All posts by hlancey@bloomberg.net

BASF’s 2Q Earnings Fall; More Cuts Considered

Ammonia, Earnings, Germany, News Briefs, Spain

German chemical industry giant BASF SE’s earnings declined slightly in the second quarter after prices fell across its chemicals business.

EFITDA fell 3.7%, to €969 million ($1.1 billion), BASF reported on July 26, adding that gains in its industrials solutions unit were dragged down by lower prices for ammonia-based products. The result slightly missed analyst forecasts. Shares traded down 2.4% at 10:47 a.m. in Frankfurt, bringing the stock’s losses this year to 11%. BASF left its outlook unchanged.

BASF in February deepened savings measures at its main site in Ludwigshafen to trim €1 billion from annual costs by 2026. Those and other efficiency measures that the company announced in late 2023 (GM Nov. 3, 2023) are going ahead as planned, BASF said. The company also plans to shut down two smaller sites in Germany and is reviewing investment plans for battery materials as growth of electric-vehicle sales stalls (GM Dec. 22, 2023).

“Results were mostly in line with our expectations,” Citi Analyst Sebastian Satz said in a note, adding that volume growth was strong in the chemicals and industrial solutions units while “surprisingly weak” in the materials and agricultural divisions.

In June, BASF abandoned plans for a $2.6 billion nickel-cobalt refinery joint-venture in Indonesia. It is considering layoffs at its Finnish battery materials plant, and stepped back from plans to invest in lithium mining assets in Chile. On July 26, it also said it will pause plans for a battery recycling site in Spain.

Fertiglobe Sales Volumes Impacted by Gas Supply

ADNOC - Abu Dhabi, Ammonia, Earnings, Egypt, Middle East, News Briefs, North Africa, Urea

Fertiglobe reported revenues of $496 million and adjusted EBITDA of $156 million for the second quarter and $1.048 billion and $378 million, respectively, for the first half of 2024.

Its own-produced sales volumes for the first half were up 1% from last year despite recent gas supply issues in Egypt, and the company said they would have been up 7% excluding those external factors.

Own-produced sales volumes for the second quarter were down 2% from last year, driven by a 5% drop in urea volumes offset by a 12% increase in ammonia sales volumes. Excluding the impact of the gas supply shortages in Egypt, Fertiglobe said own-produced sales volumes in the second quarter would have been up 8%.

“Over the past quarter, Fertiglobe has taken important steps towards achieving its strategic business objectives by maintaining the positive momentum surrounding some of its most significant operational projects and decarbonization initiatives,” said Ahmed El-Hoshy, CEO of Fertiglobe.

These include a Final Investment Decision (FID) on the TA’ZIZ 1 mtpa low carbon ammonia project, developed in partnership with TA’ZIZ, GS Energy Corp., and Mitsui & Co. Ltd. The construction contract for the project was awarded to Tecnimont SpA, with production expected to start in 2027.

“ADNOC’s pending acquisition of OCI Global’s 50% equity stake in Fertiglobe continues to progress,” El-Hoshy added.

Headquartered in Abu Dhabi, Fertiglobe’s production capacity comprises 6.6 million mt/y of urea and merchant ammonia, produced at four subsidiaries in the UAE, Egypt, and Algeria, making it the largest producer of nitrogen fertilizers in the Middle East and North Africa (MENA).

TFI, Other Trade Groups File Brief in CWA Case

News Briefs

The Fertilizer Institute (TFI) has joined 14 other trade groups in filing an amicus brief with the US Supreme Court in the case City and County of San Francisco, California v. Environmental Protection Agency (EPA).

According to one of the groups, the National Federation of Independent Business Inc. (NFIB), the case questions whether the Clean Water Act (CWA) allows the EPA (or an authorized State) to impose generic prohibitions in National Pollutant Discharge Elimination System (NPDES) permits that subject permitholders to enforcement for exceeding water quality standards without identifying specific limits to which their discharges must conform.

“Small businesses rely on clear and consistent water quality standards, as promised by the Clean Water Act,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center, in a July 29 statement. “Without specific permitting conditions, it will be impossible for many small businesses to comply with ambiguous standards and protect themselves from harmful activist lawsuits. America’s job creators need clarity and relief from Washington, not further confusion.”

