All posts by mickeybarb@charter.net

Compass Unable to File 10-K, Cites Material Weakness

Earnings, News, Specialty

Compass Minerals International Inc. on Nov. 29 filed a Form 12b-25 with the SEC saying it has determined that it is unable to file its Annual Report on Form 10-K for the fiscal year ended Sept. 30, 2022, by the prescribed due date without unreasonable effort or expense primarily because the company’s independent registered public accounting firm needs additional time to complete its audit procedures.

As a result, the company expects to file its 2022 Form 10-K within the 15 calendar day extension provided by Rule 12b-25, but can provide no assurance that it will be able to file by such time.

Compass said that based on currently available information, it expects to report a material weakness in:

  • the design and operations of its information technology general controls over user access related to an enterprise resource planning and other IT systems that support the processes related to the preparation of its consolidated financial statements,
  • the design and operations of select controls related to the sales process, and
  • controls over salt inventory at salt depots and warehouses.

Compass does not expect any of the material weaknesses to result in material misstatements or omissions in its previously reported financial statements. It does not anticipate any material changes to the selected financial information furnished with the Form 8-K (fourth-quarter and full-year earnings press release) filed by the company on Nov. 29, 2022.

Yara Plant Reported Offline

Ammonia, Australia, Featured, News, Norway

Yara International ASA’s giant Pilbara ammonia plant (840,000 mt/y) on the Burrup Peninsula in Western Australia is offline due to a natural gas leak in a pipeline from an offshore platform, according to a Nov. 30 report in The Age.

The Pilbara plant manager was quoted as saying that it was unclear when gas supplies would resume. However, Santos, the gas supplier to the plant, said on Nov. 29 that it expects it to take four to six weeks to repair its damaged pipeline and get back to full production.

Yara was quoted as saying it had sufficient reserves of ammonia and technical ammonium nitrate (TAN) to supply customers. The plant’s ammonia traditionally is exported and used at an adjacent TAN plant jointly owned with Orica. Yara had not responded to inquiries at press time.

Santos said a small gas leak was identified on Nov. 27 in a subsea flange on the main gas trunkline from the John Brookes platform, offshore Western Australia to the Varanus Island gas processing facilities. The platform and pipeline were immediately shut down and depressurized, and all personnel demobilized.

Santos said it is working with customers and other parties to manage gas supply arrangements while the leak is repaired. Varanus Island will continue producing at reduced rates.

Brenntag, Univar Confirm Acquisition Talks; Univar Investor Calls for Full Sales Process

Eastern Cornbelt, Featured, Germany, News

Brenntag SE, Essen, Germany, and Univar Solutions Inc, Downers Grove, Ill., both confirmed late on Nov. 25 that Brenntag is exploring the acquisition of Univar. The move would create the world’s biggest chemical distributor and establish a company with more than $30 billion in sales.

Brenntag shares fell sharply on Monday, Nov. 28, according to Bloomberg. Shares dropped as much as 11% in early trading. The stock was down 9.7% at 10 a.m. in Frankfurt, giving it a market value of €9.5 billion ($10 billion).

While Brenntag is a serial acquirer of smaller assets, a Univar takeover would mark its largest purchase by far and be a bold move for CEO Christian Kohlpaintner. The German company unveiled a new growth plan on Nov. 10 to “shape the future of its industry,” including organic re-investments and “value creating M&A activities.”

“Acquiring Univar would give Brenntag an unrivalled market position in the US, and generate important operational synergies, but it would not accelerate a mix shift towards higher margin, higher growth specialty chemicals,” Citigroup Inc. analysts wrote in a note.

Brenntag is the global market leader in chemical and ingredients distribution, with over 17,000 employees in 78 companies, according to its website. Univar, meanwhile, boasts one of the industry’s largest private transportation fleets, as well as a sales force and logistics team that helps connect chemical makers and buyers across sectors.

Univar is also no stranger to dealmaking. It merged with rival Nexeo Solutions Inc. in 2018 (GM Sept. 28, 2018) and then sold its plastics business in 2019. A combination with Brenntag would create an opportunity to boost growth and cut costs, but could also face tough antitrust reviews as national governments more closely scrutinize sector tie-ups.

“We believe such a transaction would be a logical step, creating a leading chemical distributor with significant competitive advantages over regional competitors in a period of accelerating industry transformation,” analysts at Jefferies Financial Group Inc. wrote in a note.

An investor in Univar is calling for the company to run a full sales process to maximize shareholder value. Engine Capital, which said it owns roughly a 1% stake in Univar, sent a letter to the company’s board on Wednesday, Nov. 28, arguing the approach confirms its view that the stock is undervalued.

