All posts by mickeybarb@charter.net

Borealis Completes Sale of Entire Stake in Rosier to Turkey’s Yildirim

Austria, News, News Briefs, Turkey

Vienna-based fertilizers and polyolefins major Borealis AG has announced the completion of the sale of its entire shareholding (98.09%) in Belgian fertilizer producer Rosier SA to Turkey’s Yildirim Holding AŞ.

Borealis and Yildirim signed a binding agreement for the sale last September (GM Sept. 30, 2022). Yildirim’s offer for the Austrian company’s stake valued the Rosier business (enterprise value) at €35 million (approximately $37.1 million at current exchange rates), resulting in a valuation of roughly €11.65 per share, according to a statement by Borealis at the time.

Borealis made no comment on the value of the offer in its Jan. 2 statement announcing the completion of the sale.

As previously reported, Yildirim subsidiary, Yilfert Holding, will now launch a mandatory takeover bid followed by a squeeze-out for the remaining Rosier shares at a price of €20 per share, in accordance with article 50 of the Belgian Royal Decree on Public Takeover Bids (GM Nov. 11, 2022).

Moustier-based Rosier produces and distributes a range of granulated fertilizers, liquid fertilizers, NPKs, and hydrosuluble fertilizers.

The proposed divestment of its stake in Rosier is part of Borealis’ strategy to focus on its polyolefins and base chemicals business, as well as on the transformation towards a circular economy.

The Vienna-based company, which is a 75% owned subsidiary of Austrian oil and gas group OMV AG, currently is in exclusive negotiations with Czech Republic’s chemicals and fertilizers producer Agrofert for the sale of its Nitrogen division, after receiving a binding offer for the business from the Czech company in June (GM June 3, 2022).

Borealis had been targeting the closing of the transaction for the end of 2022 (GM Sept. 26, 2022).

Borealis’ Nitrogen business includes fertilizers, melamine, and technical nitrogen products; the offer valued the business on an enterprise value basis at €810 million.

BHP to Start Recruiting Operations Works for Jansen This Year

Australia, Featured, News, Potash, Saskatchewan

BHP Ltd. plans to start recruiting people in 2023 to operate the group’s Jansen potash mine in Saskatchewan, Canada, 140 kilometers east of Saskatoon, where first production is targeted in calendar 2026.

Canada’s Financial Post, citing BHP’s President of Minerals for the Americas Ragnar Udd, reported that the group plans to recruit roughly 600 people who will operate the mine, with aspirations to draw a large proportion of its workforce from the local community. BHP also aspires for gender balance and a representative indigenous workforce of about 20% as well.

This year, Jansen’s workforce will peak, with as many as 2,500 people on site.

BHP already has completed two 1,000-meter deep mine shafts (GM Nov. 4,2022)and by the end of 2023 hopes to have poured concrete foundations for the processing mill and other processing and storage facilities, and to have started to erect steel structures, according to the report.

In its initial stage, when fully ramped-up, Jansen “Stage 1” is expected to produce 4.35 million mt/y of potassium chloride, and has the potential for the addition of three subsequent expansion phases to take the mine to an envisioned eventual production capacity of between 16-17 million mt of potash a year. BHP already has accelerated the Jansen “Stage 2” study, which could add another 4 million mt/y (GM Oct. 21, 2022).

Nouryon Completes ADOB Fertilizers Acquisition

News, News Briefs, Specialty, The Netherlands

Amsterdam-based Nouryon, a global specialty chemicals leader, announced Jan. 4 that it has completed the acquisition of ADOB Fertilizers, Poznań, Poland, a supplier of chelated micronutrients, foliars and other specialty fertilizers.

All business operations will transfer to Nouryon as part of the transaction, which includes two manufacturing sites located in Poznań and Wrocław in Poland.

Nouryon announced in late September that it had entered into a definitive agreement to acquire ADOB Fertilizers (GM Sept. 30, 2022).

Nouryon said the acquisition will enable it to expand its product portfolio and broaden its offerings for customers in the crop nutrition industry.