The brief argues that receiving water prohibitions are inconsistent with the CWA’s text and design, and that NPDES permit conditions that hold permittees directly liable for the quality of receiving waters will have devastating consequences for the business community and the economy.

Other signatories on the brief include the National Mining Association, the American Chemistry Council, the American Farm Bureau Federation, the American Forest & Paper Association, the American Fuel and Petrochemical Manufacturers, the American Gas Association, the Associated General Contractors of America, the American Petroleum Institute, the U.S. Chamber of Commerce, the National Association of Home Builders, the National Association of Manufacturers, the National Pork Producers Council, and the Southeastern Lumber Manufacturers Association.

Lithuania Lifts Sanctions on Producer Lifosa

DAP/MAP, Lithuania, News Briefs, Phosphate, Phosphoric Acid, Russia, Ukraine

Lithuania’s Financial Crime Investigation Service (FNNT) has removed phosphate fertilizer producer Lifosa from its list of sanctioned companies. Lifosa, which is wholly owned by EuroChem, was sanctioned in 2022 following the Russian invasion of Ukraine, and its production facility at Keidanai in Central Lithuania was idled.

According to national news outlet Rinkos Aikste, Lifosa has been placed under temporary administration until May 22, 2025. Prior reports indicated that Lifosa had resumed production and was in the process of ramping up (GM June 14, p. 27).Lifosa has an annual capacity of 990,000 mt of DAP and 850,000 mt of phosphoric acid.

Tanzania, Indonesian Firm Ink MoU for Urea Plant

Africa, Ammonia, Indonesia, News Briefs, Urea

Tanzania Petroleum Development Corporation (TPDC), Tanzania Fertiliser Regulatory Authority (TFRA), and the Tanzania Investment Centre (TIC) have signed a Memorandum of Understanding (MoU) with PT ESSA Industries Indonesia Tbk to build a $1.3 billion natural gas-to-urea fertilizer manufacturing plant in the Mtwara Region.

The facility is set to begin operations in 2029 and will have an initial requirement of natural gas of 70 million standard cubic feet.

“We need to increase productivity in agriculture and industries,” said State Minister Kitila Mukumbo at the signing ceremony in the capital Dar-es-Salaam. “Because apart from food crop, our agenda is to go to industry-driven economy, so you can’t speak of industries without speaking of agriculture because 65% of raw materials used in industries come from farms, so there is no industrial revolution without agricultural revolution.”

Tanzania currently imports 87% of the fertilizer it applies. Once the plant commissions, it is expected that up to 40% of production will be exported to neighboring countries, contributing to improving self-sufficiency in East Africa, a region that – much like the rest of the continent – is heavily reliant on fertilizer imports.

“We intend to replicate this technology from Indonesia to Tanzania,” said Rahul Puri, Commissioner and Board Member of the Indonesian partner ESSA Industries. “Tanzania has immense natural gas. We learned from our own example in Indonesia where there are six different plants since the 1950s to make sure there is adequate urea in the country.”

Headquartered in Jakarta, PT Surya Esa Perkasa Tbk (ESSA) was founded in 2007 and it operates the largest private LPG refinery and ammonia plant in Indonesia. It produces 190 mt of LPG and 2,000 mt of ammonia per day.

Angola Touts Plan to Produce NPK Compounds

Africa, Ammonia, News Briefs, NPK, Phosphate, Urea

Angolan officials announced that the upcoming Soyo Fertilizer plant, located in the northern province of Zaire, will also have an integrated unit for NPK processing, in addition to ammonia and urea production, according to a July 30 report by the Angop news agency.

The project will be adding phosphate production as well, having awarded a mining title for exploration in Kinzau, Tomboco region, to supply phosphate rock to the Soyo plant. Construction at Soyo began in 2022. Once completed, the plant will have an annual capacity of 3.8 million mt of fertilizers.

“We started with ammonia and the project evolved into NPK compounds,” said Diamantino de Azevedo, Minister of Minerals, Oil, and Gas, at a presentation to African Import-Export Bank (Afreximbank), which is financing the project.

“The Soyo fertilizer plant demonstrates Africa’s ability to take advantage of the natural reserves it has to improve its food security,” said Afreximbank Chairman Benedict Oramah.