While it commended Univar for its recently expanded share buyback program – something Engine Capital suggested in another board letter in October – it called for a full sales process now that the company is effectively in play.

“This strategic approach from a direct competitor confirms Engine’s view that Univar is undervalued in the public market and, in turn, a highly attractive acquisition target for qualified buyers,” Engine Capital Managing Partner Arnaud Ajdler and Partner Brad Favreau said in the letter, a copy of which was reviewed by Bloomberg.

Engine Capital argued that Univar could fetch $38 to $44 a share in a competitive auction.

Univar fell 1.5% in trading Wednesday to $32.33 at 9:44 a.m. in New York, giving the company a market value of roughly $5.3 billion. Shares in Brenntag were little changed.

“We value the view of our shareholders, and we will continue to make decisions and take actions that we believe are in the best interests of the company and our shareholders,” said Dwayne Roark, a spokesman for Univar.

A representative for Brenntag did not return a request for comment.

While Ajdler and Favreau acknowledged the industrial logic of the potential combination, they noted that private equity players have been active in the sector, including through past ownership of both Univar and Brenntag.

“We urge you to publicly announce a competitive and formal sales process that invites additional parties to bid for the company and ensures the board has all the information needed to make a value-maximizing decision that benefits all shareholders,” the pair said.

Inflationary Pressures, SOP Production Challenges Drag Compass in 4Q

Earnings, News, Southern Plains, Specialty

Compass Minerals reported a net loss from continuing operations of $4.9 million on sales of $249.4 million for the fourth quarter, compared to the year-ago loss of $4.6 million on sales of $211.7 million. Adjusted EBITDA from continuing operations was $35.0 million, above the year-ago $33.0 million.

The company’s fiscal fourth quarter results, changed to end Sept. 30 from the company’s year-ago calendar-year accounting in 2022, capped a year of “significant headwinds,” said Compass President and CEO Kevin S. Crutchfield, including inflationary pressures and SOP production challenges, which combined to impact both the company’s Salt and Plant Nutrition segments.

“The inflationary pressures that all industries had to deal with in 2022 had a particularly acute impact on our Salt segment, as the contract architecture of our North American highway business does not allow for the passthrough of inflationary costs in real time,” said Crutchfield. “As a result, our profitability was severely tampered by historic levels of inflation, resulting in higher distribution and production costs.”

He said the company took actions throughout the year to partially offset some of those effects, primarily through raising prices within the consumer and industrial businesses. However, he said ultimately the impact of these efforts fell far short in comparison to the inflationary effect, causing the profitability of the Salt segment to come in well below the inherent earnings potential for this business.

Including discontinued operations, the company posted a fourth-quarter net loss of $6.9 million, compared to a year-ago net loss of $56.0 million. Adjusted EBITDA was $35.0 million, down from $40.0 million.

Fourth-quarter operating earnings for the Plant Nutrition segment were $12.6 million on sales of $57.8 million, rising from a year-ago $200,000 loss on $49.3 million, respectively, while EBITDA tracked at $21.8 million, above the year-ago $8.7 million. Average fertilizer prices were $929/st with a selling volume of 62,000 st, compared to $627/st and 79,000 st, respectively, posted one year earlier.

Twelve-month Plant Nutrition operating earnings stood at $37.1 million on sales of $222.3 million, shifting from the year-ago $9.1 million and $235.0 million, respectively. EBITDA was $72.7 million, up from $44.9 million. The average selling price was $777/st on volumes of 286,000 st sold, compared to the year-ago $583/st and 403,000 st, respectively.

Compass noted average fiscal-year 2022 SOP selling prices increasing by 33% year-over-year, although that increase was partially eaten by a 29% decline in sales volumes compared to the previous year. Consolidated operating earnings of $44.4 million, down $62.7 million year over year, and adjusted EBITDA of $187.1 million, off $53.7 million from the year-ago, were impacted by increased production and distribution costs, partially offset by the favorable impact of increased pricing in the Plant Nutrition segment, the company said.

“Our Plant Nutrition business had a strong year from a profitability perspective, with EBITDA per ton of approximately $245 above the long-run average for this business,” said Crutchfield. “However, we continue to be challenged throughout the year to deliver production volumes in line with historical levels. (By) that measure, we fell short of what we believe is the inherent potential for this business.”

Operating earnings for the Salt segment in the fourth quarter were $16.3 million on sales of $188.9 million, a change from $22.4 million on $159.5 million, respectively. EBITDA was $33.1 million, below the prior-year $40.1 million. The average sales price was $89.79/st, above the year-ago $87.42/st.

