All posts by mickeybarb@charter.net

Gensource Confident of Reaching Equity Financing Goals this Fall

News, News Briefs, Potash, Saskatchewan

Gensource Potash Corp. President and CEO Michael Ferguson told shareholders in an Aug. 31 call that the company is confident of reaching its equity financing goals this fall, which will allow the company to launch the Tugaske Project in Saskatchewan to construction.

The junior producer provided the update to shareholders after saying that turmoil in the global financial markets, exacerbated by Russia’s invasion of Ukraine, caused delays in completing the equity financing during the first half.

“With the significant improvement in potash price and an unprecedented visibility of potash and other fertilizers in the global press, there is increased interest for private equity in the fertilizer space and in the potash market particularly,” Ferguson told shareholders.

“The company is currently in detailed discussions with both domestic and international equity investors. These discussions have been constant over the past several months, but now with the heightened focus on potash as a truly strategic commodity, the discussions have now progressed to a serious negotiation level, well past a letter of intent (LOI) stage,” he continued.

“With the five largest players accounting for more than 75% of the market, and each of those five players relying on large and in many cases old producing assets, it only takes a problem at one asset to have a global impact,” said Ferguson, who noted three recent examples – flooding that closed Mosaic’s K1 and K2 mines, sanctions against Belarus, and the Russian invasion of Ukraine. He said the Russia situation puts a cloud over whether Russian potash producers can expand in the near term as planned.

“Russian and Belarusian product will find ways to get out to some markets and the situation will even out a bit, but the supply will remain constrained,” he added. “And we are of the view that the potash industry will never really return to its previous state.”

Ferguson noted that Helm AG, a future equity and offtake partner in the Tugaske Project, has worked shoulder-to-shoulder with Gensource to structure an equity solution that will complete the financing picture. He added that Helm has supported the project in significant ways by guaranteeing accounts included in the debt financing package, by providing short-term financial input to the company, and by investing further of their own resources and personnel, and has rolled up their sleeves and helped negotiate and complete the financing of the project.

Ferguson said plans announced in June to double the size of the Tugaske Project (GM June 24, p. 1), located 170 km south of Saskatoon, from 250,000 mt/y to 500,000 mt/y under a second phase of the project by adding a second module, continue.

Ferguson is upbeat despite the additional headwind of inflation. He also noted that a second phase of the project would only cost about 80% of the first phase, as infrastructure will already be in place.

Asked by a shareholder as to whether some of the delay has been due to technology, Ferguson reiterated that there is no issue on that front. He said it has had three or four independent technical reviews and has been reviewed by banks and equity investors. “And the results of every technical review is that the techniques used are robust…” he said.

Gensource shares closed at C$0.21 on Sept. 1, down 22% from the Aug. 30 close of C$0.27.

“European Gas Market is Bust,” Says Fertilizers Europe; Urges Urgent Crisis Management

Europe, Featured, Natural Gas, News

Fertilizers Europe, the Brussels-based European producers’ organization, warned on Aug. 26 that the European fertilizer industry is in a “full-fledged unprecedented crisis” because “the European gas market is bust,” with natural gas prices soaring over 1,000% from levels a year ago.

The industry body estimates that over 70% of European fertilizer production capacity has been curtailed or shut down as “record high prices of natural gas, which represent 90% of the industry’s variable production costs, makes it impossible for European producers to compete.”

At least six European nitrogen producers have announced initial or additional ammonia/and or nitrogen production cuts from Aug. 22 onward due to soaring natural gas and energy prices across the region. They include Yara International ASA, CF Fertilisers UK, Vienna-headquartered Borealis AG, Lithuania’s Achema AB, Hungary’s Nitrogénművek Zrt., and Poland’s Grupa Azoty and Anwil SA (GM Aug. 26, p. 1). Anwil early this week, however, announced it was resuming fertilizer production (see related story), while another – Slovakia’s Duslo – also suspended production (see related story).

With the cost of natural gas 8-10 times higher in Europe compared to the US and even more compared to other fertilizer industry hubs, the European producers are not able to compete on the domestic and global market, said Fertilizers Europe.

The industry body’s General Director Jacob Hansen warned that if the situation prevails, Fertilizers Europe fears that remaining producers could also be affected.

Fertilizer Europe is calling for “an urgent and decisive” European Union-driven crisis management action to restore fertilizer production.

It said this is key to secure the EU’s strategic autonomy for fertilizer and to ensure Europe’s long-term food security. It urges the European institutions and EU Member States to take immediate action to avert energy and fertilizer crisis.

“The current crisis begs for a swift and decisive action from EU and national policy makers for both the energy and fertilizer market. The gas market needs to be looked at to address today’s challenges, support domestic industry, and restore market confidence,” said Hansen.

