All posts by hlancey@bloomberg.net

ADNOC Delivers Certified Low-Carbon Ammonia

Ammonia, Carbon Dioxide, Clean Ammonia, Germany, Japan, Low-Carbon

ADNOC has delivered the first low-carbon ammonia enabled by carbon capture and storage to Mitsui in Japan for use in power generation. The ammonia was produced by Fertiglobe’s Fertil facility in Ruwais Industrial City in Abu Dhabi, UAE, and the carbon dioxide captured from the ammonia production process was sequestered in a saline aquifer.

The low-carbon certification process was completed by German-based TÜV SÜD and was conducted while auditing the process from production to delivery. Certification of low-carbon ammonia has not been standardized between countries, with several agencies developing their own certification process.

Fertiglobe had previously shipped low-carbon ammonia certified by ISCC Plus (International Sustainability and Carbon Certification) from Egypt to India (GM Nov. 22, 2023).

The Ammonia Energy Association has sought to facilitate the establishment of a global Ammonia Certification System to support the development of a market for low- and zero-carbon ammonia, according to their webpage, but this has not been finalized.

Hexagon, Oceania Ink Low Emission Ammonia MOU

Ammonia, Asia, Australia, Clean Ammonia, Low-Carbon

Hexagon Energy Materials Ltd. and Oceania Marine Energy Pty Ltd., both based in Australia, have signed a Memorandum of Understanding (MOU) for the potential bunkering of low-emissions ammonia in the Pilbara region of Western Australia.

The project will make use of the planned WAH2 Project low-emissions ammonia that is expected to generate 600,000 mt/y of low-emissions ammonia at a site in the Maitland Strategic Industrial Area in Australia, with production targeted for 2028. The ammonia from WAH2 will primarily be used for power generation in Asia, but also potentially as a fuel for Australia to ship iron ore exports in a decarbonized manner.

Under the agreement, Hexagon and Oceania will demonstrate the feasibility of supply of low-carbon ammonia as a bunker fuel for iron ore bulk carriers via ship-to-ship transfer and complete a market assessment and development plan for offtake agreements. It is expected that the work will be completed by Q4 2024.

K+S Earnings Beat Expectations; K Prices Stabilize

China, Earnings, India, News Briefs, Potash, Ukraine

German potash company K+S posted 1Q EBITDA of €200 million, beating expectations by some 20%. The company highlighted the stabilization and recovery of potash prices following the volatility triggered by the war in Ukraine and does not anticipate any oversupply in the potash market.

1Q revenues totaled €988 million, down 18% from €1.2 billion in the first quarter of 2023, while free cash flow was €111 million, down from €113 million. Agriculture segment revenues decreased to €680 million due to lower fertilizer prices, with low prices partially offset by higher sales volumes of more than 2 million mt versus 1.73 million mt in 1Q 2023.

“Strong European business with a high share of fertilizer specialties has provided a successful start into the financial year,” said Dr. Burkhard Lohr, K+S Chairman of the Board of Executive Directors. “This increases the probability that EBITDA for the year as a whole will be above the lower end of the indicated range of €500 million to €650 million.”

K+S cautioned that its competitors have not yet settled contracts with China and India, noting that a continued delay could trigger a wait-and-see attitude on the part of customers, which could reduce sales volumes to around 7.3 million mt.

Lower Prices Impact OCI’s 1Q Earnings, EBITDA

Earnings, Europe, News Briefs, Nitrogen, Texas

OCI Global reported first-quarter earnings of $1.2 billion and EBITDA of $297 million, down 11% and 12%, respectively, from last year’s first quarter. OCI attributed the decline to lower nitrogen pricing globally, partially offset by improved operations and higher sales volumes across the European nitrogen and methanol segments.

“Following extremely challenging market conditions in 2023, conflated with prolonged turnarounds at some of OCI’s assets, OCI benefited in the first quarter of 2024 from improved asset reliability,” said CEO Ahmed El-Hoshy. “Efficiency improvements helped offset disruption from unplanned outages.”

OCI reported sales at $513 million for the quarter, slightly higher than last year’s $502 million. Net income also increased, to $26 million from a net loss of $72 million one year ago.