“On a segment basis, Salt revenue totaled $188.9 million for the fourth quarter, up 18% year-over-year, driven by 15% growth in sales volume and a 3% increase in average selling price,” said Compass CFO Loren Crenshaw. “Despite higher revenue, Salt operating earnings declined 27% to $16.3 million for the quarter, and by 34% to a $117.4 million for the full year, as increased production and distribution costs more than offset revenue growth.”

Twelve-month operating earnings in the Salt segment were $117.4 million on sales of $1.01 billion, compared to the year-ago $177.7 million and $899.6 million, respectively. EBITDA was $181.9 million, down from $248.4 million. Average sales prices were $80.45/st, up from the year-ago $79.67/st.

“From a cost perspective, roughly two-thirds of the full-year increase was driven by higher shipping and handling costs, which rose 19% to roughly $28 per ton, and one-third by … production costs, which rose 7% to roughly $43 per ton,” Crenshaw said. “The increase in cash cost was primarily driven by inflationary impacts and higher maintenance costs. The increase in shipping and handling costs primarily reflected the combination of inflationary impacts, such as fuel surcharges and higher costs to serve our markets due to geographic mix.”

Compass posted a 12-month net loss from continuing operations of $36.7 million on sales of $1.24 billion, compared to the year-ago income of $35.6 million and $1.15 billion, respectively. Adjusted EBITDA was $187.1 million, off from $240.8 million, within the $175-$195 million guidance issued in the company’s third-quarter earnings report.

The company realized a 12-month net loss of $24.5 million compared to the year-ago loss of $185.2 million. Adjusted EBITDA including discontinued operations was $206.1 million, falling from $292.7 million.

Looking ahead to 2023, the company expects full-year Plant Nutrition sales volumes to fall in a 265,000-295,000 st range. Revenue is projected at $200-$240 million, with EBITDA at $55-$70 million.

The company expected average fertilizer sales prices to rise moderately year-over-year, with prices moderating sequentially throughout 2023. Sales volumes are anticipated to be comparable to 2022.

Full-year Salt sales volumes for 2023 are expected to run 11.35-12.20 million st, with revenue projected at $990 million-$1.07 billion and EBITDA at $215-$255 million.

“We expect (Salt segment ) pricing in 2023 to rise on the order of 15%, and volumes to decline on the order of 9%,” Crutchfield said. “I’m pleased with these efforts and expect to see substantial progress in (fiscal-year 2023) as measured by EBITDA per ton rising to match or exceed the $20 per ton in EBITDA the Salt segment has delivered on average over time, up from approximately $15 EBITDA per ton as delivered in (fiscal-year 2022).”

Plant Nutrition (millions) Three months ended Sept. 30, 2022 Three months ended Sept. 30, 2021
Sales 57.8 49.3
Operating Earnings (loss) 12.6 (0.2)
EBITDA 21.8 8.7
Sales Volumes (000 tons) 62 79
Avg. Sales Price ($/ton) 929 627
Salt (millions) Three months ended Sept. 30, 2022 Three months ended Sept. 30, 2021
Sales 188.9 159.5
Operating Earnings 16.3 22.4
EBITDA 33.1 40.1
Sales Volumes (000 tons) 2,103 1,825
Avg. Sales Price ($/ton) 89.79 87.42

Corteva to Purchase Stoller Group for $1.2 Billion

Eastern Cornbelt, Featured, Houston, TX, News, Specialty

Agricultural chemical giant Corteva Inc., Indianapolis, Ind., announced on Nov. 30 that it has signed a definitive agreement to acquire Houston-based Stoller Group Inc., one of the largest independent plant science and biologicals companies, for a purchase price of $1.2 billion in cash.

Corteva said the purchase price represents an enterprise value multiple of approximately 12x based on Stoller’s expected EBITDA for 2022 on a stand-alone basis. The acquisition brings immediate scale and profitability, Corteva said, with Stoller projecting revenues of more than $400 million in 2022 from operations in more than 60 countries.

“Biologicals provide farmers with sustainably-advantaged tools that complement crop protection technologies, and collectively, can work to address global challenges around food security and climate change,” said Chuck Magro, Corteva CEO. “In combination with Corteva’s leading innovation organization, Stoller provides a platform for expanding and accelerating Corteva’s biologicals business to become one of the largest players in the rapidly expanding biologicals market.”

Corteva said the purchase price will be paid at closing, which is anticipated to be completed in the first half of 2023 following regulatory approvals and satisfaction of customary closing conditions. Corteva said it expects that Stoller results will be accretive to both operating EBITDA and operating EPS for 2023.

