All posts by hlancey@bloomberg.net

Heringer Sees Improved Margins, Lower Volumes

Brazil, DAP/MAP, Earnings, News Briefs, Urea

Fertilizantes Heringer reported first-quarter gross profit of R$17.4 million, up from the year-ago negative R$56.4 million. “An important reversal when compared to the same period in 2023,” CFO and Investor Relations Officer Persio Pimentel Pinto Ravena said in the company earnings call, “representing a positive margin of 1.8% over net revenue.”

EBITDA also reflected an improvement at a negative R$52.1 million versus the year-ago negative R$139.5 million. However, the company’s net loss grew 9.6%, to R$144.2 million on net revenue of R$970.1 million from the year-ago negative R$131.5 million and R$1.38 billion, respectively.

First-quarter fertilizer sales volumes were off 3%, to 455,000 mt from the year-ago 469,000 mt, with the company citing the delay in soybean planting and harvest at the end of 2023, which resulted in a reduction in the area and investment for second crop corn. Conventional fertilizer sales were off about 8%, to 405,000 mt from 441,000 mt, while premium fertilizers (formerly called specialty) were up nearly 80%, to 50,000 mt from 28,000 mt.

Heringer reported a mixed bag on major fertilizer prices, saying urea prices increased due to geopolitical tensions and increased demand in North America. However, it saw a large supply of potash in the market and a favorable exchange rate with prices remaining low. It said Brazilian MAP remains stable compared to the international market due to suppressed demand.

Citing a May CONAB survey, the company said Brazil should reach a 2023/24 harvest of around 295.4 million mt, with grain production seeing a reduction of 7.6% from 2022/23, which saw a record harvest of 319.8 million mt.

China’s SDIC in Talks for Stake in Thai Potash Mine

Asia Pacific, China, News Briefs, Potash, Thailand

Pacific Potash Corp., according to a Bloomberg report, citing people familiar with the matter.

SDIC aims to acquire up to 49% of the company, which has exploration and production rights in northeast Thailand, from Italian-Thai Development Plc (ITD), the people said, asking not to be identified discussing confidential information. ITD shares jumped as much as 11%, the biggest gain in three weeks.

A deal could be worth at least $400 million and might be announced as soon as the coming weeks, the people said. They cautioned, however, that no agreement has been finalized and talks could still fall apart. ITD, Asia Pacific Potash, and SDIC didn’t respond to requests for comment. 

Bloomberg News reported in February that ITD was considering selling its 90% stake in Asia Pacific Potash and talking with potential buyers, including from China (GM Feb. 23, p. 32). In April, ITD’s Executive Vice President reaffirmed that talks were ongoing and asset sales would accelerate as the builder tries to repay debts.

While ITD is still one of Thailand’s biggest construction firms, its market value has tumbled to a little over $100 million from more than $1.5 billion less than 10 years ago. Net income for the first quarter was about 122 million baht ($3.4 million), down 60% from one year earlier, the company said last week. 

After reporting a fourth consecutive annual loss in March, ITD said it expected to get new loans and sell non-core assets to continue operations and address a liquidity crunch. Bondholders also approved two-year extensions of redemption dates in January. ITD’s total liabilities were 107 billion baht as of Dec. 31.

ITD acquired Asia Pacific Potash in 2006, giving it access to high-grade potash deposits in Thailand’s Udon Thani province, where it has annual production capacity of 2 million mt, according to its website. 

SDIC Mining is a subsidiary of China’s State Development and Investment Corp., which invests in non-coal mineral resources and related industries.

Acron Estimates $1.6 B to Complete Talitsky Project

News Briefs, Potash, Russia

Russian fertilizer producer Acron estimates that $1.6 billion in capital expenditures will be needed to complete the Talitsky potash project, according to Interfax, citing the company’s annual report. Acron said it has already spent about $500 million in capex, not including the cost of the license.

Acron said potash production at the Talitsky mine is scheduled to start in 2026 and is expected to reach design capacity in 2029. The operation will have an initial production capacity of 2 million mt/y when fully ramped up, with plans to expand to 2.6 million mt/y.

The company spent $246 million on the project in 2023, completing the sinking and equipment of vertical shafts and starting construction on the mine’s surface facilities, processing plant, tailings dump, auxiliary shops, and external infrastructure, Interfax reported.

