All posts by mickeybarb@charter.net

Higher Selling Prices Boost Fertiglobe 1Q, Offset Lower Volumes

ADNOC - Abu Dhabi, Ammonia, Earnings, Europe, News, Urea

Fertiglobe, the Abu-Dhabi-based Middle Eastern joint venture partnership between OCI NV, Amsterdam, and Abu Dhabi’s state-energy company, Abu Dhabi National Oil Corp. (ADNOC), reported a big jump in adjusted net income attributable to shareholders of the company to $361.0 million for the first quarter ended March 31, 2022, up from the year-ago $83.6 million. Diluted earnings per share were $0.158 versus the prior year $0.038.

Adjusted EBITDA increased by 171% to $624.6 million versus $230.8 million, while revenue was up 118%, to $1.18 billion from $543.4 billion.

Fertiglobe cited higher selling prices, which it said more than offset lower sales volumes due to a re-phasing of some deliveries into the second quarter at better netbacks.

Total own-produced sales volumes were down 17% in the quarter, to 1.254 million mt versus the year-ago 1.504 million mt, which the company attributed as mainly due to a re-phasing of ammonia and urea shipments to the second quarter at higher prices. But it noted first-quarter own-produced sales volumes were 2% higher than in fourth quarter 2021.

Own-produced ammonia sales volumes declined by 46% to 223,000 mt in the first quarter, while own-produced urea sales volumes fell by 5% to 1.031 million mt.

However, traded third-party sales volumes increased 78% year-over-year to 276,000 mt, up from 155,000 mt.

“We look forward to an even better performance in the second quarter, as we benefit from strong in-season demand, the phasing of volumes from the first quarter to the second quarter, and higher selling prices,” said Fertiglobe CEO Ahmed El-Hoshy.

He said the majority of the company’s volumes are already committed for the second quarter, “which provides good visibility ahead and sets us up for a strong third and fourth quarter.”

Based on the continued favorable market dynamics and resulting free cash flows, and in line with the company’s dividend policy of distributing excess free cash flows to its shareholders, OCI management now expects a cash distribution of at least $700 million for the first half of 2022 (payable in October 2022), compared to the previous guidance of at least $200 million. The exact dividend amount will be announced with the second-quarter 2022 results in August.

Fertiglobe Product Sales Volumes (‘000 mt)

  1Q-2022 1Q-2021 % change
Own Product      
Ammonia 223 418 (46)
Urea 1,031 1,087 (5)
Total own product sold 1,254 1,504 (17)
Third-party traded      
Ammonia 52 35 +48
Urea 224 120 +87
Total traded third-party product 276 155 +78
Total own product and traded third-party 1,530 1,659 (8)

OCI 1Q Revenue Beats Estimates, Sees Higher 2Q EBITDA & FCF

Ammonia, Ammonium Sulfate, Calcium Ammonium Nitrate, Earnings, Europe, Methanol, News, UAN, Urea

OCI NV, Amsterdam, posted a 246% increase in adjusted net income attributable to shareholders of the company to $354.2 million for the first quarter ended March 31, 2022, up from the prior year $102.4 million. Diluted earnings per share were $1.688, versus $0.488 a year ago.

Adjusted EBITDA for the quarter rose 115%, to $970.1 million versus $451.8 million a year earlier. Revenue was up 108%, to $2.33 billion from $1.12 billion. Reported revenue beat analysts’ estimates (Bloomberg Consensus), with the average estimate at $2.16 billion, but the reported adjusted EBITDA missed estimates, with the average estimate at $1.01 billion.

OCI cited higher selling prices for all products, which more than offset lower volumes due to a shift in sales volumes to the second quarter.

Own-produced product sales volumes fell 13% to 2.59 million mt year-over-year, down from the previous year 2.99 million mt, while own-produced nitrogen product sales volumes declined 7% year-over-year, to 2.31 million mt versus 2.48 million mt. The company attributed this latter fall as largely due to a build-up of inventory at Fertiglobe and the Iowa Fertilizer Co. (IFCo) ahead of the spring application season.

Own-produced fertilizer sales volumes were down 11%, to 2.05 million mt in the quarter from the prior year’s 2.3 million mt.

Total own-produced methanol sales volumes declined 44% to 281,500 mt. OCI cited the shutdown of BioMCN in The Netherlands due to the high gas price environment in Europe and downtime at OCI Beaumont, Texas, the effect of which was partially offset by higher volumes at Natgasoline.

However, total traded third party sales volumes increased by 61% to 854,800 mt, up from 532,200 mt a year ago.

Based on current visibility for volumes and prices, OCI expects higher EBITDA and free cash flow in the second quarter compared to the first quarter of 2022.

“We look forward to an even better performance in the second quarter as we benefit from strong in-season demand, the phasing of volumes from the first quarter into the second quarter, and higher selling prices,” said OCI NV CEO Ahmed El-Hoshy in the company’s May 12 results statement.

“The majority of our volumes are already committed for the second quarter, which provides good visibility ahead and sets us up from a strong third and fourth quarter of 2022.”

Based on this outlook, OCI expects the semi-annual cash distribution with respect to the first half of 2022 to be significantly higher than the €1.45 per share to be paid with respect to second-half of 2021 period.

OCI’s Nitrogen business posted a 153% increase in its first-quarter adjusted EBITDA, to $854.1 million on revenues of $2.07 billion, up from $337.1 million and $849.6 million, respectively, the previous year, despite plant turnarounds and higher gas prices in Europe and the U.S.

Adjusted EBITDA of the Nitrogen U.S. segment increased by 91% to $152.6 million in the first quarter, boosted by higher year-over-year sales volumes and selling prices. Last year, production downtime during extreme cold-weather conditions resulted in lost volumes, whereas the first quarter of 2021 adjusted EBITDA included gains from physical and financial gas hedges.