“In Stoller’s 50+ year history, we have successfully helped growers around the world increase their productivity and improve their sustainability,” said Guillermo de la Borda, Stoller CEO. “We are proud to join forces with Corteva as we share a vision of helping farmers succeed in growing the nutritious food the world relies on.”

Bloomberg reported in May that the owners of Stoller were exploring a sale that could value the company at as much as $1.5 billion, including debt. The takeover is Corteva’s second biologicals deal this year, after agreeing to buy Spanish microbiological technologies firm Symborg in September.

The biologicals market is expected to grow high-single digits annually through 2035, representing about 25% of the overall crop protection market by 2035, Corteva said in its statement.

“This announcement is a true testament to the incredible success and dedication of our teams across the globe who have helped us become one of the most trusted biostimulant and plant health companies in the world,” de la Borda added. “Our innovative solutions and deep expertise will continue to make an impact for years to come.”

House, Senate Bills Passed to Prevent Rail Strike

Featured, News, Transportation, U.S.

The US House of Representatives on Nov. 30 passed legislation to force a tentative rail labor agreement ahead of a Dec. 9 strike that threatened to cripple the US economy. The bill then moved to the Senate, which approved the measure on Dec. 1, but without an expansion of paid sick days that had narrowly won support in the House.

The House bill passed on a 290-137 vote, and came just one day after President Joe Biden called on Congress to immediately approve legislation “without any modification or delay” that adopts the contract terms outlined by a Presidential Emergency Board (PEB) last summer and approved by labor and railroad negotiators in September.

This includes a 24% compounded wage increase over a five-year period from 2020 through 2024, immediate payouts averaging $11,000 upon ratification, and an extra paid day off. In a separate 221 to 207 vote, however, the House also approved a resolution to provide seven days of paid sick leave in the contract instead of one, which was a key disagreement that led to four of 12 unions voting against ratification.

The House resolution granting seven paid sick days was backed by nearly all House Democrats on Nov. 30, but only three Republicans. It prompted an angry statement from the Association of American Railroads (AAR), which had earlier applauded the Biden Administration for moving quickly to head off a strike.

“Now is not the time for Congress to put its thumb on the scale and selectively add to labor contracts, including agreements already ratified by employees, created through a multi-year process,” said AAR President and CEO Ian Jefferies. “It is in direct conflict with the President’s statement, and the Speaker and Congress must think of the long-term implications of such actions. A vote for terms above and beyond those recommended by the PEB, agreed to at the bargaining table, and ratified by a majority of the unions and voting employees, would upend the time-tested bargaining process in rail and other industries.”

In a Nov. 29 statement, Biden acknowledged his pro-union past and his hesitancy to force a binding agreement, but said the economic impact of a nationwide rail strike was too severe to allow the impasse to continue. A strike or lockout on Dec. 9 would cost the US economy an estimated $2 billion per day.

“As a proud pro-labor President, I am reluctant to override the ratification procedures and the views of those who voted against the agreement,” Biden said. “But in this case – where the economic impact of a shutdown would hurt millions of other working people and families – I believe Congress must use its powers to adopt this deal.”

Biden’s decision angered some union leaders. The Brotherhood of Maintenance of Way Employes (BMWED), one of the four unions whose members had rejected a proposed contract agreement with the railroads, said it was “deeply disappointed” in the president.

“A call to Congress to act immediately to pass legislation that adopts tentative agreements that exclude paid sick leave ignores the railroad workers’ concerns,” BMWED said in a Nov. 29 statement. “It both denies railroad workers their right to strike while also denying them of the benefit they would likely otherwise obtain if they were not denied their right to strike.”

The Senate on Dec. 1 took up three separate measures in its bill, ultimately approving by an 80-15 margin the contract that the Biden administration negotiated in September, without the additional paid sick days. A separate Senate measure to extend the Dec. 9 negotiation deadline by 60 days failed on a vote of 70-25, and an effort by Senate Democrats to add seven paid sick days was defeated in a 52-43 vote, failing to get the needed 60 votes to pass.

The bill now goes to President Biden, who was expected to sign quickly and not a moment too soon. Bloomberg reported on Nov. 30 that US railroads had already begun curtailing shipments of hazardous chemicals ahead of a potential nationwide strike. Some members of the American Fuel & Petrochemical Manufacturers (AFPM) were reportedly notified that shipments of hazardous products such as chlorine, ethylene oxide, and sulfuric acid were already winding down and any new shipments would be halted by the end of the week, according to Bloomberg.

The US Environmental Protection Agency (EPA) also warned that rail carriers could issue embargoes by the end of the week on chemicals needed for drinking water treatment, including anhydrous ammonia and phosphoric acid. Shipments of ethanol and diesel exhaust fluid were also imperiled, according to NATSO, which represents truck stops and travel plazas, and SIGMA, which represents fuel marketers and retailers.