“The policy makers should also seriously consider crisis management policies for fertilizer industry to minimize long-term repercussions for EU food security,” he said.

Hansen added “moving away from dependency on Russian energy and raw material supplies cannot be achieved by closing plants and moving jobs outside of Europe.

“An urgent correction of current gas policies is therefore needed to address this very serious crisis. Europe needs a strong domestic fertilizer industry to continue producing food and in the long run to develop Europe’s hydrogen economy using green ammonia supplied by fertilizer industry,” he continued.

Dutch TTF front-month gas (currently October), the European benchmark, this week eased back from the €339.195 a megawatt-hour (MWh) high hit on Aug. 26. That was close to the all-time high of €345 per MWh seen in early March, and came amid an impending three-day outage at the key Nord Stream 1 pipeline that supplies Russian gas to Europe via Germany.

Flows through the pipeline were suspended at 4:00 a.m. Moscow time on Aug. 31 for scheduled repairs at Nord Stream 1’s only operational gas compressor unit at the Portovaya compressor station, according to Russia’s Prime business news agency, citing Russian gas major Gazprom PJSC.

TTF’s front-month gas contract closed at €252 per MWh on Sept. 1, but this still compares to just €52.9 a MWh a year ago and just €20.3 on Jan. 4, 2021.

This week’s Dutch gas futures easing follows news mid-week that the EU has met its gas storage filling goal two months ahead of target.

But analysts have warned the bigger factor for the region’s energy security will be whether European countries can cut consumption enough to ensure that stored gas lasts through the coldest winter months, Bloomberg reported.

Full gas storage could sustain European countries for roughly three months at best, and stored gas in Germany could meet just 80-90 days of average demand, according to Oxford, UK-based Aurora Energy Research, as cited by Bloomberg.

Furthermore, concerns remain widespread that Russia may find another excuse to further reduce gas supplies to Europe.

But some are optimistic that Russia will not cut gas to Europe completely. Gazprom CEO Alexey Miller said in a statement on Aug. 31 that the state-run gas major expects this year’s revenues to exceed 2021 levels even as export volumes drop, Bloomberg reported.

In late-breaking news on Sept. 2, Russia’s Gazprom PJSC said its key gas pipeline to Europe would not reopen as planned, according to Bloomberg. The pipeline was due to reopen on Saturday after maintenance. But in a last-minute statement late on Friday, the company said a technical issue had been found and the pipe cannot operate again until it is repaired.

UK Fears CO2 Supply Shortages Amid CF’s Planned Billingham NH3 Production Halt

Ammonia, Carbon Dioxide, News, News Briefs, United Kingdom

The UK’s Department of Environment, Food, and Rural Affairs and food and drinks industry groups, such as the British Meat Processors Association, are urging the UK government to intervene – as it did in September last year – in the impending temporary halt to ammonia production at CF Fertilisers UK’s Billingham Complex in northeast England in order to safeguard the country’s CO2supplies.

CF’s Billingham plant has the capacity to produce 750 mt of CO2per day, with currently some 42% of the UK’s CO2 supplies coming from Billingham. CO2is vital for many of the country’s food processing and drinks sectors, as well as the UK’s hospitals and nuclear power industry, among others.

The company, a subsidiary of the US’s CF Industries Holdings Inc., on Aug. 24 announced its intention to temporarily halt ammonia production at the Billingham Complex due to market conditions (GM Aug. 26, p.1). CF said it is still to determine the exact date when it will begin the temporary shutdown of the ammonia plant. It intends to use the site’s ability to import ammonia to enable it to continue to run its ammonium nitrate and nitric acid plants.

However, once the ammonia plant is halted, CO2 production, which is a byproduct of the ammonia production process, will stop until the plant is restarted.

In September 2021, when CF halted production at Billingham and at its other UK plant, at Ince, Cheshire, due to soaring energy costs, the UK government agreed to an exceptional three-week arrangement that provided “limited financial support” to CF and allowed the Billingham plant to restart (GM Sept. 24, 2021), while the company and its CO2 customers worked on a revised pricing deal.

Since last year’s outage, CF has permanently closed the smaller Ince plant (GM June 10, p.1). CF Fertilisers’ two plants accounted for as much as 60% of the UK’s CO2 requirements.

While UK meat processing sources reported the country is in a much better position now regarding CO2supplies than they were a year ago, they have “serious concerns” that if CF follows through on its decision to temporarily halt ammonia production at Billingham, without sufficient supplies of the gas the country will potentially face an animal welfare issue with a growing number of animals unable to be sent for processing.