Acron subsidiary Verkhnekamsk Potash Co. (VPC) secured the license to the Talitsky section of the Verkhnekamsk potassium and magnesium salts deposit in Perm Territory in 2008. The project was later joined by banks and at the end of 2023 Acron owned 50% plus one share in VPC, Sberbank held 29.9%, state bank VTB owned 10%, and Otkritie held 10.1%. Acron bought out 30% of VPC shares from its partner banks earlier this year (GM March 29, p. 30), increasing its stake to 80%.

The Talitsky mine will have design capacity to produce 2 million tonnes of potassium chloride per year and there are plans to expand to 2.6 million tonnes. Acron itself needs 600,000 tonnes of potash per year.

Saudi Arabia, Jordan Officials Discuss Collaboration

Jordan, News Briefs, Phosphate, Potash, Saudi Arabia

Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim Alkhorayef reportedly met with Arab Mining Co. Chairman of the Board Mohammed Ahmed Al-Shehhi in Jordan this week to discuss ways of enhancing cooperation in the mining sector, the Saudi Press Agency reported.

Alkhorayef also held meetings with officials from Jordanian companies operating in the mining sector during his official visit to Jordan, including Jordan Phosphate Mines Company, to explore opportunities for cooperation in phosphate extraction and production.

Additionally, the Saudi Press Agency reported that Alkhorayef met with officials from the Arab Potash Co. to review the progress made in implementing a Memorandum of Understanding signed in 2022 (GM Jan. 21, 2022) with the Saudi Arabian Mining Co. (Ma’aden) to enhance collaboration in specialized fertilizers and products in both countries.

Sri Lanka Eyes Domestic SSP Over Imported TSP

News Briefs, Phosphate, Phosphate Rock, Triple Superphosphate

Sri Lanka’s Department of Agriculture has recommended the use of single super-phosphate (SSP) by using Eppawala Rock Phosphate for paddy cultivation over triple super-phosphate (TSP), in a May 16 meeting at the Ministry of Agriculture and Plantation Industry.

To date, eight private sector manufacturers and two government-owned entities in the island nation produce SSP, which, following government guidance, will be used for rice application during the 2024/25 Maha season (September through March).

Agriculture Minister Mahinda Amaraweera asked the National Fertiliser Secretariat and the two state-owned fertilizer companies, Lanka Fertiliser Co. and Commercial Fertiliser Co., to develop an extension and information program to educate farmers on the use of SSP for paddy cultivation.

The Eppawala deposit holds some 60 million mt of phosphate rock and is seen as a promising initiative for the country’s fertilizer sovereignty. Between 2016-2020, Sri Lanka imported on average 70,000 mt/y of TSP, but imports have fallen sharply to under 10,000 mt/y due to lower affordability during the price rally of 2021-2023.

Petro Vietnam Acquires Korea-Vietnam Fertilizer

News Briefs, NPK, Urea, Vietnam

Petro Vietnam Ca Mau Fertilizer JSC has acquired a 100% stake in Korea-Vietnam Fertiliser (KVF) for an estimated purchase price of $25 million. The acquisition is primarily intended to penetrate the NPK market in southeast Vietnam, the Central Highlands, and Central Vietnam. KVF’s NPK plant assets will also be used as a storage facility for raw materials.

Ca Mau has made a series of recent acquisitions, including acquiring Han Viet Fertilizers in April 2023, which has a total capacity of 360,000 mt/y of NPK. In addition to the new assets, Petro Vietnam has an existing 787,000 mt/y of urea capacity at Ca Mau and 200,000 mt/y of NPK capacity at Phu My.

NASDA Awarded Funds to Diversify Ag Markets

News Briefs, U.S.

The National Association of State Departments of Agriculture (NASDA) announced on May 21 that it has been awarded $5 million through the USDA Foreign Agricultural Service to diversify market opportunities for US food and agricultural products by expanding markets beyond the top regions that US ag products are currently exported to.

The funding will be supplied through USDA’s Regional Agricultural Promotion Program, and will be used to foster relationships, maintain and improve market access, and expand export opportunities for small and medium-sized US food and beverage companies. USDA Foreign Agricultural Service said that for each $1 invested in export market development, US agricultural exports have increased by more than $24.

“We are excited for NASDA members to have additional resources to bolster international marketing opportunities for U.S. agricultural producers,” NASDA CEO Ted McKinney said. “With this new investment in diversifying markets and increasing trade, we can support rural and agricultural communities through developing long-term economic impacts.”

House Ag Committee Advances Farm Bill

News Briefs, U.S.