In a Nov. 29 statement, The Fertilizer Institute (TFI) applauded the Biden Administration’s call for swift Congressional action to avert a Dec. 9 strike, and warned that rail shipments of ammonia and other fertilizer would stop moving on Dec. 4 if the threat of a strike persisted. “These embargoes could hamper production and add additional uncertainty to an already tight global market,” said TFI President and CEO Corey Rosenbusch.

In a Dec. 1 statement, Rosenbusch thanked Congress for its “swift work,” adding that the House and Senate votes prompted an “industry-wide sigh of relief” and an end to “months of uncertainty” for the fertilizer industry.

“TFI is also appreciative of the Biden Administration’s leadership as this challenging situation took bipartisan efforts on all sides and every level of our government to make it happen,” Rosenbusch added. “Rail is critical to the movement of fertilizer year-round. Averting embargoes and production delays were crucial to not only ensuring we’re able to provide the fertilizers our nation’s farmers need, but also avoiding additional disruptions to a global market already constrained by geopolitical events and volatile energy prices.”

A coalition of 449 organizations led by the U.S. Chamber of Commerce had warned congressional leadership in an open letter on Nov. 28 that disruptions to rail service caused by pre-strike embargoes were a “matter of grave urgency.”

“In September, the mere possibility of a rail service stoppage created significant disruptions to the timely delivery of critical goods and products,” the letter said. “The freight railroads must safely reduce operations and secure their customers’ goods days in advance of a potential strike, meaning businesses and communities saw interruptions in the delivery of fertilizers, chlorine and other products essential to clean water, our food supply and electricity generation.”

The Surface and Transportation Board (STB) has reportedly called Union Pacific (UP) management, including CEO Lance Fritz, to appear at a Dec. 13-14 hearing about the freight railroad’s escalating use of embargoes. According to STB data, UP’s use of embargoes to control congestion has increased from a total of five in 2017 to more than 1,000 to date in 2022. The agency said it has received numerous reports that the embargoes are hampering shippers’ operations and adding to supply chain problems.

Ammonia

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

US Gulf/Tampa:

Tampa ammonia for December was concluded at $1,030/mt CFR, down $120/mt CFR from November’s $1,150/mt CFR. Market observers had expected a lower price based on increased production in Europe, as well as lower international prices.

Eastern Cornbelt:

The ammonia market continued to be quoted at $1,250-$1,350/st FOB in the Eastern Cornbelt, with the low reported out of Koch terminals in Illinois and Indiana and the high reflecting limited terminal offers from CF. The ammonia market FOB Lima, Ohio, remained at $1,300/st FOB during the week.

Ammonia continued to move to the field in some parts of the Eastern Cornbelt during the final days of November, and some sources said they expect another two weeks of application based on weather forecasts. No spring pricing programs have been announced in the region.

“Tons are still moving to the field, and we’ve been seeing some parties who normally apply in the spring taking advantage of this fall weather and moving to apply now,” said one regional contact.

Western Cornbelt:

Ammonia pricing slipped to $1,250-$1,300/st FOB for prompt fall tons in the Western Cornbelt, depending on location and supplier. In the Southern Plains, new offers FOB Enid, Okla., were reported at the $1,000/st level.

California:

Anhydrous ammonia postings in California remained at $1,250/st DEL. The aqua ammonia market was unchanged at $271-$336/st FOB, with the low reported for the last offers at Stockton and the high at Sycamore.

Pacific Northwest:

Ammonia pricing in the Pacific Northwest remained at $1,335-$1,350/st FOB and $1,350/st DEL. The aqua ammonia market was also unchanged at $345/st FOB in the region. “Ammonia will come down once fill/prepay numbers start to come out,” said one regional contact.

Western Canada:

New winter fill pricing for anhydrous ammonia in Western Canada was quoted in a broad range at C$1,350-$1,595/mt DEL, down sharply from the last reported prompt fall pricing in the C$1,600-$1,800/mt DEL range. No spring pricing programs were announced in the region as of Dec. 2.

Black Sea:

News reports indicate the United Nations and Russia are closer to a deal that would re-open the ammonia pipeline from Russia to Odessa, but international traders continue to criticize the move.

One European trader noted that the Russians are targeting electrical supply centers in their war against Ukraine. Efforts to open the pipeline will require the diversion of the limited electricity produced in the war zone away from the civilian population to the pipeline.

If the deal does go through, sources said the price of ammonia could come down. However, Russia may find it difficult to regain many of its old markets. Several major buyers that once depended on Russian ammonia have moved on to other suppliers.