Afreximbank, headquartered in Cairo, is a pan-African multilateral financial institution created to finance and promote intra- and extra-African trade.

Indorama, Egypt Eye Ain Sokhna Phosphate Project

Egypt, News Briefs, Phosphate

Indorama Vice Chairman Amit Lohia met with Egyptian Minister of Petroleum and Mineral Resources Karim Badawi on July 28 to discuss the establishment of a phosphate fertilizer factory in Ain Sokhna.

Indorama stated it plans to finalize initial project preparations by the end of 2024, with full-scale implementation slated for 2025. The project was first announced last year (GM Sept. 1, 2023) with an initial investment of $700 million.

Grupa Azoty Expands Ammonium Nitrate Portfolio

Ammonium Nitrate, News Briefs, Nitrogen, Poland

Polish nitrogen producer Grupa Azoty Puławy announced on July 31 that it will adapt its fertilizer offering to market demands by expanding its ammonium nitrate product line. Ammonium nitrate 33.5%, which is a flagship product currently produced at Grupa Azoty’s Kędzierzyn plant, will also now be produced at the Puławy plant.

Grupa Azoty stated that the next step will involve rebranding the product from the current ZAKsan 33.5 to megAN 33.5. The decision is part of a wider strategy to better integrate production, sales, and marketing across the whole company.

Headquartered in Tarnow, in the Lesser Poland Voivodeship of southeastern Poland, Grupa Azoty has a combined nitrates production capacity of 4.9 million mt/y across its three sites in Tarnow, Puławy, and Kędzierzyn.

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, India, Market Watch, Northern Plains, Northwestern Europe, Tampa, Thailand, U.S. Gulf, Western Cornbelt

US Gulf/Tampa:

The August increase in Tampa ammonia, to $475/mt CFR from July’s $415/mt, pushed truck pricing up to $430/st FOB out of Gulf Coast production points, above the prior $380-$400/st FOB range.

Eastern Cornbelt:

Ammonia prices edged up slightly in the Eastern Cornbelt, to $520-$550/st FOB from the prior $510-$520/st FOB range, with the high reported on a spot basis in Illinois. Most regional terminals were quoted solidly at the $520/st FOB level for fall prepay or prompt offers in early August.

Western Cornbelt:

Ammonia prepay and prompt pricing remained at $520/st FOB in Nebraska and Missouri and $525/st FOB in Iowa during the week. In the Southern Plains, the latest pricing out of Oklahoma and Kansas production points was quoted at $490-$500/st FOB.

Northern Plains:

Fall prepay offers for ammonia were quoted in the $515-$540/st FOB range in the Northern Plains, with the low confirmed at Velva, N.D. Delivered ammonia remained at $530-$550/st in the region, depending on location and supplier.

Northwest Europe:

Several offshore deliveries into Europe took place over the past week and a half, with little price information forthcoming. Given the higher Tampa settlement, gas-related production issues in Trinidad, and stable natural gas prices in Europe, the fundamentals are supportive of ammonia pricing in the region.

News emerged late in the week, however, of a purchase ex-Turkey for delivery into Northwest Europe, with the price reflecting around $550/mt CFR. As a result, the ammonia range in Northwest Europe moved up to $510-$550/mt CFR.

India: 

A FACT tender seeking 15,000 mt of ammonia with an arrival deadline of Sept. 10-15 to the Port of Kochi, on India’s West Coast, is scheduled to close on Aug. 5.

The Kochi facility’s limited storage means that only 8,000 mt of product can be unloaded at one time. The tender documents noted that if the full 15,000 mt is shipped in one vessel, that ship will have to wait for the storage tanks to empty before discharging the rest of the cargo. The rate of discharge was put at 600 mt/d.

The last FACT tender was covered by Iranian product. Given the current lack of ammonia available from the Arab Gulf and Southeast Asia, Iranian ammonia will likely supply the current tender as well.

Black Sea:     

January-June ammonia imports to Turkey were counted at 432,000 mt, Trade Data Monitor reported, nearly even from the 434,000 mt reported during the same period of 2023. Algeria, Egypt, and Libya combined to supply 180,000 mt, about 41% of the total. Algeria shipped 155,000 mt.