Grupa Azoty Opens New Storage Unit

News, News Briefs, Poland

Polish fertilizer and chemicals group Grupa Azoty SA said Jan. 3 it has opened a new fertilizer storage facility in Tarnów. The new complex has a total storage capacity of about 6,650 mt of fertilizer, with project cost of Pln14.5 million (approximately $3.3 million at current exchange rates).

Azoty said the project is a response to growing customer expectations regarding fertilizer availability, and that it also marks a step towards increasing the number and efficiency of loading operations.

New Deere Tech Could Cut Starter Fertilizer Use

News, News Briefs, Specialty

John Deere revealed a new planting technology on Jan. 5 at the Consumer Electronic Show 23 in Las Vegas. The company said ExactShot™ allows farmers to reduce the amount of starter fertilizer needed during planting by more than 60%.

The company said that across the US corn crop, ExactShot could save over 93 million gallons of starter fertilizer annually and prevent wasted fertilizer from encouraging weed growth or increasing the risk of running off the field into a waterway.

ExactShot uses a sensor to register when each individual seed is in the process of going into the soil. As this occurs, a robot will spray only the amount of fertilizer needed, about 0.2 ML, directly onto the seed at the exact moment as it goes into the ground.

Deere also introduced a new electric excavator, powered by a Kreisel battery, which the company said will provide construction workers and road builders with lower daily operating costs, reduced jobsite noise, enhanced machine reliability, and zero emissions, without sacrificing the power and performance they need in a machine. Deere owns a majority stake in Kreisel Electric, which has battery technology for a wide range of applications.

EuroChem Tries Again to Take Heringer Private

Brazil, Europe, News, News Briefs

EuroChem Group AG, which bought a 51.48% in Fertilizantes Heringer last year (GM April 1, 2022) for R$554 million (US$116.4 million), in December launched a second public offering for the remaining minority shares. EuroChem plans to take the company private. EuroChem is now offering a R$19 per share based on a second appraisal that priced the shares in the R$18.96-R$20.86 per share range.

The second offering is expected to conclude in the first quarter, with one minority shareholder telling the Valor Economica that the share price could eventually top R$21.00.

An earlier attempt to buy out minority shareholders failed (GM Dec. 2, 2022; Sept. 2, 2022). A previous appraisal concluded that a fair price would be in the R$11.48-R$12.62 per share range, which was reportedly below the R$15.00 and above where the shares had been trading on the stock exchange.

Russia Looks to Press Big Firms for More Cash; One-Time Payment from Fertilizer Producers Eyed

News, News Briefs, Russia

Russia is planning to wrest more money from some commodity producers and state companies and trim non-defense spending, as the costs of the invasion of Ukraine mount.

Proposals include higher dividends from state companies and a “one-time payment” by fertilizer and coal producers, under instructions issued to officials by Prime Minister Mikhail Mishustin in mid-December and seen by Bloomberg.

The government order calls the effort part of “revenue mobilization.” It also orders 175 billion rubles ($2.4 billion) in extra spending to resettle 100,000 people from Kherson to Russia, an apparent admission that the Kremlin has little hope of retaking the parts of the Ukrainian region that its forces abandoned in the fall just weeks after illegally annexing it.

Russia’s budget is increasingly squeezed as President Vladimir Putin’s invasion heads for its second year and the economy contracts under sweeping US and European sanctions. Dividends and a windfall tax paid by Gazprom PJSC already helped swell a fiscal surplus late last year, before heavy spending commitments in December likely sent the budget into the red.

Some of the additional money is necessary to cover costs related to the war, according to people with knowledge of the matter. No decision has yet been taken on the size of dividends or the one-time levy, they said, as the amount will depend on how the budget fared in the full 2022 year. Authorities will try to set dividends above 50% of net income for state companies whenever possible, they said.

Spokespeople for the Russian government and the Finance Ministry didn’t immediately respond to a request for comment during a holiday period in the country.

The Russian leader has meanwhile vowed “no limitations” on military spending for the war, with social programs remaining the biggest single budget item. By contrast, outlays on education and medicine are feeling the pinch.

It’s a balancing act laid bare in Mishustin’s order, which calls for an “optimization” of budget spending outside defense and security that should generate at least 150 billion rubles in savings.

