All posts by hlancey@bloomberg.net

Engro Completes $50 Million Turnaround

News Briefs, Pakistan, Urea

Pakistan’s Engro Fertilizers on June 18 completed a 55-day maintenance turnaround at its EnVen Plant, the largest scheduled maintenance period at the plant since its launch in 2011. The EnVen Plant has urea production capacity of 1.3 million mt/y and is the most energy efficient fertilizer plant in Pakistan, Engro reported, with the lowest consumption of gas per ton of urea.

The project scope of the turnaround included over 5,000 technical activities to improve reliability and operational efficiency at EnVen, including the first replacement of the waste heat boiler, overhaul of the furnace convection section, ammonia storage tank inspection, and a comprehensive overhaul of six major turbo trains and gas turbines.

Engro said it invested approximately $50 million to complete the turnaround, with more than 6,000 workers engaged round-the-clock at the site during peak maintenance. The plant was built at a cost of $1.1 billion in 2011.

“The safe and successful completion of this major turnaround, despite extreme weather conditions, showcases the engineering excellence of the Engro Fertilizers team in executing large-scale projects within planned schedules and budgets, while prioritizing the safety of everyone involved in the activity,” said CEO Ali Rathore.

“The meticulous planning and execution ensured that the availability of urea to our hardworking farmers was not impacted, demonstrating the entire Engro Fertilizers team’s firm commitment to our purpose of enabling the food security of Pakistan,” he added.

Lula Says Petrobras Should be Profitable

Brazil, News Briefs

Brazilian President Luiz Inácio Lula da Silva said he wants Petrobras to be profitable in an apparent effort to ease investor concerns about the direction of the state-controlled oil and fertilizer producer, Bloomberg reported.

“Nobody wants any shareholder to lose money,” Lula said at a ceremony to swear in Petrobras CEO Magda Chambriard. “If you invested, you are entitled to a return on your investment.”

Rio de Janeiro-based Petrobras has seen sharp fluctuations in its share price this year amid a dispute between previous management and members of Lula’s cabinet over how much it should be paying investors in dividends, Bloomberg said.

Chambriard pledged to deliver robust results and ensure good governance, while also saying management is aligned with the government’s mission to grow the economy. She added that Petrobras will develop new offshore oil regions to help pay for the energy transition, and also focus on refining, petrochemicals, and fertilizer production. 

You can’t “talk about the energy transition without mentioning who will pay the bill,” said Chambriard. “It’s oil that will pay this bill.”

BP Takes Control of Brazil Ethanol Business

Brazil, Europe, Germany, London, News Briefs, U.S.

BP Plc has agreed to take full control of its Brazilian ethanol joint venture with agribusiness giant Bunge Global SA while scaling back some new biofuel projects in the US and Europe, Bloomberg reported on June 20.

The acquisition of 50% of BP Bunge Bioenergia SA, as the venture is known, will give BP the capacity to produce about 50,000 barrels a day of sugar-cane ethanol, the London-based company said in a June 20 statement. The stake has an enterprise value of nearly $1.4 billion.

Meanwhile, the company said it is pausing plans on renewable diesel and cleaner jet fuel projects as it seeks to simplify its portfolio and focus on “value and returns.” BP will not proceed with plans for standalone biofuels production units at its Cherry Point refinery in the US and its Lingen plant in Germany, spokesman David Nicholas told Bloomberg.

The deal with Bunge, which will give BP full control over 11 sugar cane mills, will expand the British company’s ability to tap the huge potential for advanced biofuel production in Brazil. Sugar-cane ethanol, which typically has a lower carbon footprint than that for the ethanol made of corn in the US, is seen as a key ingredient for so-called sustainable aviation fuel, the main bet to decarbonize air travel.

The transaction seems to have a “reasonable valuation” and should help secure BP’s 2025 earnings target for its bioenergy business, Biraj Borkhataria, an analyst at RBC Capital Markets, told Bloomberg.

Bunge has long been looking to divest from the joint venture, with CEO Greg Heckman saying in 2020 that a sale of the stake to BP was a possibility. Brazil’s sugar cane industry has been struggling with poor profits on the ethanol business as weak demand and a supply glut damped prices in the local market.

“This business is not core to Bunge’s long-term strategy and this transaction will allow us to focus and invest in our core businesses while also further strengthening our balance sheet,” Heckman said in a June 20 statement.

The deal, which Bunge said should yield net proceeds close to $800 million, comes at a time when the crop trader is seeking to complete its $8.2 billion acquisition of Glencore Plc-backed Viterra, which was announced a year ago. It raises questions about what the company plans to do with Viterra’s sugar business in Brazil once the acquisition is completed.

Subject to regulatory approvals, BP expects the transaction to close by the end of 2024. BP shares were up 1.2% as of 4:09 p.m. in London. Bunge climbed 1.4% in New York.