June imports were 34,000 mt, a 12% decline from 39,000 mt in June 2023. Second-quarter imports of 201,000 mt were down from the 236,000 mt recorded in April-June 2023.

Thailand:                  

Ammonia shipped to Thailand fell 11% year-over year in January-June, according to Trade Data Monitor, to 167,000 mt from 189,000 mt. Malaysia led suppliers with 102,000 mt, followed by Australia with 31,000 mt.

Thailand received 20,000 mt in June, off 51% from the 41,000 mt taken one year earlier. April-June imports were shown at 79,000 mt, down 15% from the 92,000 mt received in second-quarter 2023.

Urea

Black Sea, Brazil, China, Eastern Canada, Eastern Cornbelt, India, Indonesia, Market Watch, Mediterranean, Middle East, Northeast, Northern Plains, Pakistan, Thailand, U.S. Gulf, Urea, Western Cornbelt

US Gulf:

The NOLA urea barge market edged up to $307-$317/st FOB for prompt and August business during the week, slightly above last week’s $305-$315/st FOB range.

Eastern Cornbelt:

Urea remained at $365-$375/st FOB in the Eastern Cornbelt, with the low confirmed at Cincinnati, Ohio, and the high out of inland warehouses. Most Illinois River terminals were quoted firmly at the $370/st FOB level during the week.

Western Cornbelt:

Urea pricing was pegged at $350-$365/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and Port Neal, Iowa.

Northern Plains:

Urea slipped to $355-$365/st FOB St. Paul, Minn., for limited tons, down from the prior $360-$380/st FOB range. Delivered urea was also slightly lower at $395-$435/st in the Northern Plains, depending on location and point of origin, down from $400-$440/st FOB.

Northeast:

Urea remained at $370-$380/st FOB in the Northeast, with the low confirmed at Fairless Hills, Pa.

Eastern Canada:

Urea in Eastern Canada was unchanged at C$592-$700/mt FOB in early August.

India: 

India’s urea reserves were reported at 9 million mt going into August. The large stockpile, steady domestic production, and tonnage slated to arrive from the Indian Potash Ltd. (IPL) tender could combine to push back the next urea tender, sources speculated. Flooding currently taking place in many areas of the country could delay urea demand as well, some traders noted.

Many traders initially expected a new tender to be called by Aug. 15. Now, some are speculating the call could come later in the month. If India’s recent purchasing pattern holds, National Fertilizers Ltd. (NFL) will be the next state-owned entity to call a tender.

Pakistan:       

Trading Corp. of Pakistan (TCP) closed its 150,000 mt urea tender on July 28. Six companies participated.

Traders were surprised by the lowest two offers of $358.99/mt CFR from West Trade and $369.99/mt CFR from Mercury. The remaining offers, priced in the $380-$395.75/mt CFR range, were more in line with the market’s expectations for the tender.

Offering
Company 		Quantity (mt) $/mt CFR Source
West Trade 50,000-
150,000 		358.99 Oman-China-UAE
Mercury 150,000 369.99 Russia-Middle East-Egypt-Azerbaijan-Turkmenistan
Aditya Birla
Group 		80,000 380.00 Russia
Sinepo 150,000 388.80 Oman-Bahrain-Qatar-Malaysia
Torbert 50,000 392.75 China-Oman-Indonesia
Trammo 45,000 395.75 Open

TCP issued a counterbid to all the offering companies at the West Trade price of about $359/mt CFR. The companies were expected to reply by Aug. 1.

Some traders commented that little is known about West Trade and its ability to supply even the minimum of its proposed volume at the price offered. Significant volumes of sanctioned material – mostly from Iran – have been reported circulating in the area. While the tender documents excluded sanctioned product, recent shipments of Iranian urea to China have most in the industry expecting those tons to resurface as re-exported material. There have also been regular re-export activities of Iranian urea through select Arab Gulf producer states.

As TCP called its tender in early July, the government was reportedly in the process of approving an additional purchase of 200,000 mt to be made soon after the current tender was settled. TCP’s counterbid to the offering companies could also be seen as an effort to secure more tons than were requested in the tender.