Poland’s Anwil Back Up, Azoty Maintains CO2, Dry Ice Supply; Government Ensures Fert Access

Ammonia, Carbon Dioxide, Featured, News, Poland

Anwil SA, a unit of Poland’s biggest oil refiner, PKN Orlen SA, has restarted fertilizer production “despite difficult macroeconomic conditions” in order “to guarantee food security” in the country, the company said in an Aug. 29 company filing. Anwil had temporarily suspended fertilizer production on Aug. 23 due to the unprecedented increase of natural gas prices in Europe (GM Aug. 26, p. 1).

The Polish fertilizer producer said the price of its fertilizers once production resumes will reflect the current price of natural gas and market conditions.

Following Anwil’s fertilizer production halt and that of fellow fertilizer producer Grupa Azoty SA and two of Azoty’s subsidiary companies – Grupa Azoty Puławy, Grupa Azoty ZAK – on Aug. 22 amid soaring gas prices, Poland’s food sector warned the shortage of fertilizer production byproducts, including CO2, could put the country’s food security at risk as a number of food processing plants would be forced to suspend production.

Grupa Azoty said on Aug. 29 despite the temporary production cuts at three of the group’s companies, the group was continuing to provide CO2 supplies to its existing customers. Azoty said the reduction in fertilizer production was planned “so as to ensure the availability of sensitive products, including liquid CO2, dry ice, and aqua ammonia,” which it said was necessary for the operation of the commercial power industry.

In addition to CO2 inventories held in company storage facilities, Azoty said the group continues to produce and supply CO2 to its customers on an ongoing basis.

Poland’s Deputy Prime Minister, Minister of Agriculture, and Rural Development, Henryk Kowalczyk, on Aug. 29 said the country will ensure its farmers have access to fertilizers at “moderate” prices, according to a PAP news report. But he said these prices will not be at last year’s levels as “there is no going back to that level.”

Poland’s cabinet is working on a mechanism to shield the country’s farmers against the higher cost of fertilizers, Bloomberg reported on Aug. 30, citing Poland’s Prime Minister Mateusz Jakub Morawiecki, who was speaking at a press conference in Warsaw.

The Polish government is seeking measures that will not boost the profit of “foreign companies,” and “finding such solutions requires more time,” according to the report.

Bulgaria’s Agropolychim Resumes Full Capacity Production, Cuts Natgas Reliance

Ammonia, Eastern Europe, Natural Gas, News, News Briefs

Bulgarian fertilizer producer Agropolychim last month said it had resumed full capacity production after the completion of another stage of an investment program that has updated several of its production facilities and has helped it reduce natural gas consumption.

During the 50-day nitrogen production shutdown, the company said several major facilities at its production site near the northeastern town of Devnya were upgraded. One of the most important projects was the partial reconstruction of the nitric acid plant, where a new steam turbine was put into operation.

With the new equipment, internal steam consumption has been reduced by over 10%, which Agropolychim said will contribute to a further “significant” reduction in the company’s natural gas consumption. This comes in addition to the already operational steam plant using straw bales as fuel, it said.

Agropolychim in 2019 switched from ammonia production to imported ammonia after the commissioning of an ammonia import terminal, which it said made the company almost completely independent of the price of natural gas.

The company this year will increase the storage capacity of the ammonia terminal by 130%, from 10,000 mt currently to around 30,000 mt, at a cost of over €17million (approximately $17.05 million at current exchange rates).

Agropolychim said it currently imports ammonia from various suppliers in the Middle East, North Africa, and America, which in addition to its own production needs, also allows it to deliver ammonia and ammonia gas to various industries in Bulgaria and Romania.

Operating its fertilizer production facilities at full capacity will allow the company to meet the fertilizer needs of Bulgarian farmers and have for some export, it said.

The Bulgarian producer said it sells more than 1.3 million mt/y of fertilizers, of which it produces about 900,000 mt

According to data on its website, Agropolychim currently has production capacity for 400,000 mt/y of ammonium nitrate or 800,000 mt/y of UAN, as well as 300,000 mt/y of MAP/DAP production capacity or 330,000 mt/y for TSP. It also can produce about 300,000 mt/y of NPKs.

Agropolychim is a privately-owned company with Bulgarian and Belgium joint stock participation.

Fellow Bulgarian nitrogen fertilizer and NPK producer Neochim has reported a 250% increase in consolidated net profit to 75.6 million levs (approximately $38.8 million) for the first half of 2022, up from the year-ago 21.6 million levs, despite a 195% surge in raw materials expenses, according to a SeeNews report.

Neochim, which unlike Agropolychim uses natural gas as it main raw material, saw its expenses in the first-half surge to 327.3 million levs from 126.4 million levs the previous year, almost entirely from increased raw materials cost, according to the report.