BP has pledged to achieve net zero emissions by 2050 and gradually shrink its oil and gas production in the coming decades. It has been investing heavily in renewable electricity – mainly wind and solar – as the main source of clean energy. However, biofuels also have a major role to play in decarbonizing transport as long as battery power remains unsuitable for air travel.

Russia Arrests Former PhosAgro Executive

News Briefs, Russia

Yevgeny Novitsky, the former First Deputy CEO of Russian fertilizer producer PhosAgro and head of Russian multi-industry investment conglomerate AFK Sistema, was detained in an investigation of “a criminal case of an economic nature,” according to bne IntelliNews, citing TASS reports from Russian law enforcement authorities. 

Novitsky became one of the heads of Sistema’s company in 1995 and was President of the holding company until 2005. Until 2013 he was a member of the company’s board of directors. Novitsky resigned from PhosAgro after sanctions were imposed against him in June 2022, bne IntelliNews reported.

Novitsky’s name appeared in the case file of Alexey Taicher, the ex-owner of Transfin-M, who was arrested the day before, bne IntelliNews reported, citing RBC business portal sources. In 2012 Taicher in partnership with AFK Sistema acquired the railway operator SG-trans.

Travertine Secures $8.5 M to Reduce Fert Emissions

Carbon Dioxide, Clean Ammonia, Low-Carbon, U.S.

Travertine Technologies, a clean energy startup company based in Boulder, Colo., announced the closing of its $8.5 million financing to commercialize a technology that enables carbon-negative production of fertilizer.

The financing was co-led by Holcim MAQER Ventures with participation by the Grantham Foundation for the Protection of the Environment, Clean Energy Ventures, and Bidra Innovation Ventures.

Travertine’s technology uses electrolysis, Direct Air Capture (DAC), and mineralization to make economical gigaton-scale carbon dioxide removal and permanent sequestration a reality, according to the company’s website. Travertine was founded in 2022.

India Increases Green Ammonia Bids for Fertilizer

Clean Ammonia, Green Ammonia, India, Low-Carbon

State-owned Solar Energy Corporation of India (SECI) has announced a 36% increase in the size of bids it is requesting for green ammonia.  The decision was announced two weeks after the tender’s initial launch due to higher-than-expected demand for the green ammonia product (GM June 21, p. 25).

The original bid program was based on cost-based competitive bidding under the SIGHT program implemented by the Ministry of New and Renewable Energy. The program originally invited bids for up to 550,000 mt/y but is now increasing that amount by 200,000 mt/y.

In the program, ten-year supply contracts will be allocated via a reverse auction. Green ammonia producers will compete to supply the volumes for the lowest price. Winning bids will also be awarded a three-year subsidy worth up to $0.11 per kg of ammonia. The green ammonia is expected to be split across 11 different delivery points at existing fertilizer plants along India’s east and west coasts.

Construction Begins on UAE Blue Ammonia Project

Ammonia, Blue Ammonia, Clean Ammonia, Japan, Low-Carbon

Mitsui, Fertiglobe, GS Energy Corp., and TA’ZIZ have agreed to commence construction on their blue ammonia project in Al Ruwais, United Arab Emirates (UAE). In addition, Japan-based Mitsui has signed a loan agreement with the Japan Bank for International Cooperation to finance the development of the project.

The project was originally announced in 2021 (GM May 28, 2021) and is set to produce 1 million mt/y of ammonia by capturing and storing CO2 emitted in the manufacturing process.  Initial production is set to begin in 2027 with plans to begin production of clean ammonia by 2030.

Mitsui will offtake some of the ammonia volume for supplying Japan and other Asian markets.  Mitsui has said it will use the ammonia in fuel applications and chemical fertilizer feedstock applications. Mitsui joined the project in 2021 (GM Nov. 19, 2021) and Tecnimont was named as the EPC for the project last year (GM Feb. 17, 2023).

Hygenco, Ameropa Ink Green Ammonia Deal

Ammonia, Clean Ammonia, Green Ammonia, India, Low-Carbon, Switzerland

India’s Hygenco Green Energies Pvt Ltd and Swiss agriproducts merchant Ameropa have signed a term sheet for the supply of green ammonia from Hygenco’s Gopalpur Industrial Park project in Odisha, India. The quantities of ammonia in the agreement have not been released.

The Gopalpur Industrial Park project is set to begin operation by 2027, a slight delay from the initially reported operational date of December 2026. The plant is expected to produce 600 mt/d of green ammonia (GM May 10, p. 27). Full green ammonia production on the order of 1.1 million mt/y is expected by 2030.