The Iowa Fertilizer Co. (IFCo) plant in Wever, Iowa, experienced an unplanned interruption on production May 9. Iowa Fertilizer Co. had said it hoped to return to normal operations later this week (see Related Story).

OCI noted the DEF business continued to grow, with first-quarter volumes up by 50% from a year-ago, to an annualized more than 900,000 mt. The company said DEF now represents around 45% of its sales volumes from IFCo, with a growth in contract volumes in 2022. It said the higher netbacks for this product enable OCI to continue to enhance returns for its U.S. nitrogen operations going forward.

The company said the Nitrogen Europe segment continued to perform well “in a difficult market environment with volatile and record high natural gas input costs.” First-quarter adjusted EBITDA for the segment increased by 189% to $76.3 million versus the year-earlier $26.4 million.

Selling prices for all products were up, which offset a $134 million negative impact year-on-year from higher natural gas prices.

OCI said throughput capabilities at its ammonia import terminal in Rotterdam continued to increase in the quarter, enabling the company to maintain production of its downstream products (CAN, UAN, and melamine), after it temporarily closed one of two of OCI Nitrogen’s ammonia plants due to the high gas prices in Europe at the beginning of the fourth quarter of last year.

CAN volumes were down 11% year-over-year in the quarter, but the company pointed to a healthy order book for its nitrates business in the second quarter, and it expects to continue to benefit from its logistics “close to core demand centers.”

For its Methanol business, OCI reported an 11% increase in adjusted EBITDA for the first quarter, to $143.1 million on revenues of $353.6 million, versus the year-ago $128.4 million and $282.1 million, respectively. The company cited higher methanol prices and a higher contribution from Natgasoline, more than offsetting lower volumes and higher gas prices compared to a year ago.

Own-produced methanol sales volumes decreased by 44% to 281,500 mt in the quarter, down from the year-ago 507,100 mt.

The downturn in sales volumes was due to the aforementioned temporarily shutdown last June of the company’s BioMCN methanol facility in The Netherlands, which remains shut due to the high gas price environment, as well as downtime at OCI Beaumont.

OCI Methanol has methanol production capacity of around 3 million mt/y, with plants in The Netherlands and in Texas.

OCI said it has added green MTBE to its product offering of clean fuels, and is expanding its geographic footprint across Europe with sales into Germany

After a period with relatively low operating rates, Natgasoline had its inaugural planned turnaround starting during the third quarter of 2021. Following the resumption of production at the beginning of December, OCI reported the plant has achieved rates close to nameplate production capacity, “which bodes well for the future,” it said.

OCI reported in February that it had inked definitive legal agreements to create a strategic alliance with Abu Dhabi’s ADQ and Alpha Dhabi Holding, under which the Abu Dhabi firms will acquire a 15% stake in the OCI Methanol Group for $375 million (GM Feb. 11, p. 35; Nov. 24, 2021). OCI said the alliance is aimed at positioning the OCI Methanol Group to be able to pursue future growth opportunities in hydrogen-based applications, including fuel.

Under the terms of the agreements, OCI Methanol Group will be incorporated as an Abu Dhabi Global Market (ADGM) company in Abu Dhabi.

OCI Product Sales Volumes

‘000 mt 1Q-2022 1Q-2021 % change
Own product      
Ammonia 386.7 587.0 (34)
Urea 1,042.1 1,103.2 (6)
CAN 291.4 328.4 (11)
UAN 329.6 279.9 +18
Total fertilizer 2,049.8 2,298.5 (11)
Melamine 31.0 34.2 (9)
DEF 226.2 150.8 +50
Total nitrogen products 2,307.0 2,483.5 (7)
Methanol1 281.5 507.1 (44)
Total own products sold 2,588.5 2,990.6 (13)
Traded third party      
Ammonia 57.2 41.1 +39
Urea 449.8 220.5 +104
UAN 24.3 13.6 +79
Methanol 144.1 78.7 +83
AS 94.1 118.5 (21)
DEF 85.1 59.8 +42
Total traded third party 854.8 532.2 +61
Total own product and traded third party 3,443.3 3,522.8 (2)

1 Including OCI’s 50% share of Natgasoline volumes

The financial results of Fertiglobe, the Abu-Dhabi-based Middle Eastern joint venture partnership between OCI NV, Amsterdam, and Abu Dhabi’s state-energy company, Abu Dhabi National Oil Corp. (ADNOC), are reported separately (see Earnings Section).

OCI and ADNOC completed an initial public offering (IPO) of Fertiglobe last October, raising gross proceeds of over $795 million (GM Oct. 22, 2021). OCI’s stake in Fertiglobe is now 50%, down from the pre-IPO 58% holding.

Organic Fertilizer Producer Halts Production to Upgrade Emission Destruction Equipment

News, News Briefs, Specialty, Texas

Organic fertilizer producer Texas Sigma Partners (TSP), Winnsboro, Texas, which is in litigation over fumes related to the drying system material combustion from its Winnsboro, Texas, facility-in-development, confirmed on May 12 that it has ceased plant production for a period of days.

During this outage, it said major additional, state‑of‑the‑art cleaning and emission destruction equipment will be installed, which is anticipated to completely alleviate local citizen concern which spawned the litigation.

TSP described itself as a new company in the latter implementation stages. The company said it has been developing a plant update that inevitably would have led to downtime as agreed by the party litigants. TSP said new developments in design and layout will improve efficiency and product output.

TSP said the hiatus also gives it ample preparation time to increase its packaging division capabilities. It said adding a packaging division has broadened its product offerings while employing more local citizens. The company said it is now employing more than 30 individuals from the local community, and that the project had widespread support from the local city and county governments.

In addition, TSP said it anticipates the upgrades to its facility will provide increased production capabilities, which will be a significant contribution to the ever‑growing crisis in the US around the world related to global fertilizer and food shortages.