Slovakia’s Duslo Suspends Production

Eastern Europe, News, News Briefs

Slovakia’s trucking companies are reported to have started “panic-buying” AdBlue after the country’s nitrogen fertilizer and chemicals producer Duslo a.s. halted production in mid-August due to soaring natural gas prices.

Duslo, which is a unit of the Prague, Czech Republic-based Agrofert Group, operates one of Europe’s largest AdBlue plants. AdBlue is an essential additive for diesel trucks to reduce levels of nitrogen oxides (NOx) pollution from their engines.

Ammonia

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

U.S. Gulf/Tampa:

With another wave of ammonia plant closures in Europe due to higher natural gas prices, Tampa ammonia moved up $50/mt for September, to $1,150/mt CFR from the $1,100/mt CFR posted in August.

Sources said a new, higher Cornbelt range lifted the bottom for NOLA barges to $975/st FOB.

Eastern Cornbelt:

Ammonia prices were up significantly in the Eastern Cornbelt. After climbing to $1,170-$1,200/st FOB over the previous weekend, another increase on Aug. 31 took posted prices up to $1,250-$1,300/st FOB regional terminals, with the high reflecting new pricing from CF and the low for Koch offers. CVR’s East Dubuque, Ill., facility is reportedly down for a turnaround.

New ammonia postings in Indiana at midweek included $1,280/st FOB Mount Vernon and Terra Haute. Nutrien also raised its ammonia price FOB Lima, Ohio, firming to $1,250/st FOB for prompt or prepay, up from the previous week’s $1,025/st FOB for prompt and $1,050/st FOB for prepay.

Western Cornbelt:

Ammonia prices were on the rise in the Western Cornbelt. The range at the beginning of the week was reportedly $1,125/st FOB in Nebraska, $1,130/st FOB Port Neal, Iowa, and $1,140-$1,150/st FOB most other Iowa terminals. Prices firmed another $50-$75/st at midweek, however, depending on location. The Palmyra, Mo., market reportedly moved from $1,150/st up to $1,225/st FOB for prompt or prepay as the week progressed.

Ammonia prices also strengthened in the Northern Plains, with new delivered offers reported in a broad range at $1,050-$1,150/st in North Dakota, up significantly from the prior week’s $850-$950/st range.

Southern Plains:

After starting the week in the $950-$1,000/st FOB range, ammonia prices in the Southern Plains strengthened again at midweek, firming to $1,000-$1,200/st FOB, with the high confirmed at Verdigris, Okla., and the low at Woodward, Okla. The Borger, Texas, market was pegged at $1,025/st FOB.

No ammonia prices were being offered at Coffeyville, Kan., where the nitrogen plant was reportedly building inventories after restarting following a recent turnaround.

Sources continued to report little in the way of preplant application on winter wheat ground in the region. “It’s too dry to even think about planting,” said one Kansas source. “Some ammonia is being applied in traditional ammonia areas that have caught some showers, however.”

South Central:

Truck pricing for ammonia out of Gulf Coast terminals was pegged at $1,000-$1,080/st FOB, up from last week’s $1,000-$1,050/st FOB range, with the low confirmed at Beaumont, Texas. No offers were reported at El Dorado, Ark., Midway, Tenn., or Cherokee, Ala.

Northwest Europe:

Ammonia prices remain at $1,290/mt C&F, but sources said not for long. Upward pressure on the price is coming from the high production costs due to high natural gas prices in Europe – now pegged at $3,000/mt. A more moderating influence is coming from Trinidad, North Africa, and the Arab Gulf.

European companies are finding it is vastly cheaper to import product than produce it. The higher prices in Europe, combined with a softer Southeast Asia market, have Arab Gulf producers looking west. Their extra tonnage is helping keep prices in Antwerp from running wild.

Middle East:

Sources reported deals done at $1,075-$1,100/mt FOB. This price fits nicely with the Northwest Europe price of $1,290/mt C&F, and also with the $1,300/mt C&F price expected soon.

Producers are looking at the high natural gas prices in Europe, causing production costs that are out of line with any market. The sales into Europe are at higher rates than what the producers could achieve from their deals in Southeast Asia.

Iranian exports for January-July 2022 were reported at 281,000 mt by Trade Data Monitor, down 28% from the 358,000 mt exported during the same period in 2021. July 2022 exports of 39,000 mt were also down from the 42,000 mt shipped in July 2021. India was the main buyer of the July tonnage, taking 37,000 mt.

Black Sea:

The ammonia market from the Black Sea remained nonexistent. Sources said it is easier to load dry bulk vessels with grains and fertilizers for export than it is to ship a volatile product like ammonia.