Ammonia

Ammonia, Eastern Cornbelt, India, Market Watch, Middle East, Northwestern Europe, South Central, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

US Gulf/Tampa:

No Tampa ammonia news was out for July as Green Markets went to press. While some were speculating last week that the price would be down from June’s $400/mt CFR based on aggressive fill offers circulating briefly in the Cornbelt, others suggested a rollover or slight increase this week, citing higher but limited Cornbelt offers this week and reports of new business out of Trinidad at the $375/mt FOB level.

Eastern Cornbelt:

After last week’s aggressive fill programs that circulated briefly on June 20 at the $410/st FOB level in the Eastern Cornbelt, new ammonia pricing was launched this week at $460-$475/st FOB in the region, depending on location. The offers were limited, however, with not all producers participating.

Western Cornbelt:

Few new ammonia offers were on the table in the Western Cornbelt after last week’s limited fill program offers, though sources speculated that any new business would be up roughly $50/st from last week, to $440-$450/st FOB. “It’s been really quiet on the ammonia front,” commented one regional source at midweek.

Southern Plains:

Sources reported no new ammonia prices in the Southern Plains following last week’s fill program offers at $335/st FOB Enid, Okla., $350/st FOB Dodge City, Kan., and $370-$375/st FOB Verdigris, Okla., and Coffeyville, Kan. Those offers were no longer on the table this week.

South Central:

The only new ammonia offer reported in the South Central region during the week was $350/st FOB Midway, Tenn. Sources said no other regional terminals had prompt or fill prices on the table in late June.

Northwest Europe:

Ammonia in Northwest Europe was stable again this week, as were natural gas prices. With the latest business ex-Trinidad closing above prior levels, however, a response is expected by some on the European front.

Others expect a flat market going forward, citing the offseason for demand in Europe and other regions, as well as softer prices in the US market for fill program offers.

India: 

Prices in India remained steady at $397/mt CFR in the absence of new spot deals.

Middle East: 

Arab Gulf supply is expected to strengthen as production ramps up, sources said. So far, said one trader, supply and demand have remained in balance, but an increase in product over the next few weeks could lead to softer prices unless demand firms.

Urea

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

US Gulf:

NOLA urea was reported in a tight range at $303-$308/st FOB for loaded barges during the week, with the same range reported for limited full-June and July business. This week’s market fell within last week’s $290-$309/st FOB level.

Eastern Cornbelt:

Urea was quoted at $355-$375/st FOB in the Eastern Cornbelt, with the low confirmed out of spot Illinois and Ohio River terminals. The Cincinnati, Ohio, market was steady at $365-$375/st FOB during the week. Michigan pricing included $390/st FOB and $425-$430/st DEL in late June.

Western Cornbelt:

Urea in the Western Cornbelt remained at $335-$365/st FOB, with the low reported at Port Neal, Iowa. The St. Louis, Mo., market was unchanged at $345-$350/st FOB in late June.

Southern Plains:

Urea slipped to $355-$370/st FOB in the Southern Plains, with the low reported at Catoosa/Inola, Okla., and the high in Texas.

South Central:

Urea was unchanged at $340-$370/st FOB terminals in the South Central region, with the low confirmed at Convent, La., and the high in Arkansas. Pricing at Memphis, Tenn., and out of Kentucky river terminals was reported at $355-$365/st FOB during the week.

Southeast:

Urea pricing in the Southeast remained at $375-$380/st FOB port terminals in late June, with the low confirmed at Wilmington, N.C., and the high at Chesapeake, Va.

India: 

Indian Potash Ltd. (IPL) called a urea tender this week to close July 8 with a shipping deadline of Aug. 27.

While many sources were expecting a tender to be called in late June or early July, several players expressed surprise that the call came this week.

India started the month with urea reserves at an unprecedented 11 million mt. At the same time, prices were already fluctuating due to China’s export restrictions and production shutdowns in Egypt. The added pressure from an Indian tender could keep the market unsettled, said one trader.

In stipulating a late-August shipping deadline, sources speculated that IPL might have been counting on the availability of Chinese product, thereby adding downward pressure to prices. However, even if the Chinese government allows exports to begin in August, it now looks as though orders will be limited to small lots of 10,000 mt or less, one trader noted.

At the same time, urea reserves from the Arab Gulf have been greatly reduced following a series of plant closures for routine maintenance. The tons that remain available are being used to cover existing contracts or to engage in swap deals to help other producers cover their contracts, sources reported. The steady sale of urea to existing buyers could leave limited tonnage for the Indian tender, said one trader.

Traders initially speculated that IPL will set a top buying target of 1 million mt. As the week progressed, however, more sources voiced expectations of a purchase below 1 million mt, with one trader predicting a take of only 500,000 mt.

Black Sea:     

Prilled urea edged up to $305-$310/mt FOB in the Black Sea following reports of a production shutdown in Egypt and a tender call from India.

