and no new discussions for spot deals were reported. The urea tender announced out of India is expected to shake things up as the year winds down.

With sellers already boasting healthy order books for January, the NFL tender call will make life even better for producers. With China out of the urea export business, sources expect to see most of the Indian tender covered with Arab Gulf material.

On the downside for producers, however, are reports that NFL will not be looking for a large purchase unless the price is dramatically lower. So far, sources estimate that NFL will take only 500,000-600,000 mt, potentially leading to a large surplus of urea in the global market. In turn, this could cause prices to fall.

Rising freight costs, partially due to higher insurance rates, will impact the netbacks that Arab Gulf producers can expect from the Indian tender. With India expecting a lower price than the previous tender, producers may have to accept a lower netback than preferred to compensate for the higher transportation costs, while also taking into account the lower prices estimated in the global market.

The week started with Egyptian producers processing and loading cargoes bound for Europe and Ethiopia. By the end of the week, however, new deals locked in the year-end price at $340/mt FOB.

MOPCO sold 5,000 mt at $338/mt FOB and another 6,000 mt at $340/mt FOB, sources confirmed, with both shipments slated for January. Producers are once again targeting $345/mt FOB for late-January and February orders.

The cost of shipping from the area has gone up. Sources pointed to higher insurance rates for vessels entering or leaving the Red Sea due to stepped-up attacks on ships in the area. So far, traders said, there have been no attacks on urea vessels.

There are reports that Iranian producers are offering deep discounts to encourage sales. Some Brazilian buyers were reportedly offered a January cargo at $300/mt FOB, though no deal was confirmed.

China:

Domestic reserves are building and ex-plant prices are dropping, sources said. The situation appears to have made it easier for some plants to take maintenance turnarounds, or at least reduce output while taking care of maintenance work.

Some small shipments of urea, mostly in containers, are still being allowed from Chinese ports. Traders have expressed concern that the attacks in the Red Sea could lead to a shortage of containers for use in the Asian market.

Exports of urea firmed 70% in January-November, Trade Data Monitor reported, to 3.9 million mt from the year-ago 2.3 million mt. India purchased about 40% of the exports, taking 1.6 million mt. November exports were 516,000 mt, against 373,000 mt shipped in November 2022.

South Korea:

The South Korean government reported that it is still in talks with China to ensure a steady supply of industrial urea for its emissions control infrastructure. At the same time, however, sources said South Korean buyers have been approaching as many urea producers in the region as they can. Lotte Fine Chemical (LFC) reportedly closed a deal earlier this week for 5,000 mt from Vietnam, and additional sales out of Vietnam are expected.

The South Korean government is also easing its tariffs on imported urea. The government said the move was designed to make it easier to meet the country’s imported urea needs.

January-November urea imports fell 18% year-over-year, Trade Data Monitor reported, to 668,000 mt from 812,000 mt. November imports were counted at 74,000 mt, 67,000 mt of which came from China before that country clamped down on exports. South Korea received 35,000 mt in November 2022.

Brazil:

Urea imports softened 6.6% in Brazil, to $310-$330/mt CFR from last week’s $340-$345/mt CFR. Prices started the week at the top of the range and receded as the week progressed, while news of the Indian tender prompted most sellers to step out of the market.

Weakening CFR prices pushed Rondonópolis prices to $460-$490/mt FOB ex-warehouse, down from $470-$495/mt FOB last week.

Weather constraints continue to negatively impact soybean production, and the soybean season’s late start has compromised demand for the upcoming corn season. Heat waves and reduced rainfall were expected to reduce 2023/24 soybean production by 20%, Moneytimes reported, referencing research by the Association of Soybean and Corn Producers of Mato Grosso (Aprosoja), while the Mato Grosso Institute of Agricultural Economics (IMEA) estimated a 24.59% reduction in planted corn acres due to delays in soybean planting.