TSP said a major financial and management participant in its Winnsboro project is Sigma AgriScience, Boling, Texas. On its website, Sigma Agriscience indicates that it has manufacturing plants in both Winnsboro and Boling. It said it is North America’s leading manufacturer of high quality organic granular fertilizers, providing products to agriculture, nursery, orchard, turf, and landscape markets from all over the US to Mexico, Central and South America, Europe, and Asia.

Ammonia

Ammonia, Black Sea, Eastern Cornbelt, Great Lakes, India, Market Watch, Middle East, North Africa, Northern Plains, Northwestern Europe, Tampa, U.S. Exports, U.S. Gulf, U.S. Imports, Western Cornbelt

U.S. Gulf/Tampa:

Tampa for May continues to stand at $1,425/mt CFR, though some players expect June prices to be lower based on recent trades to other large buyers such as OCP.

U.S. Imports:

March ammonia imports were reported at 263,468 st in the Dept. of Commerce’s most recent trade report, up 5.9% from 248,826 st in the prior year. July-March import totals stood at 1.98 million st, rising 7.0% from the year-ago 1.85 million st.

U.S. Exports:

Ammonia exports from the US in March softened 22.9%, to 26,804 st from the prior-year 34,755 st. Exports totaled 277,419 st for July-March, off 38.8% from the year-ago 452,980 st.

Eastern Cornbelt:

Sources said ammonia movement was accelerating with the nice weather, although some growers were reportedly foregoing preplant applications and moving quickly to plant corn.

The ammonia terminal market was quoted at $1,400-$1,475/st FOB in the Eastern Cornbelt, with the low reported at East Dubuque, Ill., and the high at Lima, Ohio. Most Koch and CF terminals were pegged at the $1,450/st FOB level in Illinois and Indiana.

Western Cornbelt:

Preplant ammonia movement picked up steam in the Western Cornbelt during the week, although wet field conditions continued to delay activity in some areas. Prompt truck pricing dropped to $1,355/st FOB Port Neal, Iowa, sources reported, while the regional high remained unchanged at $1,450/st FOB Palmyra, Mo.

Delivered ammonia pricing was reported at $1,400-$1,420/st in Missouri for tons from Enid, Okla., where the FOB price was quoted at the $1,225-$1,250/st level after netbacks.

Northern Plains:

Ammonia pricing remained at $1,500-$1,525/st FOB regional terminals in the Northern Plains, with the low confirmed at Velva, N.D. Delivered ammonia had reportedly increased to $1,650-$1,675/st in North Dakota for very limited offers, however, up from the last reported range of $1,575-$1,600/st DEL.

Great Lakes:

The ammonia market in the Great Lakes region was quoted at $1,400-$1,475/st FOB, depending on location. The Huntington, Ind., market remained at the $1,450/st FOB level. No current offers were confirmed at Courtright, Ont.

Black Sea:

Exports from the area remain shut down. The Russian closures of Ukrainian ports are not allowing any ammonia to be loaded or shipped. Buyers in Bulgaria, Romania, and Turkey are able to get their ammonia delivered to ports in the southern portion of the Black Sea.

India:

The bulk of imported ammonia is entering the country under large quantity, formula-based deals. The pricing for these contract tons, mostly from the Arab Gulf, are pegged at $1,000-$1,050/mt CFR, for a netback to the Arab Gulf of $950-$1,000/mt CFR.

The few spot tons that are coming into India, however, seem to be mostly from Iran and in small lots. Sources called the price for these orders at $1,100-$1,150/mt CFR.

Reportedly, the Arab Gulf suppliers are arguing for higher prices, with offers at $1,200-$1,300/mt FOB. The Indian buyers, however, keep pushing back by claiming the price of their orders should be calculated under the terms of their contracts, which is much lower.

The producers seem to be willing to accede to the buyers, said one trader, because any delay in shipping material could lead to a buildup of reserves, which could then lead to a softer market for even spot tons.

Middle East:

Arab Gulf producers keep pushing for higher prices, especially with Indian buyers, but often settle for less just to keep product flowing. The reported netback for contract tons into India is put at $950-$1,000/mt FOB.

Deals from Arab producers under long-term contracts are denying any buildup of product. While producers want a higher price – sources said they are asking $1,200-$1,300/mt FOB – they seem to be willing to accept a lower price for large shipments to prevent increasing reserves at their facilities.

Sources said if the stockpiles begin to build up too much in the Arab Gulf, buyers could push harder for lower prices. As it is now, sources said only long-term clients are getting any discount. Smaller spot buyers are left scrambling for tons, with many looking to Iran for their ammonia.

Northwest Europe:

Sources said for all practical purposes there is no real market in Northwest Europe. The price for ammonia in the area has fluctuated with the gyrations of natural gas prices. Even at its lower levels, the price for ammonia is still at near record levels.

Sources said if a buyer offered $1,200/mt C&F for ammonia, he could find a seller. However, that price is now seen as too expensive for the buyers, who are facing a backlash against passing on their higher costs to end users.

The last open trade around $1,500/mt C&F was several weeks ago, and seems to have been the acme of the market. Even with lower prices being discussed, sources said buyers are holding back until they really need the product. Traders said this hand-to-mouth market is expected to last as long as there is uncertainty in the natural gas market and as long as prices remain high.

North Africa:

The closure of the Black Sea to exports has denied OCP/Morocco access to about 70,000 mt/month of ammonia. Sources said OCP is so far being successful in replacing those lost shipments.

Last week OCP loaded vessels in Argentina and Oman. This week a vessel is loading in Donaldsonville, La. Agents for OCP are reaching as far as Indonesia for product and are willing to pay premiums to secure what they need.

Urea

Africa, Black Sea, Brazil, China, Eastern Canada, Eastern Cornbelt, Great Lakes, India, Market Watch, Middle East, Northeast, Northern Plains, U.S. Exports, U.S. Gulf, U.S. Imports, Urea, Western Cornbelt

U.S. Gulf:

NOLA granular barges were reported at $630-$645/st FOB, compared to the week-ago $620-$670/st FOB. While prices did not slip below the week-ago low, the average price did inch down.