India:

Buyers in India are almost exclusively taking spot tons from China and Southeast Asian sources such as Indonesia and Malaysia. Long-term contract material is still coming from Arab Gulf suppliers.

The Asian suppliers are offering their tons at levels that equate – and sometimes beat – the contracted price from the Arab Gulf. Sources said the landed price for spot ammonia into India remains around $850/mt CFR.

Middle East:

Sources said there is no spot material coming out of the Arab Gulf, and the product moving out is said to all be contracted tons. Reportedly, the producers claim they are sold out for December and into early January.

Any discussion about a spot cargo usually begins around $1,000/mt FOB from the producers and just under $900/mt FOB from buyers. With cheaper product from Southeast Asia for East of Suez buyers, sources said there is little incentive for buyers to come up in their bids. Likewise, sufficient supplies from North Africa and Trinidad and lower landed prices are keeping buyers West of Suez from agreeing to the spot prices proposed by Arab Gulf producers.

The lack of any new spot deals leaves the last public spot price at $1,015-$1,030/mt FOB. Sources said this is not a level that is easily attained at this time, however.

The producers are keeping an eye on demand out of Australia following the closure of the Yara Pilbara plant. Reportedly, the Australians could be looking at more purchases from Indonesia and Malaysia, reducing the availability of ammonia from Southeast Asia. They are also watching rising gas prices in Europe to see if more imports will be needed that cannot be supplied from North Africa or Trinidad.

January-October ammonia exports from Iran were reported at 419,000 mt by Trade Data Monitor, down 11% from the 473,000 mt exported during the same period in 2021. The main buyers were India at 344,000 mt and Oman at 27,000 mt.

October 2022 exports were reported at 35,000 mt, up 42% from the 25,000 exported in October 2021. India took 18,500 for 53% of the exports, followed by Oman with 14,000 mt for 39% of exports.

Northwest Europe:

A sale by Nutrien at $1,050/mt CFR dropped the ammonia price in Europe. Sources said the move presaged the drop in Tampa to $1,030/mt CFR. One trader noted that the netback to Trinidad from Europe and Tampa is about the same.

Imports of ammonia are expected to pick up in December. Sources said gas prices into Europe have been rising at almost 10% per day, leaving ammonia producers little choice but to cut back on production.

European producers began to ramp up production in November following a dip in gas prices, resulting in fewer imports. Sources estimated that European buyers imported about 200,000 mt less in November than they did in October. With natural gas prices moving up again, however, the producers may begin reversing their gradual increase in production by slowly stepping back on their output.

Potential buyers will start looking again at Trinidad and Southeast Asia for supplies. Sources said tonnage from Malaysia and Indonesia may be less available. The European buyers could face competition from buyers looking to replace the tons lost due to the closing of the Pilbara plant. Even though the plant is expected to be closed for about a month, it will be during the height of winter in Europe when gas prices are expected to be even higher.

Southeast Asia:

Ammonia supplies are expected to tighten as buyers look to cover lost material from the closing of the Pilbara plant in Australia. The plant was closed because of uncertain natural gas supplies. Damage to the pipeline run by the supplier is expected to take four to six weeks before deliveries can recommence.

Even with the expected increased demand for ammonia from the area, sources said the excess material from China will work to keep prices stable.

Thailand ammonia imports for January-October were reported at 288,000 mt by Trade Data Monitor, down about 19% from the 354,000 mt imported during the same period in 2021. The main suppliers were Malaysia at 200,000 mt and Indonesia at 81,000 mt.

October 2022 ammonia imports were reported at 18,000 mt, with Malaysia supplying 15,000 mt. This is a drop of 64% from the 49,000 mt imported during October 2021.

Urea

Africa, Argentina, Brazil, California, China, Eastern Cornbelt, India, Market Watch, Middle East, Nepal, Pacific N.W., Pakistan, Thailand, U.S. Gulf, Urea, Western Canada, Western Cornbelt

US Gulf:

NOLA urea barge prices dipped to $451-$485/st FOB, down from the week-ago $490-$520/st FOB.

Eastern Cornbelt:

The urea market slipped again to $570-$590/st FOB in the Eastern Cornbelt, down $15-$20/st from the prior week, with the Cincinnati, Ohio, market pegged at $570-$580/st FOB.

Western Cornbelt:

Urea pricing fell to $550-$580/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo., and the high in Iowa. The Catoosa/Inola, Okla., market was quoted at $550-$575/st FOB, down another $25/st from the previous week, while pricing at St. Paul, Minn., was pegged at $580-$610/st FOB.