Summer begins on Dec. 22 in the southern hemisphere, and weather irregularities from El Niño are expected to persist through early 2024. Reduced rainfall is expected in December and January, Agroclima reported,referencing Climatempo. While precipitation is forecast to increase in January and February, it will arrive late in the season and may impact the beginning of the harvest.

UAN

California, Eastern Cornbelt, Market Watch, Pacific N.W., U.S. Gulf, UAN, Western Canada, Western Cornbelt

US Gulf:

No new NOLA UAN business was reported during the week, leaving the market at $240-$245/st ($7.50-$7.66/unit) FOB based on netbacks from current river terminal pricing.

Eastern Cornbelt:

The UAN-32 market was pegged at $280-$300/st ($8.75-$9.38/unit) FOB in the Eastern Cornbelt for December-January tons, depending on location. The Cincinnati, Ohio, market reportedly firmed to $290/st ($9.06/unit) FOB for December-March, up $10/st from last week, with UAN-28 quoted at the $253.75/st ($9.06/unit) FOB level at that location.

Western Cornbelt:

UAN-32 was steady at $275-$295/st ($8.59-$9.22/unit) FOB in the Western Cornbelt, depending on location, with most spot quotes falling in the $285-$295/st ($8.91-$9.22/unit) FOB range for December-January tons.

California:

UAN-32 slipped to $310-$340/st ($9.69-$10.63/unit) FOB in California, below the prior $350/st ($10.94/unit) FOB level, with rail-DEL tons quoted at the $330/st ($10.31/unit) level in Northern California, down from $340-$345/st ($10.63-$10.71/unit) in late November.

Pacific Northwest:

The latest UAN-32 offers were pegged at $330/st ($10.31/unit) FOB Kennewick, Wash., below the prior $370/st ($11.56/unit) FOB level. Delivered pricing remained at $341-$350/st ($10.66-$10.94/unit) in the Pacific Northwest.

Western Canada:

UAN-28 offers in Western Canada were down from last report, falling to C$420-$430/mt (C$15.00-$15.36/unit) from the previous C$430/mt (C$15.36/unit) FOB level.

Ammonium Sulfate

Ammonium Sulfate, Brazil, California, China, Eastern Cornbelt, Market Watch, Pacific N.W., South Korea, U.S. Gulf, Western Canada, Western Cornbelt

US Gulf:

It was another quiet week for NOLA ammonium sulfate, with no new business reported to move the market from the longstanding $270-$275/st FOB range.

Eastern Cornbelt:

Granular ammonium sulfate in the Eastern Cornbelt was unchanged at $300-$330/st FOB, depending on location and time of shipment, with the low confirmed at Cincinnati, Ottawa, Ill., and LaSalle, Ill., for December-January tons. Michigan prices were pegged at $320-$340/st FOB and $345-$355/st DEL in late December.

Western Cornbelt:

Granular ammonium sulfate remained at $300-$330/st FOB in the Western Cornbelt, with the low reported at St. Louis and the high in Iowa.

California:

The ammonium sulfate market was unchanged at $320-$350/st FOB and $350/st DEL for the latest offers in California, with the low reported at Lathrop, Woodland, and Richvale. The last posting FOB Helm was steady at the $330/st FOB level in late December.

Pacific Northwest:

The ammonium sulfate market was steady at $290-$330/st FOB or DEL in the Pacific Northwest, with the low for standard grade and the high for granular.

Western Canada:

The ammonium sulfate market in Western Canada was pegged at C$470-$480/mt DEL for the latest business, down from the prior C$480-$485/mt DEL range.

China:

Ammonium sulfate remains off the list of restricted exports in China. Buyers, such as NPK blenders who might have otherwise bought urea, are now looking for amsul to cover their nitrogen needs.

Amsul production is down, even as sources report rising demand due to reduced industrial output in China. The combination has moved prices up once again, with sources now calling the market $115-$120/mt FOB for caprolactam grade product.