With budget deficits entrenched for years to come and international debt markets all but shut for Russia, the urgency is growing to ensure the government has access to financing as its energy proceeds come under pressure.

The Finance Ministry, which last year was forecasting a budget gap of 0.9% of gross domestic product, now expects the shortfall at 2% both in 2022 and 2023. In total, spending last year probably reached around 30 trillion rubles, Finance Minister Anton Siluanov said in late December, or about 27% more than initially planned.

Siluanov has said the government plans no changes in taxes this year even if budget expenditures rise, and Mishustin’s order appears to propose no permanent levies.

In the months just before the invasion at the end of 2021, Russian mining companies, including coal and fertilizer producers, were hit by an increase in the mineral extraction tax rate. The government has since declined to ease the burden even as sanctions disrupted sales and forced output cuts.

Ammonia

Ammonia, Black Sea, China, Eastern Cornbelt, India, Market Watch, Middle East, North Africa, Northern Plains, Northwestern Europe, Southeast Asia, Tampa, Thailand, U.S. Gulf, Western Cornbelt

US Gulf/Tampa:

Tampa ammonia prices for January moved down $55/mt, to $975/mt CFR from December’s $1,030/mt CFR. With natural gas prices weakening in Europe, sources said that more European ammonia production may start up, which would continue to pressure Tampa and international pricing.

US natural gas prices are also down, a boon to ammonia producers. Buyers argued that NOLA production is plentiful and that prices should move lower.

Eastern Cornbelt:

Ammonia prepay prices remained at $1,095-$1,110/st FOB in the Eastern Cornbelt, with the low at Lima, Ohio, and the high at Wood River, Ill. Most Illinois and Indiana terminals were reported at the $1,100/st FOB level for prepay offers in early January.

Western Cornbelt:

Spring prepay offers for ammonia pricing were unchanged at $1,050-$1,100/st FOB in the Western Cornbelt, with the low in Nebraska and the high at Palmyra, Mo. Iowa terminals were reported in the $1,060-$1,070/st FOB range. Prepay ammonia in the Southern Plains was steady at $950/st FOB Verdigris, Okla., $900/st FOB Pryor, Okla., and $850/st FOB Woodward, Okla.

Northern Plains:

Spring prepay offers for ammonia were quoted at $1,160/st FOB Glenwood, Minn., Velva, N.D., and Grand Forks, N.D., and $1,110/st FOB Murdock, Minn. No current delivered ammonia pricing was confirmed in the region in early January.

Black Sea:

No exports from the Black Sea were reported because the pipeline from Russia to Odessa remains closed. Critics continued to pan efforts to reopen the pipeline, noting that the stepped-up attacks by Russian forces on Ukrainian targets are damaging the infrastructure needed to make the pipeline work properly.

Imports by Turkey for January-November were reported at 704,000 mt by Trade Data Monitor, down 17% from 761,000 mt recorded through same period in 2021.

November imports were reported at 127,000 mt, more than double the 63,000 mt imported in November 2021. The main suppliers were Indonesia with 61,000 mt, good for 48% of imports, and Bahrain with 30,000 mt. Neither country sent ammonia to Turkey in 2021.

Northwest Europe:

Lower gas prices into Europe have cut into the production cost of ammonia. Sources now put the production cost of ammonia at just under $800/mt, compared to well over $1,000/mt in December.

Sources attributed the lower price to reduced demand stemming from unseasonably warm weather and larger-than-expected reserves built up by European companies. Some expect to see ammonia producers and industrial buyers of ammonia consider either restarting their plants or stepping up production.

Trading was slow this week, with sources noting no new deals moving the price away from the $1,050/mt CFR level set in December. However, discussions taking place across Europe, the drop in the January Tampa price, and lower gas prices combined to give industry watchers the idea that prices should be coming off soon. Talks with Turkish buyers are now reportedly centered around $800/mt CFR instead of the $900-$1,000/mt CFR discussed in December

One trader noted the drop in ammonia pricing could impact the movement to green and blue ammonia. He noted that the break-even price for these new forms of ammonia is $600-$800/mt ex-plant. If the price continues to slide in Europe, sources noted, maintaining production of green and blue ammonia might not be feasible.