The main hindrance to restarting ammonia exports, said one source, was that the ammonia pipeline from Russia into Ukraine runs through a heavily contested war zone. Until the southern portion of Ukraine is settled, sources said they do not expect to see ammonia coming out from the area.

Turkish imports for January-July 2022 were reported at 392,000 mt by Trade Data Monitor, down 21% from the 500,000 mt imported during the same period in 2021. Russia was the main supplier to Turkey, with 153,000 mt so far this year.

July 2022 imports were reported at 53,000 mt, down 19% from the 66,000 mt imported in July 2021. Saudi Arabia sent 25,000 mt and Russia sent 21,000 mt in July.

India:

Sources reported that Ma’aden/Saudi Arabia closed deals with a number of clients in India, but no prices were announced. Sources said the deals will be long-term contracts with pricing on a formula basis.

Some small spot deals were reported in India this week. More Chinese ammonia has been offered into the country at $850/mt CFR. Shipments of Middle East ammonia are also being offered, but at $900/mt CFR.

Reports of more Chinese product being offered into India do not square with first-half import figures released this week. January-June 2022 imports were reported at 1 million mt by Trade Data Monitor, down about 7% from the 1.1 million mt received during the first semester of 2021. Imported ammonia coming from China was reported at 22 mt. Saudi Arabia with 449,000 mt and Qatar with 195,000 mt dominated supplies in the first six months of the year.

Second-quarter 2022 imports were reported at 517,000 mt, up 10% from the 469,000 mt imported during the same period in 2021.

June 2022 imports were reported at 201,000 mt, up from the 194,000 mt imported in June 2021. Saudi Arabia with 99,000 mt, Indonesia with 33,000 mt, and Bahrain with 31,000 mt accounted for 80% of imports that month.

Southeast Asia:

The market remains depressed as manufacturers slow down their demand for ammonia. The combination of the lingering impact of COVID and the current high interest rates have reduced demand for many of the products produced in the area.

Sources said excess ammonia from Indonesia may soon end. Reportedly, ammonia is being diverted to the Kaltim V urea facility. This plant is the most efficient plant in Indonesia, so sources said it makes sense to divert ammonia from older plants and from the spot market to produce urea.

The ammonia reformer in the plant blew up in June, leaving the urea facility untouched but devoid of the necessary ammonia. Estimates as to when ammonia operations at Kaltim V can resume range from late October 2022 to February 2023.

Indonesian exports of ammonia for the first half of 2022 were reported at 996,000 mt by Trade Data Monitor, up 4% from the 956,000 mt exported during the first semester of 2021. With the exception of India, which took 106,000 mt, the main buyers were Southeast Asian neighbors South Korea, Japan, and Taiwan for a total of 532,000 mt.

Second-quarter 2022 shipments were reported at 518,000 mt, up 19% from the 436,000 mt exported during the same period in 2021.

June 2022 exports were reported at 168,000 mt, up from the 130,000 mt shipped during June 2021. As a sign of how buyers are working to make up for the loss of Black Sea ammonia, Morocco took 23,000 mt from Indonesia in June after taking 17,000 mt in May.

Thailand imported 205,000 mt of ammonia during January-July 2022, according to Trade Data Monitor. This is about 23% down from the 267,000 mt imported during the same period of 2021.

July 2022 imports from Indonesia and Malaysia were reported at 45,000 mt, down from the 57,000 mt imported during July 2021.

Urea

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

U.S. Gulf:

New NOLA urea trades were reported at $680-$710/st, up from the week-ago $560-$695/st FOB.

Eastern Cornbelt:

After the previous week’s dramatic rise, urea prices in the Eastern Cornbelt firmed to the $720-$740/st FOB range for new offers, with both the high and low confirmed at Cincinnati, Ohio, as the week progressed. In the Michigan market, new pricing FOB Toledo, Ohio, was pegged at the $765/st FOB level for September business.

Western Cornbelt:

The urea market was pegged at $710-$735/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo., and the high in Iowa. The Caruthersville, Mo., market was also quoted at the $735/st FOB level at midweek, while pricing at Port Neal, Iowa, was pegged in the $725-$735/st FOB range.

In the Northern Plains, urea prices jumped to $725-$750/st FOB St. Paul, Minn., and $745-$770/st DEL in North Dakota, up from the prior week’s $645-$670/st DEL range.

Southern Plains:

Urea prices were up significantly in the Southern Plains. The Catoosa/Inola, Okla., market reportedly ranged from $722-$735/st FOB during the week, depending on timing and supplier, with reports of December-January offers moving to as high as $740/st FOB.

The Enid, Okla., market was pegged at $725-$730/st FOB, with pricing at Borger quoted at the $735/st FOB level. No urea offers were reported at Houston, with all tons currently committed. Sources said the Houston market should have some urea in about two weeks, pending barge arrival.