There were unconfirmed reports that prices this week may have dipped as low as $625/st FOB. Sources said early-week reports that prices might hit $700/st FOB during the week were wishful thinking.

U.S. Imports:

July-March urea imports were reported at 4.40 million st, up 43.9% from the year-ago 3.06 million st. March imports were off 21.2%, however, slipping to 757,614 st from the prior-year 961,873 st.

July-March imports from Qatar were pegged at 868,080 st, followed by Russia’s 595,499 st, and 694,685 st from Oman. Saudi Arabia added 594,845 st.

U.S. Exports:

March urea exports shot up 249.4%, to 165,187 st from the prior-year 47,284 st. July-March exports softened 22.6%, however, to 505,635 st from the previous 653,023 st.

Eastern Cornbelt:

Granular urea prices remained under pressure in the Eastern Cornbelt. Sources quoted the market at $680-$735/st FOB in the region, down from last week’s broad $680-$780/st FOB range, with the low confirmed out of spot river terminals in Illinois and the high at Cincinnati, Ohio.

Western Cornbelt:

Urea was quoted at $680-$715/st FOB in the Western Cornbelt, down from the previous week’s $680-$750/st FOB range, with the high reported in Iowa at midweek. The St. Louis, Mo., urea market was quoted at $680-$700/st FOB.

Urea pricing FOB Catoosa/Inola, Okla., covered a broad range at $675-$720/st FOB during the week, depending on supplier and timing.

Northern Plains:

Urea prices continued to fall in the Northern Plains. Sources reported the St. Paul, Minn., market in the $675-$715/st FOB range during the week, down from the prior week’s $690-$720/st FOB, and well below the mid-April range of $820-$840/st FOB.

Delivered urea was pegged at $760-$780/st in North Dakota, down $10-$20/st from the week before and considerably lower than the $875-$905/st DEL range reported in mid-April.

Great Lakes:

Urea prices were falling in the Great Lakes region, driven by NOLA pricing volatility and the previous several weeks of weather-related fieldwork delays.

Sources quoted the market at $775-$900/st FOB in the region, depending on location and supplier, with the high confirmed out of spot Michigan warehouses. The range was down dramatically from month-ago highs in the $965-$1,000/st FOB range.

Northeast:

Urea terminal prices in the Northeast were quoted at $750-$765/st FOB during the week, depending on location, significantly lower than the $975-$1,025/st FOB values reported in mid-April.

Eastern Canada:

Urea prices in Eastern Canada were reported at C$1,395-$1,465/mt FOB during the week, down from the prior low of C$1,440/mt FOB.

India:

The RCF tender closed on May 11 with 14 companies offering 2.64 million mt. Samsung came in with the lowest offers for both coasts with $716.50/mt CFR for West Coast delivery and $721.30/mt CFR for East Coast cargoes.

The West Coast price held steady from the mini tender held by IPL in April, while the East Coast price came down about $29/mt.Offers favored deliveries to the West Coast, with traders offering 1.5 million mt to those ports, plus 135,000 mt in a direct offer from a company representing a producer. East Coast offers were reported at 1.01 million mt.

Offering Company Quantity (mt) US$/mt Discharge Port
FOB CFR
Samsung L1 for East Coast and West Coast 49,500   721.30 Kakinada
45,000   721.30 Krishnapatnam
45,000   721.30 Karaikal
47,000   716.50 New Mangalore
45,000   716.50 Kandla
94,000   716.50 Mundra
94,000   716.50 Pipavav
Swiss Singapore 90,000   727.50 ECI
45,000   718.50 Mundra
165,000   718.55 WCI
Ferticom 50,000   735.00 Pipavav
50,000   750.00 Paradip
Keytrade 45,000   736.25 Gangavaram
45,000   745.00 Mundra
45,000   735.00 Kandla
Ameropa 45,000   739.00 Kakinada
47,250   725.00 Mundra
45,000   725.00 Mangalore
Koch 47,000   745.00 Krishnapatnam-Vizag
50,000   745.00 Kakinada-Karaikal
50,000   750.00 Mundra-Kandla
47,000   750.00 Adani Tuna-Dahej
Midgulf 50,000   752.00 Krishnapatnam
50,000   752.00 Gangavaram
50,000   742.00 Adani Tuna
50,000   742.00 Mundra
Dreymoor 163,000   755.00 Pipavav
46,000   790.00 Kakinada
Gavilon 50,000   763.00 ECI
50,000   767.00 Mundra-Kandla
SABIC 125,000   745.00 Mundra-Kandla
Medallion 50,000   765.00 ECI
50,000   747.00 WCI
Grain Conservation and Warehousing Industries (OQ Trading) 65,000   769.00 Kakinada-Krishnapatnam
235,000   734.50 Kandla-Mundra
Consolidated Shipping and Bulk Terminals (OCI Trading) 70,000   807.00 ECI
116,000   800.00 WCI
Coastal Chemical (Fertiglobe) 135,000 780.00   FOB

The offer directly from a producer was handled by Coastal Chemical, which seems to be representing Fertiglobe. The offered price was $780/mt FOB, which would equate to about $805-$810/mt CFR.

Two other companies – Grain Conservation and Warehousing Industries and Consolidated Shipping and Bulk Terminals – also attracted the attention of industry watchers. These two companies, plus Coastal Chemical, have the same people on their boards of directors. A fourth company that also shares the same directors, International Ore and Fertilizer, is affiliated with Rahimtula Group, a large Indian fertilizer trading company.

Industry sources calculated that Grain Conservation was working with OQ Trading, which handles urea sales out of Oman. Consolidated Shipping is linked with OCI Trading that primarily handles Fertiglobe product, as well as material from Egypt.