Middle East:

The Arab Gulf market is slowly coming back as the new year begins. So far, no new deals have been confirmed to move the price off the December levels of $850-$880/mt FOB.

Producers are still reportedly talking about $900/mt FOB for any spot tons. Contract sales into Taiwan, the rest of Southeast Asia, and India have reportedly shown a netback well below the current estimated price.

India:

The spot price into India remained in the $850s/mt CFR on tons sourced mainly from China, Malaysia, and Indonesia. Product from the Arab Gulf also comes in at a similar price, but under long-term contracts that have offered quiet, but favorable, prices to buyers.

China:

Sources said export totals continue to run higher than normal, but could soon sputter out. The estimated production cost for Chinese ammonia was put about $600/mt ex-plant. With freight of $100-$150/mt to India and Southeast Asian buyers, it will not take much of a price drop to make export sales uneconomical.

Southeast Asia:

Demand for more ammonia remains slow as buyers reassess the market situation. With reports of lower ammonia prices in the offing, some manufacturers seem to be contemplating stepping up both production and demand for ammonia.

Exporters such as Indonesia and Malaysia are also keeping an eye on shifts in the market. Sales into Europe benefited the producers while demand in the region has slowed down. Sellers are watching closely how prices are shifting in the Caribbean and possibly in Europe to determine if they will be able to maintain their current rate of production and sales.

Indonesia exported 1.8 million mt of ammonia in January-November, according to Trade Data Monitor,up about 8% from the year-ago 1.7 million mt. The market’s largest buyers were South Korea with 487,000 mt, and India with 255,000 mt.

November exports from Indonesia were reported at 167,000 mt, up 71% from 98,000 mt in November 2021. South Korea bought 50,000 mt, representing 31% of the market. Morocco, Turkey, and India each took 21,000-24,000 mt, combining to total 41% of November exports. These buyers did not buy any material from Indonesia in November 2021. The US, a new entry to the Indonesian market, bought 6,000 mt during the period.

Thailand:

Trade Data Monitor reported January-November ammonia imports at 306,000 mt, off19% from 376,000 mt in the prior-year period. Malaysia was the single largest supplier with 215,000 mt, followed by Indonesia with 84,000 mt.

November imports were counted at 18,000 mt, down from 22,000 mt purchased in November 2021. Malaysia accounted for 83% of imports with 15,000 mt, leaving 17% for Indonesia, with 3,000 mt.

North Africa:

Reports that India and Morocco will be discussing possible joint venture operations to produce DAP and NPK could require more ammonia for the Moroccan market.

Sources said Morocco is better positioned than India to receive ammonia from sources as diverse as the Caribbean and Southeast Asia. At the same time, there are reports that production costs in Morocco could be dramatically lower than in India, and Morocco is reportedly looking to expand the use of solar and wind power for its industries. While the move to renewable power sources could take up to 10 years, the effort to increase DAP and NPK production could dramatically alter the dynamics of the ammonia market once completed.

Urea

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

US Gulf:

NOLA urea barges started the week at $455/st FOB, but the firming trend did not continue. Prices began to erode and were put as low as $416-$420/st FOB by Jan. 5. The previous range was $450-$455/st FOB.

Eastern Cornbelt:

Urea pricing fell to $520-$540/st FOB in the Eastern Cornbelt, down $10/st from last report, with the low confirmed at Cincinnati, Ohio.

Western Cornbelt:

The urea market softened to $510-$530/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo. The last offers FOB Port Neal, Iowa, were reported at the $520/st FOB level in early January. Urea pricing FOB Catoosa/Inola, Okla., was quoted in the $525-$535/st FOB range.

Northern Plains:

Urea prices continued to retreat in the Northern Plains. The latest urea offers were reported at $535/st FOB St. Paul, Minn., and $570/st FOB Carrington, N.D., down $20-$35/st from mid-December. Delivered urea in North Dakota was pegged at the $640/st level for 1Q tons.

Northeast:

Urea pricing in the Northeast was down $30/st from last report, to $560/st FOB Baltimore, Md., East Liverpool, Ohio, and Fairless Hills, Pa., with delivered urea pegged at the $600/st level in central Pennsylvania.