The House Agriculture Committee voted early on May 24 to advance the 2024 farm bill for consideration by lawmakers on the House floor. The vote on H.R. 8467 followed lengthy deliberations that featured policy clashes over Supplemental Nutrition Assistance Program (SNAP) benefits, climate change, funding structures, and child labor, Bloomberg reported.

The Agricultural Retailers Association (ARA) President and CEO Daren Coppock on May 24 released a statement applauding the bipartisan efforts by the committee to move the farm bill forward.

“ARA applauds members of the House Committee on Agriculture for passing a new five-year Farm Bill out of committee, which included several of ARA’s policy priorities. This is a critical step forward to providing much needed economic certainty for America’s agricultural industry,” Coppock said.

“We are confident that Congress will find a bipartisan agreement that ensures farmers and ranchers are supported in their efforts to meet our nation’s food, fiber, and fuel needs for our growing population,” he added. “ARA urges the House and Senate to vote to pass the five-year Farm Bill this year.”

The 954-page farm bill is projected to cost more than $1 trillion for the first time, Bloomberg reported, and still faces an uphill climb to become law due to divides with the Senate. House Committee Republicans rejected a bid by Democrats to amend “red-line” provisions on nutrition and conservation funding.

The Senate hasn’t yet released its version, though Agriculture Chair Debbie Stabenow (D-Mich.) and other Democratic leaders framed the GOP House’s version as a partisan hatchet job and discouraged their allies from supporting it, saying it cuts SNAP benefits and puts too many restrictions on USDA’s commodity and conservation programs.

According to Bloomberg, the House bill would tie future food aid increases to food price inflation – but not to other factors, like changing dietary guidance – reducing SNAP benefits by $30 billion over a decade, according to estimates from the Congressional Budget Office. Democrats also drew battle lines around the House plan to redirect money away from climate change mitigation and toward other conservation programs favored by Republicans.

Lawmakers need to clear the legislation before the end of the year or extend the deadline again to avoid programs lapsing.

Ammonia

Ammonia, California, China, Eastern Cornbelt, India, Market Watch, Northwestern Europe, Pacific N.W., Southeast Asia, Tampa, U.S. Gulf, Western Canada, Western Cornbelt

US Gulf/Tampa:

Tampa ammonia remained at the May settlement of $450/mt CFR, with no indications reported for the June contract.

Eastern Cornbelt:

Ammonia prices continued to fall in the Eastern Cornbelt as demand shifts to sidedress applications. The latest offers for truck tons were reported at $575-$590/st FOB in the region, down from last week’s $590-$610/st FOB range.

Western Cornbelt:

Ammonia prices slipped to $575-$590/st FOB in the Western Cornbelt, depending on location, down from $590-$600/st FOB last week. Sources quoted the latest truck offers out of Palmyra, Mo., and Wever, Iowa, at the $580/st FOB level during the week.

Ammonia was also lower in the Southern Plains and South Central region, where recent offers were quoted as low as $510-$535/st FOB Oklahoma production points and $535/st FOB Cherokee, Ala., down from last week’s $535-$570/st FOB range in Oklahoma and $575/st FOB Cherokee.

California:

Ammonia prices in California were unchanged at $670/st DEL for anhydrous and $186-$196/st FOB for aqua ammonia in late May.

Pacific Northwest:

Ammonia pricing in the Pacific Northwest remained at $645-$650/st FOB, with the aqua ammonia market steady at the $168/st FOB level in the region.

Western Canada:

Ammonia pricing continued at C$1,130-$1,150/mt DEL in Western Canada for the latest spring offers.

Northwest Europe:

No fresh spot ammonia business was heard in the region, but Algerian values reflected around $470/mt CFR, the high end of the existing range. With natural gas prices stable around $9/MMBtu and lower new-season pricing for nitrates, the Northwest European ammonia market was unchanged at $460-$470/mt CFR.

Southeast Asia:

No further business was confirmed in Southeast Asia, but plant outages continue to support ammonia pricing, with some sources citing contract business in the mid-$300s/mt FOB. The Southeast ammonia range this week was unchanged at $330-$385/mt FOB.

India: 

FACT has reportedly pulled back from the tender it closed last week after just one company, Sun International, offered tons at $316/mt CFR. At that price, Iran was the most likely source, one trader suggested.

Previous efforts by FACT to pull back on its tenders were usually part of an effort to force lower prices from offering companies. In this case, said one trader, the price seemed reasonable given the current market, so the reasoning behind FACT’s action is unclear.