The company highlighted its new production of AdBlue (diesel exhaust fluid) in the Netherlands, with current capacity of 300,000 tons per year. It also announced its intention to ramp up low-carbon ammonia imports from its Beaumont, Texas, facility into its Rotterdam port infrastructure.

Following its December 2023 announcement to divest its Fertiglobe and IFCo assets (GM Dec. 22, Dec. 15, 2023), OCI said it continues to assess various options for its remaining business and expects to update the market on its strategic review in its second-quarter earnings announcement.

Fertiglobe 1Q Revenues Drop on Lower Prices

ADNOC - Abu Dhabi, Ammonia, Earnings, Egypt, News Briefs, Urea

Abu Dhabi fertilizer producer Fertiglobe reported first-quarter revenues of $552 million, down 20% from $694 million in last year’s first quarter. EBITDA for the quarter was $223 million on adjusted net profit of $119 million. Fertiglobe cited an increase in own-produced sales, particularly in the ammonia business, against a backdrop of lower pricing.

“We are pleased to report a strong quarter, marked by a 5% year-on-year increase in our own-produced sales volumes, driven by higher production and lower ending inventories, which led to a 22% and 1% increase in ammonia and urea own-produced sales volumes, respectively,” said CEO Ahmed El-Hoshy.

“Fertiglobe remains firmly focused on technology, innovation, and digitalization, and is investing in the integration of Artificial Intelligence (AI) throughout its operations to unlock value, enhance efficiencies, and reduce emissions,” he added.

Fertiglobe’s production capacity totals 6.6 million mt of urea and merchant ammonia, produced at four subsidiaries in the UAE, Egypt, and Algeria. ADNOC’s acquisition of OCI’s majority 50% stake in Fertiglobe is expected to be completed in 2024, subject to regulatory approvals (GM Dec. 15, 2023).

Orica First-Half NPAT, EBIT Up 10%

Earnings, News Briefs

Orica Ltd. reported that EBIT and underlying net profit after tax (NPAT) were both up 10% for the first-half ending March 31, 2024. NPAT was A$179 million versus A$164 million, while EBIT was A$354 million, up from A$323 million. Sales revenue was off 9%, to A$3.66 billion from A$4 billion.

“We have delivered another strong performance for the first half of 2024 with a 10% growth in underlying earnings from previous corresponding period,” said Managing Director and CEO Sanjeev Gandhi. “Our team remains committed to executing our strategy and has delivered improved performance and growth across all segments with an ongoing focus on quality of earnings.”

Gandhi added that the core blasting business continued to strengthen during the first half, supported by strong customer demand as well as increased earnings from high margin premium products and technology.

He said Digital Solutions also delivered solid growth, with strong demand across products and services. He also noted that the Kooragang Island ammonia plant turnaround was completed safely and on budget.

Statutory NPAT was up 175%, to A$338 million from the year-ago A$123 million, reflecting significant items after tax valued at A$158 million versus the year-ago negative A$41 million. The items were attributable to Orica shareholders and mainly reflected profits on the Deer Park land sale and an Axis Group acquisition earnout, offset by recent business acquisition costs.

Brazil Regulator Approves Viterra/Bunge Deal

Brazil, Canada, News Briefs, Western Canada

Brazil’s Administrative Council for Economic Defense (CADE), the country’s antitrust regulator, has approved the proposed $8.2 billion acquisition of Viterra Ltd. by Bunge Ltd. without restrictions (GM June 16, 2023), according to Bloomberg, citing Brazil’s Official Gazette and the agency’s website.

Canada’s Competition Bureau announced on April 23 that it has concluded that the proposed deal is likely to result in “substantial anti-competitive effects” and a “significant loss of rivalry” between Viterra and Bunge in agricultural markets in Canada (GM April 26, p. 1).

The Bureau’s concerns are outlined in a report submitted to the Minister of Transport. The report will inform Transport Canada’s public interest review of the proposed transaction as it relates to national transportation, which must be completed by June 2, 2024. The final decision regarding the proposed transaction will be made by the Governor in Council based on advice from the Minister of Transport.

The Bureau determined that the transaction is likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada.