Sources said RCF is hoping to issue awards for 1.5-1.6 million mt. However, with 1.5 million mt priced at $750/mt CFR and higher, sources wondered how many tons will be available at the Samsung price. One trader noted that some of the product may have been offered to a trading house at a set price. The suppliers may not authorize a deal that dips to the $716-$720/mt CFR levels.

The $780/mt FOB offered by Coastal Chemical, reportedly on behalf of Fertiglobe, is much higher than recent business done out of the Arab Gulf, albeit lower than the $800/mt FOB producers had been proclaiming in recent weeks.

The buyer is guaranteed at least 420,000 mt from the Samsung offer. Second place Swiss Singapore, with another 300,000 mt, could most likely meet the Samsung price. After that, prices jump $15/mt or more above the lowest price. The remaining tonnage offered under $750/mt CFR amounts to another 419,000 mt, which would give RCF 1.14 million mt.

After looking at the prices, industry watchers began to calculate where the product will come from. Sources estimated Chinese urea could account for 300,000-500,000 mt, with maybe one or two cargoes also from Chinese ports but from other origins. The Arab Gulf is seen as being able to supply an equal amount, taking RCF close to its desired purchase level. That would leave some cargoes to be sent from Southeast Asia, such as Vietnam, and North Africa.

One trader noted, however, if the Arab Gulf is not willing to send as many tons as estimated, buyers might look for more tons from North and West Africa. If Nigeria is seriously tapped to help supply this tender, Brazil may become nervous about the diversion of material they feel should be directed west instead of east.

The softer price in the market was written off by traders as the result of inactivity clashing with pending demand. The industry kept looking at India, Australia, and Brazil as being poised and ready to buy. At the same time, buyers kept holding off until the tons were needed.

Sources noted the mini-tender of 78,000 mt held in April by IPL triggered some buying and a brief uptick in prices. Some in the market became concerned that the big buyers would soon move in and grab all the excess tons in the market.

As Brazilian buyers remained hesitant to commit to large orders, talk of lower prices kicked in right away. Even after the RCF tender was announced, talk of prices in the mid-$800s/mt CFR quickly ended as industry players looked to the lower $700s/mt CFR.

Black Sea:

The inability to move vessels into and out of Ukrainian ports continues to deny traders any opportunities to test prices. While some will make calculations based on the Indian tender numbers or the Arab Gulf price, sources are clear there is no urea coming out of Ukrainian ports.

One trader said some tons could be shipped out of the ports on the far eastern side of the Black Sea. However, if the urea is Russian, no Western bank will be willing to help finance the deal. Even if the tons are Georgian, the loading will have to take place at a Russian port, which could also cause problems because of the sanctions against Russia.

Even if a trading house is willing to move on a Russian cargo using its own money, sources said it would have difficulty depositing the money in any Western bank.

Middle East:

The netback to the Arab Gulf from the RCF/Indian tender is in the upper $680s/mt FOB. This represents a $40/mt drop from the last spot deal done out of the Arab Gulf.

The price was not seen as a surprise to traders. For weeks producers had been arguing the price should be $790-$800/mt FOB, while buyers were saying the softness of the market mandated a price closer to $700/mt FOB.

Once RCF issues its counterbid to the traders to match the Samsung price, sources said the world will learn how many tons were tied to specific higher prices. In an uncertain market, sources said it is not unusual for a producer and trader to agree to a minimum price for these tenders. If the awarded price is below that minimum, the parties may not respond and seek to sell the product elsewhere. Brazil and Australia will be looking for urea soon and might provide a good market for the tons.

The Coastal Chemical offer of $780/mt FOB, reportedly from Fertiglobe, allowed Arab Gulf producers to indicate where they think prices should be without formally putting their names to the offer. If the market went the other way, they would be spared the shame of offering at too low a price. As it is, the price offered will be significantly higher than the estimated netback from India.

Egyptian producers remain silent, as does any discussion of material in the area. Sources said for all practical purposes the market is non-existent. Industry observers said that might change once awards get issued from RCF. Some material from Egypt is expected to be included in the final orders.

China:

Sources estimated that China could supply 300,000-500,000 mt in the RCF tender. The tonnage would be in addition to the few cargoes of non-China origin sitting in Chinese bonded warehouses.

The netback to China from the Indian tender is estimated in the low-$690s/mt FOB. The price would be in line with the Arab Gulf price. In recent years, the Chinese and Arab prices have been within $5-$10/mt of each other.

The main issue will be getting proper customs clearances to export the urea. Sources said COVID restrictions have made it difficult to nail down an accurate account of how some plants are operating and what reserves they may have on hand. The customs officials are ordered to ensure that the country maintains a strong reserve of urea into the summer. Sources said estimates at this point indicate there should be no problem clearing the tons for export.

Ethiopia:

Imports for the first four months of the year are lagging behind last year. Trade Data Monitor reported January-April 2022 imports at only 56,000 mt, down 70% from the 189,000 mt imported during the same period in 2021.

April 2022 imports were at 55,000 mt, all from Egypt. This is a jump up from April 2021 imports of only 123 mt. Imports are expected to pick up in May and June and into the third quarter.

Ethiopia usually depends on tenders for its urea supplies. The shipments are often sporadic due to funding and logistic issues. The total amount of urea imported in 2021 was 531,000 mt.

Brazil:

Buyers remain hesitant to purchase unless absolutely necessary. Sources said this attitude has been pushing down prices. The landed price saw a dramatic dip to $700-$740/mt CFR from a high last week of $900/mt CFR.

Global traders said the hand-to-mouth style of buying in Brazil helped lead to softer-than-expected prices in the Indian tender. Prices could move up, however, if India takes the 1.5-1.6 million mt it said it wants.

Under ideal conditions, most of the tonnage to India would come from China, Southeast Asia, and the Arab Gulf. This situation would leave untouched some of Brazil’s suppliers.