First-quarter ammonia imports totaled 460,000 mt, Trade Data Monitor reported, a 26% decline from the year-ago 621,000 mt. Saudi Arabia sent 171,000 mt, Oman shipped 111,000 mt, and Indonesia added 89,000 mt. March imports were 172,000 mt, up 24% from 139,000 mt in March 2023.

China:

China often becomes an ammonia exporter when prices are high. Prices have come off this year, however, making offshore sale unprofitable for Chinese companies.

Only 17,000 mt of ammonia have been exported from China through the first four months of the year, according to Trade Data Monitor, with Vietnam taking 13,000 mt. This is down from the 131,000 mt shipped in January-April 2023. April exports were pegged at 1,700 mt, off from the 4,000 mt shipped in April 2023.

January-April ammonia imports were also down compared to the same period of 2023, with receipts noted at 206,000 mt, a 4% year-over-year decline. April imports stood at 54,000 mt, down more than half from the 109,000 mt received in April 2023.

Urea

Argentina, Black Sea, Brazil, California, China, Eastern Cornbelt, India, Indonesia, Market Watch, Mediterranean, Middle East, Pacific N.W., Southeast Asia, U.S. Gulf, Urea, Western Canada, Western Cornbelt

US Gulf:

The NOLA urea market was quoted at $285-$295/st FOB for limited trades during the week, with the high confirmed for loaded barge transactions. Sources quoted full May business at the $290/st FOB level, with first-half June trades reported at $285-$292/st FOB. The range fell within last week’s $282-$298/st FOB level.

New barge business was also reported at $306-$310/st FOB for upriver tons and down to $280/st FOB for July business, but those levels fell outside of this week’s reported range due to timing and location.

Eastern Cornbelt:

Urea was unchanged at $370-$390/st FOB in the Eastern Cornbelt, with the low reported at Illinois River terminals and the high at inland warehouses. The Cincinnati, Ohio, market was steady at the $375-$380/st FOB level in late May. Delivered urea pricing in Michigan slipped to the $403-$408/st level for May tons.

Western Cornbelt:

Urea prices in the Western Cornbelt fell to $350-$390/st FOB during the week, down $10/st from last report, with the low confirmed at St. Louis, Mo., and the high reported in Iowa.

California:

Urea was quoted at $520-$540/st FOB in California, with the low reported for bulk granular tons at Stockton and the high for prilled urea at San Diego. Bagged granular urea pricing was reported at the $560/st FOB Stockton level during the week.

Pacific Northwest:

Urea pricing in the Pacific Northwest slipped to $425-$430/st FOB and $440-$450/st DEL at mid-month, down from the prior $445-$450/st FOB and $465-475/st DEL ranges. The low end of the FOB range was reported at Rivergate, Ore.

Western Canada:

The urea market in Western Canada remained at C$775-$780/mt DEL and C$760-$770/mt FOB in late May.

India: 

Sources now say India’s next urea tender may not be called until July. Traders argue that India’s current urea reserves – estimated to hit 11 million mt by the end of the month – and the current national election support the delay.

A decision to import urea will be made by the Department of Fertilizers (DoF). Once the election results are known, the government will pass a final budget to replace the current provisional budget. A decision to call a tender will come only when the DoF knows how much money it will have for imports, said one trader.

First-quarter urea imports fell 35%, Trade Data Monitor reported, to 1.1 million mt from the 1.7 million mt received in January-March 2023. Russia led suppliers with 351,000 mt, the UAE shipped 259,000 mt, and Oman sent 226,000 mt. March imports were noted at 417,000 mt, above the 235,000 mt reported in March 2023.

Black Sea:     

Prilled urea prices remained steady at $240-$245/mt FOB in the Black Sea.

Mediterranean:

Market participants in the Mediterranean are still recovering from the rally in Egyptian urea prices, which reached $310/mt FOB last week and $320/mt FOB on May 20. Indications in Italy were higher at $320-$325/mt CFR but buyer interest was scarce, while offers in nearby Romania were heard as high as $330/mt CFR.

With no confirmed fresh sales, the Mediterranean granular urea spot market was reported at $310-$325/mt CFR for the week, reflecting the last confirmed transaction on the low end and fresh offers on the high end.

Southeast Asia:

Reports of an imminent Indonesian granular urea tender ahead of the IFA Singapore conference materialized on May 21, when one trader was reported to bid $312/mt FOB for 45,000 mt for June loading. This moved the regional price range to $290-$312/mt FOB, with the low reflecting the latest Brunei sale and the high reflecting the highest bid seen by Pupuk Kaltim.