California:

Although urea postings remained as high as $760/st FOB Stockton from some suppliers, sources said the market for new offers was closer to $725-$735/st FOB most port terminals in California. Rail-DEL offers were reported as low as $615-$635/st in Northern California.

Pacific Northwest:

Urea pricing in the Pacific Northwest slipped to $640/st FOB Rivergate, Ore., down from the last confirmed $675/st FOB level. The Aurora, Ore., price was quoted at the $645/st FOB level at midweek. Delivered urea pricing was pegged at $675-$725/st in the region, depending on location.

Western Canada:

New urea offers in Western Canada were reported at C$935-$1,005/mt FOB and C$965-$1,010/mt DEL, depending on location and time of shipment, down from mid-November pricing at the C$1,025-$1,060/mt FOB and $1,050-$1,060/mt DEL levels.

India:

Even as the paperwork from the NFL tender is still being processed, sources said they expect to see another tender call from India in the first half of December. The most likely company to call the tender is said to be RCF.

Sources said it makes sense for India to call another tender to ensure plentiful supplies for the next application season. With a shipping deadline of Dec. 22 from the NFL tender, sources said finding buyers for tons in late December and early January will be difficult, giving the Indian buyer an advantage to argue for even lower prices.

Complaints of urea shortages at local distributors prompted Indian government officials to go on the offensive. One trader said the push for a December tender might be tied to these complaints.

Pakistan:

The tender for 75,000 mt of granular urea closed on Dec. 1 with three companies participating. Swiss Singapore offered 33,000 mt at $551/mt CFR, Pacific International offered 40,000 mt at $599/mt CFR, and Keytrade offered 25,000 mt at $605/mt CFR.

Changes in the way TCP deals with tender offers now allow the company to use the lowest offer as a negotiating tool with the other offering companies to achieve their desired tonnage. In the past, TCP could only take the tonnage offered by the lowest offering company.

Some traders said they did not participate in the tender because of delivery requirements and payment procedures that could force the trader to ship the product before payment could be assured.

Sources estimated the Arab Gulf-equivalent netback from the Swiss Singapore offer at about $520/mt FOB, down significantly from the netback earned under the NFL tender. The landed price in Pakistan is about $20/mt below what NFL paid for its West Coast deliveries.

TCP is expected to at least take the 33,000 mt from Swiss Singapore. If they can convince Pacific International to lower its price, TCP will have achieved its goal of buying about 75,000 mt in an open tender.

TCP had earlier called a tender for 300,000 mt, but got no response. Eventually, the government authorized TCP to secure tons under government-to-government agreements. In the end, Pakistan will receive 125,000 mt from China and 35,000 mt from Azerbaijan under these arrangements.

Middle East:

Sources said discussions for January shipments are focusing on the $520s/mt FOB. This price fits with the equivalent netback from the lowest offer of $551/mt CFR in the TCP/Pakistan tender. So far, no sales from the area at this level have been confirmed, leaving the price at the level set under the NFL/India tender in the low-$550s/mt FOB.

Sources said producers are saying they are sold out through Dec. 22, the deadline for shipping material to India under the NFL tender. There are reports that excess tons will begin building up almost immediately, leaving producers looking for buyers at the end of December and into January.

Two sales out of Egypt by MOPCO tightened the market price. Sources reported the sale of 25,000 mt at $560/mt FOB and 5,000 mt at $565/mt FOB for December loadings. Both cargoes are said to be for European customers by traders covering shorts.

Iranian urea exports for January-October were reported at 4.2 million mt by Trade Data Monitor,up about 30% from the 3.2 million mt exported during the same period in 2021. The main buyers were Turkey at 1.5 million mt and South Africa at 491,000 mt.

October 2022 exports were reported at 473,000 mt, up 62% from the 291,000 mt exported during October 2021. Turkey bought 199,000 mt for 42% of the exports. South Africa took 64,000 mt for 14% of the exports.

Nepal:

A tender for 26,500 mt of granular urea will close on Dec. 11. The tender was called by STCL, with bagged material to be delivered to its warehouses. The price envelopes will be opened on Dec. 16.

Ethiopia:

An EABC tender for 500,000 mt of granular urea closed on Nov. 29. Sources said eight companies submitted offers, but two – including Dangote in its first direct entry in an EABC tender – were disqualified.

No prices or quantities offered by companies were made public by the time Green Markets went to press. The six companies that moved on to the next step in the tender are Midgulf International, ETG, Samsung, Fertiglobe, Bio Green, and Ethio Europe. The offers into the tender were reported to have all been on an FOB basis.