China exported 12.9 million mt of ammonium sulfate in January-November, according to Trade Data Monitor, up 15% from the 11.2 million mt shipped one year earlier. Brazil led buyers with 1.5 million mt. November exports were 1.5 million mt, up from 1.1 million mt in November 2022.

South Korea:

Ammonium sulfate exports declined in January-November, Trade Data Monitor reported, to 157,000 mt from the year-ago 234,000 mt. November exports totaled 16,000 mt, falling from the 28,000 mt shipped last November.

Brazil:

Brazil ammonium sulfate prices were noted at $155-$165/mt CFR, down from $160-$175/mt CFR at last report. Prompt offers were reported at $175/mt CFR, but no transactions were confirmed at that level. Rondonópolis prices were stable at $295-$310/mt FOB ex-warehouse.

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:

Central Florida DAP trucks continued at $575/st FOB, sources said, and truck-loaded MAP was steady at $610/st FOB. MAP postings from North Florida were reported at $640/st FOB, unchanged from last week.

US Gulf:

Sources reported rising prices and low trade volumes heading into the holidays. DAP barges firmed to $570-$580/st FOB from the week-ago $560-$575/st FOB, while sources quoted NOLA MAP trades in the $620-$623/st FOB range, above $605-$620/st FOB at last report.

US Exports:

Sources reported no new DAP or MAP spot exports during the week. Prices were noted at $570/mt FOB for the latest sales.

Eastern Cornbelt:

DAP was quoted at $615-$635/st FOB in the Eastern Cornbelt, with the low in Illinois and the high reported at Cincinnati. MAP slipped to a broad $655-$690/st FOB in the region, with the low again confirmed in Illinois on a spot basis. The Cincinnati MAP market remained at the $680-$685/st FOB level in late December.

Michigan phosphate pricing included DAP at $675/st DEL, and MAP at $695-$700/st FOB and $710-$720/st DEL.

Western Cornbelt:

DAP firmed again, to $620-$640/st FOB in the Western Cornbelt, up another $10/st from last week, with the low reported at St. Louis for “very limited tons.” MAP remained at $665-$690/st FOB in the region, with high in Iowa and the low confirmed at St. Louis.

California:

MAP was pegged at $740-$750/st FOB or DEL in California.

Pacific Northwest:

MAP was quoted at $730-$740/st FOB or DEL in the Pacific Northwest in late December.

Western Canada:

MAP firmed to C$1,065-$1,085/mt FOB or DEL in Western Canada, depending on location and time of shipment, up from the previous C$1,050/mt FOB and C$1,050-$1,060/mt DEL ranges.

India: 

An India buyer has concluded a deal for Moroccan DAP at $595/mt CFR, according to circulating reports, moving the price down at a time when most of the industry was talking about higher prices.

The deal appears to have been done under the expectation that India was ready to increase its DAP subsidies, one source said. However, the move to reinstate higher DAP subsidies so far appears to be just talk, according to sources.

Trade Data Monitor pegged January-October DAP imports at 5.3 million mt, a 6% decline from the 5.6 million mt imported during the same period of 2022. November imports were down 61% year-over-year, to 515,000 mt from 1.3 million mt.

China:

DAP exports totaled 4.7 million mt in January-November, Trade Data Monitor reported, up 40% from the 3.3 million mt shipped through the first 11 months of 2022. Indian buyers accounted for 62% of the purchases, taking 2.9 million mt. November exports were 616,000 mt, rising from 201,000 mt in November 2022.

January-November MAP exports were virtually unchanged from the first 11 months of 2022 at 1.9 million mt, Trade Data Monitor reported. November exports were 218,000 mt, up from the 197,000 mt shipped last November.

Brazil:

MAP imports were steady at the week-ago $550-$565/mt CFR, with most business reported at the top of the range.

The Rondonópolis market remained at $680-$685/mt FOB ex-warehouse for a fourth consecutive week, while aggressive offers reported in the $645-$655/mt FOB ex-warehouse range went unconfirmed for the week. Demand remains off due to low corn consumption and limited interest for the 2024/25 soybean season, sources said.