South Central:

Urea prices were up dramatically in the South Central region, driven by surging NOLA barge values. The market was quoted at $710-$735/st FOB regional terminals, up from the prior week’s low of $600/st FOB, with the high reported in Arkansas and Kentucky and the low confirmed at Memphis, Tenn. Tons at Convent, La., were reportedly sold out after pricing at that location surged from a low of $600/st up to $670/st FOB the previous week.

Southeast:

New urea offers out of port terminals in the Southeast were confirmed in the $700-$725/st FOB range, up from the prior week’s high of $675/st FOB, with both the low and high ends of the range reported in Wilmington, N.C.

India:

RCF called a urea tender for 1 million mt to close on Sept. 9. The call came just as urea prices were catching fire in North Africa and the Arab Gulf.

While the buyer hopes to get 1 million mt, sources said it might be lucky to get 800,000 mt, based on the potential suppliers for the tender. China might supply one or two cargoes, said one trader. Indonesia will have limited urea for export until it gets its Kaltim V facility back to full operations. That leaves the Arab Gulf and Russia.

Reportedly, Russia and India have worked out a deal that would allow for a ruble-rupee exchange to cover any tons offered from Russia. Even without the special arrangement, 148,000 mt of Russian product was part of the shipments that arrived as a result of the July 20 IPL tender.

While there are no sanctions against Russian fertilizer or against banks and insurance companies backing Russian fertilizer sales, sources said many traders are nervous about making sure every aspect of the exceptions are followed, lest they end up being challenged by European or American sanctions monitors.

As of Sept. 1, India still needs 4 million mt of urea to close out the year properly. The limitations of available urea, largely because of the Chinese export restrictions, make it difficult to buy what they need at a price the Indian government considers fair. The last tender came in at $517-$520/mt CFR because there was a surplus of urea in the market and IPL indicated it only wanted 500,000 mt.

Now with demand for at least 1 million mt and a smaller surplus of tons on the market, sources expect prices to be much higher. Soon after the tender was announced, one trader predicted a price of $725/mt CFR. However, as the week progressed, deals out of the Arab Gulf moved the price closer to $800/mt FOB, leading traders to re-evaluate their potential offers.

A move by GAIL, the national natural gas supplier, could help with urea supplies through the end of the year. Bloomberg reported that GAIL will close a tender for 57 trillion btu of natural gas on Sept. 7. The gas is for October-December delivery and will be earmarked for fertilizer plants.

The final tonnage booked under the July IPL tender came out to 592,800 mt, just a couple hundred mt below expectations. The shipping deadline was Aug. 31.

Sources and Tonnage of July IPL Tender Urea
China Indonesia Russia Kotka/Finland Arab Gulf Unknown
134,800 45,000 148,000 100,000 135,000 30,000

Sources said the urea sent out of the Kotka/Finland port is most likely Russian material. The shipments will send 408,000 mt to India’s West Coat and 184,800 mt to East Coast ports.

Indian urea imports for January-June 2022 were reported at 4.6 million mt by Trade Data Monitor. This is a dramatic leap from the 2.5 million mt imported during the first semester of 2021. The main suppliers for the first half of 2022 were Oman with 878,000 mt, Qatar with 425,000 mt, and Saudi Arabia with 404,000 mt.

Second-quarter 2022 imports of 1.4 million mt were about on par with the 1.3 million mt imported during the same period in 2021.

June 2022 imports were reported at 751,000 mt, up 53% from the 491,000 mt imported during June 2021. Oman with 263,000 mt, Vietnam with 94,000 mt, and Saudi Arabia with 78,000 mt accounted for 58% of all imports during June 2022.

Black Sea:

Prills from the Black Sea are being quoted at $535-$571/mt FOB, with the bulk of the business being done in the middle of the range.

It is unclear how many Russian tons will be offered in the upcoming RCF Indian tender. Handling the financial arrangements might be easier after word circulated that a ruble-rupee exchange has been worked out between Russia and India.

SOCAR in Azerbaijan closed a tender this week for 30,000 mt. No details were available at press time. Other tenders from Turkmenistan and Uzbekistan are also expected soon. All three could ship out of the port of Poti on the far east of the Black Sea.

Imports of urea by Turkey for January-July 2022 were reported at 1.3 million mt by Trade Data Monitor, down slightly from the 1.5 million mt imported during the same period in 2021. Of note were the 114,000 mt imported from Russia. During the first seven months of 2021, Turkey only imported 1,700 mt from Russia. Iranian imports were down about 26%, to 100,000 mt in 2022 from 135,000 mt in 2021.