Jurisdiction Issues Continue for Brazil Potash

Brazil, News Briefs, Potash

Despite new installation licenses and construction milestones for Brazil Potash Corp.’s proposed $2.6 billion, 2.4 million mt/y Autazes Potash Project in Amazonas state in Brazil (GM May 3, p. 29; April 12, p. 1), Brazilian federal prosecutors have filed a lawsuit to suspend a license given to the company by Amazonas state, saying it is federal environmental protection agency IBAMA, not the state entity IPAAM, that decides the issue, according to Reuters.

The jurisdiction issue has been going on for some time, with Brazil Potash winning before an appellate court last year (GM Oct. 20, 2023). The company has asked for 10 days to counter the prosecutors’ request, according to Reuters.

Yara Partners with Kongsberg Digital

Carbon, News Briefs, Norway

Kongsberg Digital, a leading provider of industrial software, and Yara International have entered into a two-year agreement under which Kongsberg will develop digital twin technology for Yara’s factories in Herøya in Norway and Sluiskil in the Netherlands. The plan is to deploy the solution to Yara’s production facilities worldwide.

Using industrial data in combination with technical date and equipment documentation, Kongsberg will create a “contextualised work surface with detailed 3D models” of the plants, along with associated maintenance, operational, and facility information gathered from the factory’s sensors and data sources.

“Yara is the first wholly Norwegian industrial company to use Kognitwin – Kongsberg Digital’s twin technology,” said Merete Østby, Digital Manager at Yara Porsgrunn. “With this technology, a significant improvement in the work process is expected, thereby leading to a more efficient workday for engineering, maintenance, and operations.”

Yara said Twin technology will also be implemented into the carbon capture project at the Sluiskil facility, where a new carbon capture unit is being built to convert CO2 gas into liquid before transporting it by ship for injection and storage in reservoirs in the North Sea.

“It is a fantastic recognition for Kongsberg Digital to develop and deliver twin technology to Yara,” said Shane McArdle, CEO of Kongsberg Digital. “We will build on the already close cooperation between Kongsberg Gruppen and Yara and deliver technology that provides Yara with improved insights and new opportunities to optimize the operation of their facilities.”

Ammonia

Ammonia, Eastern Cornbelt, India, Market Watch, Northwestern Europe, South Central, South Korea, Southeast Asia, Southern Plains, Tampa, U.S. Gulf, Western Cornbelt

US Gulf/Tampa:

With Tampa ammonia settled at $450/mt CFR for May, truck offers out of Gulf Coast terminals dropped to $400-$410/st FOB, with the low reported at Beaumont, Texas.

Eastern Cornbelt:

Ammonia prices slipped to $590-$610/st FOB in the Eastern Cornbelt, down from last week’s $625/st FOB high, though sources said most regional terminals fell in the $590-$600/st FOB range for prompt offers at mid-month.

Western Cornbelt:

Ammonia continued to be reported at $590-$600/st FOB at most Western Cornbelt terminals during the week, though sources said suppliers are “willing to listen to offers” for any remaining prompt business.

Southern Plains:

Ammonia dropped to $535-$570/st FOB production points in the Southern Plains, with the low reported at Pryor, Okla. No current offers were confirmed at Verdigris, Okla., during the week. The latest truck pricing out of Gulf Coast production points fell to the $400-$410/st FOB range, well below April’s $525-$550/st FOB.

South Central:

Prompt ammonia slipped to $575/st FOB Cherokee, Ala., for the latest offers. No truck offers were reported at El Dorado, Ark., or Midway, Tenn., at mid-month.

Northwest Europe:

With natural gas prices stable this week and lackluster demand reported ahead of the new season, Northwest European ammonia prices were unchanged at $460-$470/mt CFR.

Southeast Asia:

Plant outages continue to support ammonia pricing East of Suez. Last week’s $385/mt FOB Luwuk sale was confirmed ex-Indonesia, bringing the regional range to $330-$385/mt FOB.

India: 

FACT closed a tender for 5,000-15,000 mt of ammonia during the week for delivery in early June. So far, no pricing has been reported for the one offer made in the tender. The tender was called at a time of tight ammonia availability East of Suez, sources said.

South Korea:

South Korea imported 369,000 mt of ammonia in January-April, Trade Data Monitor reported, a marginal increase from the 361,000 mt received through the first four months of 2023. Saudi Arabia sent 197,000 mt, followed by Indonesia with 148,000 mt. April imports were 95,000 mt, up 44% from 66,000 mt in April 2023.