Eastern Canada:

Urea pricing in Eastern Canada was quoted in a broad range at C$945-$1,120/mt FOB in early January, depending on location and supplier, with the low end reflecting a significant drop from the C$1,060-$1,120/mt FOB offers reported one month earlier.

India:

Indian Potash Ltd. (IPL) issued a tender to buy 600,000 mt of urea on a long-term contract basis. The tender calls for 40,000-60,000 mt to be delivered each month, beginning March 2023 and ending February 2024. Only producers are allowed to participate in the tender, with offers due on Jan. 23.

According to the tender announcement, pricing for each cargo will be set at an unspecified percentage discount from the price of the most recent spot tender. If a tender has not been held for six months, the price will be worked out with a percentage discount based on an average of prices listed in industry publications. IPL will hold a meeting with any interested producers to clarify the shipping and pricing procedures on Jan. 12.

The IPL tender is not the one the industry has been waiting for since early December. Sources said a tender for up to 800,000 mt will still need to be called soon to ensure India has enough urea to start the next application season. One trader previously noted that the delay in calling this tender indicated that supplies are sufficient to close out the current season.

If the IPL tender is awarded, it will be the second long-term contract of its type for India. The first was the 1 million-plus mt contract with OMIFCO for tonnage sourced from Oman. Sources said that the contract, along with the two new urea plants coming online, will help ease pressure to import urea. The new plants, once fully operational, will have a combined annual production rate of 2.6 million mt/y. Even with the contracts and stepped-up domestic production, sources said the traditional spot tenders will need to continue to ensure a steady supply of urea.

Subsidies for urea purchases dominate India’s fertilizer subsidies, which in turn dominate the overall subsidy budget for the national government. The Modi government has attempted several times to either reduce the subsidy budget or to promote alternatives to urea to reduce government expenditures. Even now, according to local media reports, the government is planning to reduce the fertilizer subsidy budget by 26% in the 2023/2024 fiscal year.

The government attempted to reduce the subsidy budget for the current fiscal year, only to be forced to not only match the previous year’s budget, but to increase it. The hit to the national treasury was attributed to rising urea prices following the decision by China to limit exports, and then from the reduction of urea available in the market due to Russia’s invasion of Ukraine.

The government revised its rules for natural gas sales to industrial plants as a way to reduce subsidy costs. Under the previous policy, companies were required to buy 80% of their natural gas from long-term contracts. Reports said this led to hoarding of product and some spot shortages. The new policy now requires companies to commit to 40% of their purchases under contracts using a “take or pay” arrangement, and also allows for buyers to walk away from gas-buying tenders if the price rises too high. Media reports said that details will soon be made available.

Pakistan:

Agritech has halted urea production due to limited natural gas availability, according to media reports, after the government reportedly dropped a requirement that the gas be delivered to the plants. Other industries were also affected by the decision.

Middle East:

Sources said talks with Arab Gulf producers are now centering around $460/mt FOB. Specifically, sources said some cargoes are being discussed for Turkey and Europe, although no one has confirmed that any of the deals have been finalized.

If the deals go through as rumored, the price from the region would come off about $20/mt from the last recorded public sale. Traders had been talking about $460/mt FOB for several weeks as a new price from the region. With prices reported softening in all other markets, a price drop in the Arab Gulf would not be surprising.

Sources reported plant closures in Iran because natural gas is being diverted to residential use, making fewer tons available from the sanctioned country. Sources put the price ex-Iran at $450/mt FOB.

Egyptian producers Helwan and AlexFert closed out the week with deals confirming the softer urea market. Confirmed sales by Helwan totaling 20,000 mt to two traders at $495-$500/mt FOB came on the heels of a 6,000 mt AlexFert sale priced at $510/mt FOB.

China:

Bloomberg reported that rising COVID infections occurring among the population have not affected urea production. Plants were said to be operating at 66% of rated capacity in December, against an average of 56%.

Export restrictions on urea are expected to remain in place throughout 2023.

The lack of any new business from China leaves the price at $470-$480/mt FOB. However, sources said that more discussions are focusing on $460/mt FOB and below.