Black Sea:

Black Sea prilled urea prices were steady at $305-$310/mt FOB.

Trade Data Monitor reported January-June urea imports to Turkey at 1.7 million mt, a 16% decline from the year-ago 2.1 million mt. Oman supplied 853,000 mt, followed by Egypt with 577,000 mt.

June imports were 75,000 mt, a significant decline from the 282,000 mt received both in June 2023 and the 316,000 mt monthly average recording in January-May of this year. Second-quarter imports stood at 581,000 mt, down nearly half from the 1.1 million mt imported in April-June 2023.

Mediterranean:

Granular urea offers in France slid to $390/mt CFR amid low buyer interest, pushing the Mediterranean market to $385-$390/mt CFR. No new offers were available in Italy, where Yara Ferrara is running and supplying the domestic market. Similarly, no updated bids or offers were heard in Spain or Romania, with some sources not expecting demand to return in earnest until September.

Indonesia:     

Prilled urea continues to be offered at a premium to granular in Indonesia. No new prilled business has taken place since Pupuk sold 5,000 mt at $378/mt FOB last week. The current discussion price for granular has yet to exceed $360/mt FOB, sources said.

Thailand:      

First-half urea imports were 1.4 million mt, Trade Data Monitor reported, up 15% from the 1.2 million mt received in January-June 2023, with Saudi Arabia sending 370,000 mt. Saudi Arabia’s dominance in the market is not surprising. SABIC has long offered substantially lower prices under its contracts with Thai buyers than what any spot buyer could expect to see.

June imports fell slightly, to 301,000 mt from 307,000 mt in June 2023. Second-quarter imports slipped 17%, to 670,000 mt from the 846,000 mt received one year earlier.

Middle East: 

Urea prices remained in the low-$340s/mt FOB in the Middle East. Arab Gulf producers went quiet during the week, spending time covering awards issued in the IPL/India tender and fulfilling long-term contract deals. No one appeared to be out looking for spot sales.

At least 100,000 mt was reportedly sold into China. Deals such as these have previously been intended for re-export rather than distribution in the Chinese market. If the tons go to bonded warehouses in China – as they are expected to do – the product will soon be made available in the open market with its origins obscured after being processed through the Chinese warehouses.

Reports from Egypt indicate that more facilities are coming back online. Abu Qir is now reportedly back in operation and projected to hit 80% of rated production capacity by next week. MOPCO continues to run two of its three facilities, with both said to be operating at 80% capacity.

NCIC reportedly offered 5,000 mt of urea packaged with an equal amount of CAN. Sources reported that offers were received for the CAN, but none for the urea. The producer was reportedly looking for a price in the $370s/mt FOB, a level most buyers are forcefully resisting.

Reports from Europe indicate that buyers are not eager to commit to any new purchases. Current discussions in Europe match with the last Egyptian sale in the mid-$360s/mt FOB, a deal that prompted producers to push for the $370/mt FOB figure.

China:

The domestic price of urea bounced around during the week before settling at a reported RMB2,090-2,100/mt ex-factory. The price would equate to an export price of roughly $315-$320/mt FOB, if any exports were allowed.

Until the government lifts its restrictions on urea exports, using the ex-factory price to calculate the possible export price is only an academic exercise, sources said. The market could just as easily use the Indonesian price or pricing from the Arab Gulf to triangulate a potential China value in the $340s/mt FOB, one trader said. The bottom line, said one source, is there is no international market price for Chinese urea.

The few tons that have been allowed to ship internationally are limited to small lots, usually packed in containers for specialty markets, such as for use in South Korea’s pollution control devices.

Brazil:

Granular urea offers into Brazil softened to $360-$365/mt CFR in a slow market, while rumored transactions in the $340-$350/mt CFR range went unconfirmed. Bidding tracked around the $350/mt CFR mark with buyers expecting further price declines ahead.

Despite expectations of a possible short-term slide in prices, the Rondonópolis market continued at $480-$500/mt FOB during the week. Ongoing negotiations aimed at lowering the CFR price have yet to impact the domestic market. The progression of soybean planting will be a crucial indicator for determining fertilizer demand in the fourth quarter, as delayed sales can lead to stockpiling for the second crop after the soybean season has ended.