If, however, traders have to reach to North Africa and Nigeria to fulfill an Indian award, Brazilian buyers could become nervous, said one Asian trader. Likewise, if the Arab Gulf producers decide the Indian price is too low, they could hold on to their higher pricing ideas and make new and higher offers into Brazil. At that point, Brazilian buyers may not have any choice but to accept the new levels.

The price in Rondonopolis tightened to $900-$940/mt FOB ex-warehouse. Buyers had been buying only when needed. This action has causing reserves to build up and pressure sellers to lower prices to clear out storage space for newly arriving tons.

Imports of urea for the first four months of the year were reported at 2 million mt, down 16% from the same period in 2021, according to Trade Data Monitor. The main supplier of urea in this period was Nigeria with 460,000 mt, up 180% from the same four months last year. Qatar, Oman, and Russia were also suppliers of 320,000-350,000 mt each during the period.

April 2022 imports of 371,000 mt were down about 9% from the 406,000 mt imported during April 2021. Qatar topped the list of suppliers with 108,000 mt, representing 29% of all urea imported last month. Nigeria accounted for another 23% of imports with 85,000 mt.

UAN

Eastern Canada, Eastern Cornbelt, France, Great Lakes, Market Watch, Northeast, Northern Plains, U.S. Exports, U.S. Gulf, U.S. Imports, UAN, Western Cornbelt

U.S. Gulf:

NOLA UAN barges continued to be reported at $620-$630/st ($19.38-$19.69/unit) FOB.

U.S. Imports:

July-March UAN imports were off 21.7% year-over-year, to 1.46 million st from 1.87 million st. March imports stood at 97,094 st, falling 72.3% from the year-ago 350,848 st.

Trinidad and Tobago continued to lead July-March imports with 542,614 st, despite logging no new cargoes into the US in March. Russia followed with 497,169 st, while Canada added 334,300 st.

U.S. Exports:

UAN exports were up 121.7% in March, to 35,842 st from the year-ago 16,164 st. July-March exports softened 38.3%, however, to 364,208 st from the year-ago 590,654 st.

Eastern Cornbelt:

The UAN-32 market was pegged at $660-$675/st ($20.63-$21.09/unit) FOB in the Eastern Cornbelt, depending on location, with the low at Mount Vernon, Ind., and the high at Seneca, Ill. Other terminal offers for the week included $660-$665/st ($20.63-$20.78/unit) FOB Peru, Ill., $665/st ($20.78/unit) FOB Cincinnati, and $670/st ($20.94/unit) FOB Terre Haute, Ind.

The last reported UAN-28 offers at Cincinnati included $590-$595/st ($21.07-$21.25/unit) FOB.

Western Cornbelt:

Sources said UAN was just beginning to move in some locations. The low end of the Western Cornbelt market reportedly fell to $630/st ($19.69/unit) FOB Port Neal, down $20/st from last report, with the St. Louis market unchanged at $650/st ($20.31/unit) FOB. The high end of the regional range was pegged at $665/st ($20.78/unit) FOB, down $10/st from last report.

Northern Plains:

New UAN-32 offers were pegged at $680/st ($21.25/unit) FOB Winona, Minn., and $690/st ($21.56/unit) FOB Pine Bend, Minn., down $5/st from last report. The UAN-28 market in North Dakota remained at $595-600/st ($21.25-$21.43/unit) FOB in early May.

Great Lakes:

The UAN-28 market was pegged at $608-$615/st ($21.71-$21.96/unit) FOB in the Great Lakes region, up slightly from the previous $599-$610/st ($21.39-$21.79/unit) FOB range, with the low reported at Toledo, Ohio, and the high confirmed at Webberville, Mich. Sources talked of some supply concern as spring demand accelerates.

Northeast:

The UAN market FOB Baltimore, Md., was pegged at $690/st ($21.56/unit) for UAN-32 and $642-$649/st ($21.40-$21.63/unit) for UAN-30. The latest UAN-32 offers at Fairless Hills, Pa., were reported at the $700/st ($21.88/unit) FOB level for May-June tons.

UAN-32 pricing out of terminals in upstate New York remained at the $750/st ($23.44/unit) FOB level for new sales in mid-May.

Eastern Canada:

The UAN-28 market dipped to C$925-$935/mt (C$33.04-$33.39/unit) FOB in Eastern Canada, down some C$25/mt at the high end of the range. UAN-32 pricing was confirmed at C$1,068/mt (C$33.38/unit) FOB in Ontario, down C$17/mt from last report.

France:

Prices for UAN are reported to have fallen further as the new season sales campaign gets underway. Spot price levels for UAN-30 were quoted at €670-€685/mt FCA Rouen.

Ammonium Nitrate

Ammonium Nitrate, Brazil, France, Market Watch, U.S. Exports, U.S. Imports, Western Cornbelt

U.S. Imports:

March ammonium nitrate imports firmed 29.6%, to 36,687 st from 28,316 st in the prior year. Imports climbed 44.1% for July-March, to 257,942 st from the year-ago 179,043 st.

U.S. Exports:

March ammonium nitrate exports moved 14.4% lower year-over-year, to 33,016 st from 38,560 st. July-March totals were off 0.4%, to 320,823 st from 321,964 st one year earlier.

Western Cornbelt:

The ammonium nitrate market was unchanged at $780-$800/st FOB in the Western Cornbelt.

France:

Yara on May 10 announced list prices for June deliveries of its AN 33.5 (YaraBelaExtran33.5) in France, setting the new level at €790/mt bulk CPT, with immediate effect. The price is a €15/mt increase on the posting for May deliveries (GM May 6, p. 9). The supplier once again warned that only a limited volume would be available.

Brazil:

Imports of ammonium nitrate for the first four months of the year were reported at 72,000 mt, a precipitous fall from the 305,000 mt imported during the same period in 2021, according to Trade Data Monitor.