Brazil:

The lack of an Indian tender in December pushed market players into a bearish mood. Prices at the ports were reported at $450-$475/mt CFR, down about $30/mt from the end of December. Sources said this level has not been seen since June 2021. Buyers are continuing to push for lower prices, with more deals reportedly closing at the lower end of the range.

The Rondonopolis price tightened to $630/mt FOB ex-warehouse, as the market seemed to focus on fulfilling old orders instead of making new ones. During the seasonal drop in urea demand, traders can be left with little to do but handle the paperwork for previous deals.

Turkey:

January-November urea imports were reported at 2.3 million mt by Trade Data Monitor, a9% decline from the year-ago 2.5 million mt. Oman supplied more than half of the total with 1.4 million mt, followed by Turkmenistan with 250,000 mt.

November imports stood at 282,000 mt, down 21% from 357,000 mt imported in November 2021. Oman accounted for 68% of imports with 192,000 mt.

Indonesia:

Urea exports for January-November totaled 1.7 million mt, Trade Data Monitor indicated, falling13% from 1.98 million mt reported through the same period of 2021. Australia, with 371,000 mt, and India, with 356,000 mt, were the two top buyers of Indonesian material.

November exports were reported at 92,000 mt, down 47% year-over-year from 174,000 mt. Australia accounted for 36% of exports with 33,000 mt, followed by the Philippines with 23,000 mt, taking 25% of the exports.

Thailand:

Urea imports for January-November were counted at 1.7 million mt by Trade Data Monitor,23% below the 2.2 million mt imported in the year-ago period. Saudi Arabia was the main supplier with 677,000 mt, while Qatar and Malaysia each sent about 390,000 mt.

November imports were reported at 57,000 mt, down by nearly half from 116,000 mt received in November 2021. Qatar sent 48% of the total with 27,000 mt, followed by Malaysia with 26,000 mt.

UAN

Eastern Canada, Eastern Cornbelt, Market Watch, Northeast, Northern Plains, U.S. Gulf, UAN, Western Cornbelt

US Gulf:

Sources reported a quiet NOLA UAN barge market. Prices continued to be called $450-$460/st ($14.06-$14.38/unit) FOB.

Eastern Cornbelt:

UAN-32 prices at Cincinnati reportedly slipped to $485-$490/st ($15.16-$15.31/unit) FOB for January shipment, down $10/st from the last December offers. The low end of the regional market remained at $480/st ($15.00/unit) FOB Mount Vernon, Ind., with the high pegged at $490-$500/st ($15.47-$15.63/unit) FOB on a spot basis in Illinois.

Western Cornbelt:

UAN-32 was pegged at $485/st ($15.16/unit) FOB St. Louis, $495-$500/st ($15.47-$15.63/unit) FOB Port Neal, and $500/st ($15.63/unit) FOB Muscatine, Iowa, for January shipment. The latest offers in the Southern Plains were confirmed at $440-$445/st ($13.75-$13.91/unit) FOB Woodward and Verdigris, Okla., down $5/st from December.

Northern Plains:

Delivered UAN-28 offers in the Northern Plains were reported at $480/st ($17.14/unit) for 1Q tons from Canada, down from the last $580/st DEL prompt business, while UAN-28 at spot terminals in central North Dakota were quoted at $515/st ($18.39/unit) FOB.

With the Winona, Minn., UAN-32 terminal now closed for the winter, pricing for spring shipment was pegged at the $546/st ($17.06/unit) level, down $30-$35/st from the previous offers.

Northeast:

UAN-32 pricing was pegged at $520-$525/st ($16.25-$16.41/unit) FOB Baltimore, Md., down significantly from the $592-$595/st ($18.50-$18.59/unit) levels confirmed in mid-December. Out of terminals in upstate New York, UAN-32 offers were pegged at $600/st ($18.75/unit) FOB in early January, down $40/st from last report.

Eastern Canada:

UAN pricing was lower in Eastern Canada, where recent offers were reported in a broad C$762-$935/mt (C$27.21-$33.39/unit) FOB range for UAN-28 and as low as C$870/mt (C$27.19/unit) FOB for UAN-32, well below the C$1,000/mt (C$31.25/unit) FOB level confirmed for UAN-32 in early December.