July imports were reported at 287,000 mt, up 141% from the 119,000 mt purchased in July 2021. Oman dominated the sales at 136,000 mt. The next closest was Russia with 57,000 mt.

Indonesia:

Small tenders were awarded in the past week. Liven won an award for 12,000 mt of prilled urea at $522.89/mt FOB. It also took a 30,000 mt award for granular urea at $557/mt FOB. The granular material is most likely headed to Latin America.

Indonesia Prilled Auction
Bidding Company US$/mt FOB
Liven 522.89
Swiss Singapore 518.00
Ameropa 486.00
Hearty Chem 478.00

The granular price is only $10/mt higher than an awarded price of several months ago. The tender and awards took place before the rest of the urea market began its dramatic price increases.

Kaltim V is expected to begin producing granular urea by the end of October. It is taking ammonia that would have normally been sold on the spot market, as well as ammonia being diverted from less efficient plants.

Indonesian urea exports for January-June 2022 were reported at 822,000 mt by Trade Data Monitor, down 20% from the 1 million mt exported during the first half of 2021. The top two buyers were Australia at 220,000 mt, and India at 207,000 mt.

Second-quarter 2022 exports were reported at 619,000 mt, down from the 676,000 mt exported during the same period of 2021.

June 2022 exports were reported at 204,000 mt, down from the 271,000 mt exported during June 2021. Australia with 84,000 mt, India with 47,000 mt, and Myanmar with 25,000 mt accounted for 76% of all exports.

Middle East:

The rumors of deals closing around $700/mt FOB last week were apparently accurate. Sources said even as the ink was drying on those deals, higher prices were being bid and offered. Done business is reported in the low-$700s/mt FOB, with all the current talk taking place closer to $800/mt FOB.

The push for higher prices came on the heels of the Indian announcement of a new urea tender. With China out of the urea export market the only competition to the Arab Gulf is Russia, and questions remain about how many tons will be able to be shipped out of Russia.

Right after the tender was called, sources said Arab Gulf producers pulled back from active discussions. One trader said they most likely want to see how the market reacts to the tender call before moving ahead with commitments to back traders or to offer tons directly. With a Sept. 9 closing, the producers will have almost another full week to assess their situation and that of the global market.

SABIC officials flew to Thailand to hold talks with the Thai government about shipping more urea to that Southeast Asian country. According to the Thai commerce minister, they are looking for an additional 100,000 mt of urea for this year. As of the end of July, Saudi Arabia has already sent 495,000 mt of urea out of 2.5 million mt imported.

SABIC has long provided Thai buyers with favorable prices. In the past, the landed price in Thailand has been equal to or lower than the posted FOB price out of Saudi Arabia. A market analyst said SABIC is willing to offer lower prices to preserve a strong market presence in Thailand.

Exports of urea from Iran for January-July 2022 were reported at 2.5 million mt by Trade Data Monitor, up 24% from the 2 million mt exported during the same period in 2021. The single largest buyer was Turkey, taking 824,000 mt. South Africa, Nigeria, the UAE, and Brazil finished off the top-five buyers with a total of 851,000 mt.

July 2022 exports were reported at 316,000 mt, down from the 334,000 mt shipped out in July 2021. Turkish buyers accounted for 26% of the July exports at 188,000 mt, followed by Thailand with 66,000 mt for 21% of exports, and Brazil with 65,000 mt for 20% of exports.

The export of urea from Iran to urea-producing countries such as Nigeria and the UAE raises questions for some traders. The sanctions imposed on Iranian product by the US affects mostly the shipping and insurance related to the cargoes. Sources have suggested the urea could be used within those countries, freeing up more of their own urea for export. Sources have also suggested that the Iranian material could be processed in a way that might hide the origin of the product to avoid the sanctions.

Egyptian producers led the way in price rises. As the previous week closed, producers announced a jump from $785/mt to $865/mt FOB. The opening of this week showed more movement.

MOPCO reported a sale of 5,000 mt at $885/mt FOB. Kima said it closed a deal at $895/mt FOB for 15,000 mt, and Helwan reportedly sold an October shipment at $900/mt FOB. Reportedly, all the deals were for open destinations, but sources suggest the tonnage is bound for European ports. The high natural gas prices in Europe make importing urea cheaper than producing it, even at these levels from Egypt.

China:

Limited tonnage for export could mean China might not be a major factor in the upcoming India urea tender. Sources note the big concern is getting the necessary clearances from customs officials to export. Reportedly, the process is very slow and subject to multiple delays. Sources said traders now working to secure tons to offer into the Indian tender are not sure the process will be completed in time to meet the Oct. 21 shipping deadline.

Prilled prices are reported at $560-$570/mt FOB. So far, only prilled urea is being discussed. Sources reported Fudao looked at exporting some granular product, but was discouraged by the process to get permission to do so and decided to stay with the domestic market.