Russia supplied 70,000 mt of the tonnage received. The drop is a result of the restrictions the Russian government placed on ammonium nitrate exports several months ago.

April 2022 imports were reported at 6,000 mt, against the 70,000 mt imported in April 2021.

Ammonium Sulfate

Ammonium Sulfate, Brazil, China, Eastern Canada, Eastern Cornbelt, Great Lakes, Market Watch, Northeast, Northern Plains, Southern Plains, U.S. Exports, U.S. Gulf, U.S. Imports, Western Cornbelt

U.S. Gulf:

NOLA barges continued to drift down, moving to $655-$675/st FOB from the week-ago $665-$685/st FOB range.

U.S. Imports:

Ammonium sulfate imports were off 10.5% for the July-March period, to 655,773 st from the prior-year 732,311 st. Imports moved down 17.0% in March, to 99,036 st compared to the year-ago 119,385 st.

Imports from Canada totaled 345,397 st for July-March, followed by Belgium at 183,317 st, and 80,579 st from South Korea. Falling year-over-year imports recorded from both Russia and the Netherlands were primarily responsible for the market’s softer import total in the fertilizer year-to-date.

U.S. Exports:

Ammonium sulfate exports for March firmed 101.8%, to 50,726 st from 25,139 st. July-March shipments moved 0.1% higher, to 470,085 st from 469,612 st in the prior year.

Eastern Cornbelt:

Granular ammonium sulfate prices reportedly slipped to $700-$740/st FOB in the Eastern Cornbelt, down from the prior week’s $725-$760/st FOB range, with the low confirmed at Ottawa, Ill., and Cincinnati.

Western Cornbelt:

The ammonium sulfate market remained in the $680-$740/st FOB range in the Western Cornbelt, with the high confirmed in Iowa and the low at St. Louis.

Southern Plains:

NeuAG on May 6 announced a new May price for spray and industrial grade ammonium sulfate at $650/st FOB Clute, Texas, with an additional $100/st charge for bags, pallets, and shrink wrap.

Northern Plains:

The granular ammonium sulfate market remained at $740-$755/st FOB in the Northern Plains, with the low reported in Minnesota and the high at Sioux City, Iowa. Delivered pricing was pegged at $745-$760/st in North Dakota, down from the last reported range of $760-$800/st DEL.

Great Lakes:

Ammonium sulfate pricing in the Great Lakes region was quoted at $740-$750/st FOB, down from the last reported $750-$770/st FOB range. As with UAN, ammonium sulfate supplies were described as tight in the region.

Northeast:

Granular ammonium sulfate pricing in the Northeast was down slightly from last report. While delivered pricing remained in the $725-$775/st range in the region, terminal prices had reportedly dropped to as low as $695/st FOB Lancaster, Pa. “With a better weather forecast for the next week or so, we expect application to pick up,” said one regional contact.

Eastern Canada:

The ammonium sulfate market in Eastern Canada remained at the C$1,039-$1,075/mt FOB level in early May, unchanged from last report.

China:

The market went quiet, waiting for guidance from the Indian urea tender. The lack of action kept prices at $320-$330/mt FOB. However, with the possibility of a softening urea market, the price of amsul is expected to also drop.

Sources noted if the netbacks to China from the Indian urea tender hold, the price of amsul will have to go sub-$300/mt FOB.

Brazil:

The landed price was reported at $400-$410/mt CFR, down from the week-ago $440-$460/mt CFR. Sources pointed to the prices discussed around the Indian urea tender as a reason for softer amsul prices.

Rondonopolis pricing dropped on the lower end of its range, to $570-$620/mt FOB ex-warehouse.

Imports of amsul for the first four months of the year were reported at 1.6 million mt, up about 29% from the 1.3 million mt imported during the same period in 2021. China remained the dominant supplier to Brazil with 1.4 million mt.

April 2022 imports were pegged at 308,000 mt, dramatically up from the 87,000 mt imported in April 2021. China accounted for the lion’s share of the business, sending 286,000 mt to Brazil.

DAP/MAP

Brazil, Central Florida, China, DAP/MAP, Eastern Canada, Eastern Cornbelt, Great Lakes, India, Market Watch, Northeast, Northern Plains, U.S. Exports, U.S. Gulf, U.S. Imports, Western Cornbelt

Central Florida:

No changes in posted prices were announced for the Central Florida truck-loaded phosphate markets. Pricing was posted at $945/st FOB for both DAP and MAP trucks. North Florida MAP trucks were most recently reported at $950/st FOB.

U.S. Gulf:

Players reported falling prices for NOLA DAP and MAP barges during the week.

Nearby DAP barges were noted moving down from the prior-week $860/st FOB floor to around $850/st FOB early in the period, while an “explosion” of $820-$830/st FOB offers on May 11-12 found few if any buyers. Tons loading in the third quarter were reported trading in the $820-$830/st FOB range early in the week.

NOLA MAP barges also pressed lower. Players noted early-week trading at an $895/st FOB high, edging below the week-ago $900/st FOB top, while offers reported down to $850/st FOB on May 11 were down $20/st from the week-ago $870/st FOB low.

Overcoming early-week conditions described by some as “incredibly illiquid,” low USDA corn acreage estimates and the ongoing slow start to spring planting were reportedly weighing on market sentiment.

The NOLA DAP barge price was reported at $820-$860/st FOB for the week, softening from $860-$870/st FOB in the prior report. Players reported MAP barges loading from NOLA at $850-$895/st FOB, down from the week-ago $870-$900/st FOB.

U.S. Imports:

DAP imports dropped 80.4% in March, to 52,240 st compared to 266,407 st in March 2021. July-March imports were off 6.3%, to 955,899 st from 1.02 million st reported one year earlier.

Saudi Arabia led July-March importers with 353,470 st, followed by Australia at 251,973 st, and Egypt at 121,293 st.