Indonesia:     

Pupuk Kaltim closed a tender for 45,000 mt of granular urea. Nearly 20 companies bid on the tonnage, with prices ranging from the low-$290s/mt FOB to just over $310/mt FOB. In the end, sources reported that Universal Harvester, from the Philippines, was awarded the tonnage at a price of $312.26/mt FOB.

Sources said 6,000-10,000 mt of the order could easily be offered into the Atlas/Philippines tender, while the remainder could end up going to Universal’s regular plantation customers.

Following a tender, Pupuk will typically enter into talks with other traders to move additional tons at the tender price. By the end of the week, a total of 190,000 mt of granular was reportedly sold at the level set by the tender.

One trader argued that the tender was called to facilitate sales into the Philippines, as export business from Indonesia can only be accomplished through a public tender. This latest tender will allow for tons from the initial call to be included in offers into the Atlas/Philippines tender. Other tonnage could also be easily sent to Australia.

Middle East: 

Circulating rumors pointed to a series of transactions this week. One confirmed deal involved 20,000 mt of SABIC prilled urea at $295/mt FOB, while other unconfirmed deals were said to include granular tons from Oman and other producers priced just above $300/mt FOB.

Traders reported hearing of the granular deals, but could offer no details on buyers or sellers. They did agree, however, that given the $295/mt FOB price for prilled urea, a granular price of $300-$305/mt FOB would make sense.

The increase in Arab Gulf pricing was expected, but did not come as dramatically as people looking for a sustainable rise wanted. They noted that the price increase did not match the ones seen last week and earlier this week in Egyptian pricing. Sources expect the typical $10-$12/mt gap between Egyptian and Arab Gulf prices to narrow due to the rising prices from Arab Gulf producers. The current estimated gap of $15/mt is still considered to be too high.

The week opened with the Egyptian government ordering urea producers to cut production by 20% due to a planned diversion of natural gas allocations away from the industry, an action similar to one taken last year.

On the heels of the government’s order, MOPCO reportedly sold a 10,000 mt cargo at $315/mt FOB, followed by another 5,000 mt at $320/mt FOB. After those sales, producers were said to pull back in order to assess their situation in light of the government-prescribed cutback, and no further deals were reported.

The reduction in output should not significantly impact export sales, sources said, as producers have already booked cargoes well into June and have the reserves on hand to ensure that each order is filled.

Sources pointed to a similar reduction in output ordered last year. The producers had enough material on hand to cover their advance orders without difficulty. At the same time, the gas allocations were restored in time to cover bids for product, again without any evident shortages.

China:

Sources said their talks with Chinese producers and traders at the IFA annual conference in Singapore led them to believe that no urea will be exported until July.

The Chinese domestic market remains stronger than expected. Sources have said the domestic price will have to come down before the government allows large-scale exports. One source noted that the drop will most likely not happen until July.

The impact of China’s policy of restricting exports was evident in the latest trade numbers. Trade Data Monitor reported January-April exports at 31,000 mt, down dramatically from the year-ago 602,000 mt. South Korea took 13,000 mt, followed by Hong Kong with 7,600 mt. April exports totaled 5,200 mt – divided equally between Hong Kong and Myanmar – off from the 76,000 mt shipped in April 2023.

Brazil:

Brazil granular urea prices jumped 5.8%, to $320-$325/mt CFR from the week-ago $300-$310/mt CFR. Players confirmed sales of both North African and Russian tons into Paranaguá, while bidding at $310/mt CFR failed to attract a seller.

Demand is rising in the inland nitrogen market as June approaches, though few deals were reported at Rondonópolis during the week. Prices firmed to $460/mt FOB ex-warehouse.

Attention was reportedly focused on the Egyptian government’s announcement that producers will reduce production by 20% due to a decrease in natural gas supplies to factories. Prices for Egyptian tons were noted as high as $330/mt FOB in June and $325/mt FOB Egypt in July. Rising prices are expected to generate uncertainty in Rondonópolis, but may also support domestic prices in the short-term.

Argentina:    

Argentina imported 240,000 mt of urea in January-April, Trade Data Monitor reported, a significant increase from the 34,000 mt received during the same period of 2023.

The tons were imported before the government dropped its 5.4% import duty on non-Egyptian urea. Even with the duty in place, Nigeria, Algeria, and Bolivia surpassed Egypt’s imports during the first four months of the year, sending 86,000 mt, 42,000 mt, and 36,000 mt, respectively.

April imports were put at 38,000 mt, a notable increase from the 5,600 mt received in April 2023.