Thailand:

The Thai government met with SABIC officials to increase the urea offtake another 100,000 mt. Local media reports said the main topic is not the availability of the product or the unwillingness of SABIC to deliver, but rather the price.

The Thai government is expected to subsidize the urea to help farmers afford the product. If the imported price is too high, the finance ministries might object to the deal. In the past, SABIC has provided significant discounts to Thailand.

Imports of urea for January-July 2022 were reported at 1.2 million mt, according to Trade Data Monitor, down about 13% from the 1.4 million mt imported during the same period in 2021. Saudi Arabia topped the list of providers at 495,000 mt, followed by Qatar with 293,000 mt.

July 2022 urea imports were reported at 293,000 mt, up 24% from the 235,000 mt imported during July 2021.

Sri Lanka:

A tender for 125,000 mt closed this week for delivery by Oct. 20. The tender was a follow up to a failed tender in July. Sources said the letters of credit for the latest tender are now backed by the World Bank.

Sri Lanka has faced a crisis in crop nutrients after former President Gotabaya Rajapaksa implemented a ban on all non-organic fertilizers in 2021. The ensuing drop in crop output, especially in the vital tea production area, led to a financial crisis.

Since the replacement of Rajapaksa, countries have helped by sending fertilizers under loan or grant programs. India has already sent two cargoes of urea to the island nation.

Brazil:

Urea prices in Brazil jumped on word that India was holding another urea tender and that it wanted 1 million mt. Sources reported the portside price at $770-$830/mt CFR, with the upper end reflecting firm offers late in the week.

Buyers at Rondonopolis were reluctant to commit to deals under the old pricing. Sources said the new price of $855-$930/mt FOB ex-warehouse will not make them any more eager to step up.

Muriate of Potash

Brazil, Eastern Cornbelt, Europe, India, Market Watch, Potash Muriate, South Central, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf:

NOLA potash barges were reported to have dipped to as low as $625-$630/st FOB, with a range for the week reported at $625-$645/st FOB versus the prior week’s flat $645/st FOB level.

Eastern Cornbelt:

The potash market was quoted at $715-$735/st FOB in the Eastern Cornbelt, with the Cincinnati price reported at $715-$720/st FOB. Michigan sources pegged the Toledo market at $750-$755/st FOB, depending on time of shipment.

Western Cornbelt:

Potash was reported at $710-$735/st FOB in the Western Cornbelt, depending on location, with the St. Louis market pegged at $710-$720/st FOB in late August. Pricing FOB Caruthersville was confirmed at the $735/st level at midweek.

Southern Plains:

Potash pricing was reported at $720-$735/st FOB in the Southern Plains, with both the high and low confirmed in Catoosa/Inola, depending on supplier and shipping date. The Houston market remained at a flat $720/st FOB in late August.

The last official potash postings from Intrepid FOB Carlsbad, N.M., remained at $855/st for 60% white granular and $875/st FOB for 62% white standard.

South Central:

The potash market was generally reported at $720-$735/st FOB in the South Central region, although Memphis offers reportedly remained as high as $740-$745/st FOB in late August.

Southeast:

The latest potash offers in the Southeast were steady at $760/st FOB Wilmington, with rail-DEL pricing in the $780-$790/st range.

Belgium:

Tessenderlo Group said first-half MOP supply difficulties had only a limited impact on profitability during the period, as the company had high MOP inventories going into 2022 and it revised its sourcing mix. Previously, the Tessenderlo Kerley Ham plant in Belgium sourced MOP mainly from Russia and Belarus, and to a lesser extent from other sources.

Tessenderlo said it expects a limited impact in the second-half, despite the reduced availability. The company said the increase in energy prices had a negative impact on various activities, but this was somewhat limited by previously concluded forward purchase contracts and increases in company sales prices.

India:

Imports of MOP for January-June 2022 were reported at 1.4 million mt by Trade Data Monitor, down from the 1.6 million mt imported during the first semester of 2021.Second-quarter imports were reported at 740,000 mt, down 8% from the 809,000 mt imported during the same period in 2021.

June 2022 imports were reported at 136,000 mt, down from the 489,000 mt imported during June 2022. The major suppliers in June were Canada with 52,000 mt for 38% of the import market, Jordan with 46,000 mt for 34%, and Israel at 38,000 mt for 28%.

Brazil:

Lack of demand for imported product is keeping the MOP price in Brazil at $800-$860/mt CFR. Sources said the current oversupply situation could lead to price softening.

The impact of oversupply has already hit Rondonopolis. Source report the price has dropped to $870-$900/mt FOB ex-warehouse.