Mediterranean:

Despite the prolonged Egyptian outages, European buyers in the Mediterranean continue to resist urea values above $380/mt CFR. The latest reports of FCA business done in France and Spain reflected approximately $375-$380/mt CFR, resulting in an unchanged range for the week. Prices are likely to remain sticky as much of the region heads into the offseason.

Southeast Asia:

Southeast Asia granular urea prices edged up to $312-$350/mt FOB, with the high reflecting indications and theoretical netbacks from nearby CFR markets and the low matching the last Indonesian tender award.

Though no FOB granular urea sales were reported this week, some regional players expect Indonesia to tender some tons in the context of the fresh IPL India tender announced on June 24.

Indonesia:     

Pupuk continues to struggle with shipping the 280,000 mt of granular urea it sold earlier this month, sources said. The parent company of Indonesia’s urea producers has faced grim weather conditions at ports, preventing ships from loading. At the same time, there are reports that securing vessels for transport has become increasingly difficult.

The attacks on vessels exiting the Suez Canal for Asia have left the Asian shipping market in a state of uncertainty, sources reported There are now rumors that some cargoes may not be fully loaded until late July.

Traders said Pupuk will most likely abstain from calling another selling tender until the last of the cargoes has been nominated to a vessel, potentially pushing the next tender call into late July or early August.

Despite the lack of new business, industry players are talking about potential prices. Indications were noted in the $340s/mt FOB during the week, a significant jump from the last confirmed sale at $312/mt FOB.

Middle East: 

Offers for Middle East tons remained in the $350s/mt FOB against firm bids in the $340s/mt FOB. The distance between the two sides prevented players from nailing down new sales during the week.

Industry sources speculated that Arab Gulf urea will dominate the Indian tender set to close on July 8. However, urea reserves in the region are not very high, some traders noted.

When producers took routine maintenance turnarounds in June, they used their reserves to cover contracts or engaged in swap deals with other producers. Now that production is ramping back to normal, contracts still have to be fulfilled and swaps have to be repaid, sources said, leaving fewer tons available to offer into the tender than the buyer may have anticipated.

Urea production in Egypt has essentially shut down once again, sources reported. Earlier this week the government reinstated its limits on natural gas supplied for industrial use. The government said the gas was needed to power residential air conditioning during the current heat wave.

The gas restrictions and subsequent shutdowns in the urea industry lit a fire under export prices. Despite a lack of concluded business, pricing discussions jumped dramatically, players said.

The week opened with sources quoting the paper market at $365/mt FOB for July shipment, up from the last confirmed sale at $340/mt FOB. By midweek, following the Indian tender announcement and the news that most Egyptian urea production would cease, the July paper price jumped to $375/mt FOB.

Egyptian sources were unsure when the natural gas restrictions would be lifted and production could resume.

China:

Restrictions on urea exports remained in place in China, leaving sources to describe price discussions for potential exports as an ongoing academic exercise. The discussions showed prilled and granular urea at parity in the $340-$350/mt FOB range during the week.

Some regional buyers continue to maintain hope that exports could be allowed by mid-July. Once exports are allowed to resume, sources expect the lots to ship in containers and measure less that 10,000 mt, a size and mode of transport favorable to Southeast Asian buyers.

If the export restrictions are lifted in time, some speculated that Chinese product might play a part in the Indian tender. A number of traders dismissed that idea, however.

Even if the restrictions are lifted in early July, sources said preference will most likely be given to the smaller lots preferred by regional buyers over the large quantities needed to compete in India. One trader noted that export approval relies on the ability to maintain large and cheap reserves for the domestic market. It is easier, he said, to regulate the impact of small shipments on the domestic market than the larger, bulk lots.

Brazil:

Brazil granular urea prices softened $5/mt, to $355-$365/mt CFR from $360-$370/mt CFR at last report. Interest was muted as buyers await the results of the Indian tender, while the weakening Brazilian Real and falling corn prices also impacted the market.

The return of gas supply cuts in Egypt and the continued lack of Chinese exports also contributed to high volatility during the week

Rondonópolis trading softened to $480-$500/mt FOB, off from $500-$530/mt FOB in the prior report. While sources noted a handful of negotiations at $510/mt FOB, most product was offered toward the lower end of the range.

Domestic negotiations were affected by lower international market prices this week, while the prospect of reduced import volumes at India – a product of high existing inventories in the country – contributed to the price decline. Additionally, demand was slow as buyers focused on grain sales and the harvest.

Argentina:    

January-May urea imports to Argentina totaled 280,000 mt, Trade Data Monitor reported, a significant increase from the year-ago 95,000 mt. Nigeria sent 86,000 mt, Algeria shipped 71,000 mt, and Bolivia added 38,000 mt. May imports were 41,000 mt, down about one-third from the 61,000 mt received in May 2023.