An earlier effort to secure 930,000 mt failed in September, with no awards issued for the tender. Sources said limited participation and high prices led to the lack of any action taken on that tender. The buyer moved from the tender process to seeking a government-to-government deal. In the end, EABC secured 200,000 mt from a Chinese producer.

China:

Producers remain in good shape for the limited exports allowed. Sources estimated that 250,000-300,000 mt will go to back offers in the NFL tender. An additional 125,000 mt was agreed to for Pakistan and 200,000 mt for Ethiopia under government-to-government deals.

Only the NFL tender results offered a glimpse of pricing. Sources put the netback to China at $550-$560/mt FOB. The government-to-government deals are more opaque, with little indication of settled prices.

Brazil:

Urea prices in Brazil have softened to $530-$550/mt CFR. Sources said the downward pressure is a result of lack of demand in other markets and a lack of liquidity in the Brazil market.

The price for product from sanctioned countries is lower, putting even more pressure on the main market. Sources said Venezuelan urea is reported at $530/mt CFR and Iranian product at $510/mt CFR. The bulk of the non-sanctioned urea seems to be in the $540s/mt CFR.

Rondonopolis urea prices came down a bit from the upper end of the price range, falling to $720-$725/mt FOB ex-warehouse. Sources said low demand from farmers and local distributors is keeping a steady downward pressure on prices.

Argentina:

January-October urea imports were reported at 800,000 mt by Trade Data Monitor, down about38% from the 1.3 million mt imported during the same period in 2021.

Each of the main suppliers in 2022 either sent marginal or no tonnage in 2021. Nigeria sent 145,000 mt in 2022, but only 10,000 mt during the first 10 months of 2021. Bolivia sent 130,000 mt, Turkmenistan sent 125,000 mt, and Indonesia sent another 100,000 mt. None of these three countries sent any urea to Argentina during this period in 2021.

October 2022 imports were down about 58%, to 77,000 mt from 182,000 mt sent in October 2021. Indonesia and Oman accounted for about two-thirds of the imports, sending 31,000 mt and 20,000 mt respectively.

Thailand:

Imports of urea for January-October were reported at 1.7 million mt by Trade Data Monitor, down about 20% from the 2.1 million mt imported during the same period in 2021. Saudi Arabia sent 677,000 mt, Qatar sent 369,000 mt, and Malaysia sent 363,000 mt.

October 2022 imports were reported at 132,000 mt, down from the 211,000 mt imported during October 2021. Saudi Arabia accounted for 61% of the imported urea with 79,000 mt.

Sources said the dominance of Saudi Arabia in Thailand is not surprising. They noted that there has been a long commercial relationship between the Saudi urea industry and Thai buyers that has provided for lower landed prices for the Saudi product.

UAN

California, Eastern Cornbelt, Market Watch, Pacific N.W., U.S. Gulf, UAN, Western Canada, Western Cornbelt

US Gulf:

NOLA UAN barges were pegged in the $510-$525/st ($15.94-$16.41/unit) FOB range, following the inland markets lower.

Eastern Cornbelt:

UAN-32 pricing remained at $570-$600/st ($17.81-$18.75/unit) FOB terminals in the Eastern Cornbelt, with the low confirmed at Cincinnati. The last confirmed UAN-28 offers included $498.75/st ($17.81/unit) FOB Cincinnati.

Western Cornbelt:

The UAN-32 market was quoted at $570-$600/st ($17.81-$18.75/unit) FOB in the Western Cornbelt, with the low reported at Port Neal, Iowa. The St. Louis market was pegged at the $580-$585/st ($18.13-$18.28/unit) FOB level at midweek.

California:

The UAN-32 market ranged broadly at $590-$630/st ($18.44-$19.69/unit) FOB Stockton, depending on supplier, with reference pricing unchanged at $635/st ($19.84/unit) FOB Port Hueneme and $640/st ($20.00/unit) FOB West Sacramento. Rail-DEL tons were quoted in the $590-$610/st ($18.44-$19.06/unit) range in Northern California.

Pacific Northwest:

The UAN-32 market dropped to $600-$610/st ($18.75-$19.06/unit) FOB in the Pacific Northwest, down from $630-$670/st ($19.69-$20.94/unit) FOB at last report, with the low confirmed at Kennewick, Wash., and the high at Umatilla, Ore., and Pasco, Wash. Delivered UAN-32 was pegged in the $625-$655/st ($19.53-$20.47/unit) range during the week.

Western Canada:

The UAN-28 market in Western Canada was pegged at C$680-$720/mt (C$24.29-$25.71/unit) DEL for December-January tons, below the previous C$720-$735/mt (C$25.71-$26.25/unit) DEL range.