July-March MAP/Other imports softened 12.4% year-over-year, to 704,676 st from 804,582 st. March imports were off 70.9%, to 69,339 st from the year-ago 238,179 st. Imports from Saudi Arabia were recorded at 197,498 st in July-March. Russia followed with 108,461 st. MAP/Other imports from Jordan totaled 94,460 st.

U.S. Exports:

March DAP exports were noted at 98,663 st, a 161.0% increase on the year-ago 37,795 st. Exports were reported falling to 515,032 st in July-March, however, down 11.8% from the year-ago 584,222 st.

MAP/Other exports for March stood at 309,073 st, up 49.2% from the year-ago 207,213 st. July-March exports were quoted at 1.73 million st, up 2.4% from the prior-year 1.69 million st.

No new spot business was reported on the Gulf export DAP and MAP markets, leaving last-reported at $1,240/mt FOB for both products.

Eastern Cornbelt:

DAP pricing slipped to $940-$960/st FOB in the Eastern Cornbelt, down another $10-$15/st from last report. MAP was pegged in the $950-$970/st FOB range in the region, reflecting a $10/st decline from the prior week, with the low confirmed at Ottawa. Cincinnati pricing was reported at $955-$960/st FOB for both DAP and MAP during the week.

Western Cornbelt:

Softer NOLA barge values once again pushed phosphate prices lower in the Western Cornbelt. DAP pricing was reported at $930-$955/st FOB in the region, down another $15-$20/st, with the St. Louis market pegged at $930-$945/st FOB during the week.

MAP was quoted at $930-$960/st FOB in the Western Cornbelt, with the low again confirmed at St. Louis, down from last week’s $955-$975/st range.

Northern Plains:

DAP pricing reportedly slipped to $940-$960/st FOB St. Paul, with MAP reported at $945-$965/st FOB at that location. Delivered green MAP in western North Dakota was pegged at the $1,025/st level in early May, down $25/st from last report.

Great Lakes:

DAP pricing was quoted at $985/st FOB Michigan terminals, down significantly from the 1,030-$1,045/st FOB levels reported in early April. The MAP market had reportedly fallen to $990-$1,000/st FOB in the region, down from $1,025-$1,050/st FOB in April.

Northeast:

DAP and MAP prices were lower in the Northeast. DAP was reported at $980/st FOB East Liverpool, Ohio, down from $1,015/st FOB in mid-April. The MAP market was pegged at $990-$1,000/st FOB in the region, down from $1,020/st FOB in April, with the low confirmed at East Liverpool.

Eastern Canada:

MAP pricing in Eastern Canada was quoted at C$1,475-$1,495/mt FOB, down C$55/mt from last report at the high end of the range. The DAP market at Montreal was also down C$55/mt, to C$1,495/mt FOB in early May.

China:

Reports of a DAP deal between producer YUC and Indian buyer CIL at $1,030/mt CFR had the market in a tizzy. The price was higher than what was previously reported in India and lower than the last spot deal out of China. The estimated netback to China was $990-$1,000/mt FOB.

In the end, sources said CIL received orders from the Department of Fertilizer to scrap the deal because the price was too high for the maximum retail price and subsidy plan. Even with the reported cancelation of the deal, sources said the deal offered a valuable glimpse at where prices might be for reasonably sized cargoes.

For several weeks DAP has been shipped out of China to India under contracts that were in place before the export restrictions took effect in October 2021. The official line was that producers persuaded the government it was necessary for them to service their contracts or lose out on future sales. At the same time, the Indians insisted the price needed to reflect the price at the time the export restrictions started.

Sources said the normal contract would have allowed for price variations for each cargo based on market conditions. Under this way of thinking, the Chinese producers regularly pushed for higher prices. At the same time, the Indians noted that the producers were only able to sell to India, and used that leverage to push back on prices.

The latest YUC-CIL deal is now being used by the industry as a basis for new talks. Expectations are that the landed price will be lower, but not under $1,000/mt CFR.

India:

A deal between YUC and CIL at $1,030/mt CFR was reportedly scrapped under orders from the Department of Fertilizer.

Sources said the DoF told CIL the price was too high for the maximum retail price and subsidy program. Reportedly, the government office instructed talks to get the price down, closer to the sub-$1,000/mt levels in the last quarter of 2021.

Brazil:

Pre-sanctioned Russian MAP continues to arrive in Brazil. At the same time, cargoes from China are coming in. These two suppliers are offering prices at the lower end of the current $1,150-$1,300/mt CFR. The upper end of the range represents purchases of Moroccan MAP, which is also arriving in the ports.

Buyers are now looking at some possible delays in future Chinese shipments. Sources said reports are reaching Brazilian ears that COVID restrictions and customs clearance procedures could delay the loading of vessels an additional 90-120 days. This much of a delay could miss the application season.

Meanwhile, Russian material is expected to dry up because of the sanctions related to the Russian invasion of Ukraine. That leaves Morocco as a steady supplier. It is also a high-priced supplier.

The price in Rondonopolis has dipped slightly, to $1,300-$1,400/mt FOB ex-warehouse. Buyers are expected to take advantage of the downward shift before product availability tightens with the removal of Russian product from the supply chain.

Imports of MAP for the first four months were reported at 954,000 mt, down about 15% from the 1.1 million mt imported during the same period, according to Trade Data Monitor. Russian product dominated the January-April imports with 495,000 mt, accounting for 52% of MAP imports during that period.

April 2022 MAP imports were reported at 387,000 mt, more than double the 182,000 mt imported in April 2021. The main suppliers were Russia with 154,000 mt, accounting for 40% of MAP imports, and Morocco with 98,000 mt, covering 25% of the import market.

TSP

Market Watch, Triple Superphosphate, U.S. Gulf, Western Cornbelt

U.S. Gulf:

With minimal tons reported changing hands for the week, players noted price ideas on NOLA TSP barges slipping to the $800-$840/st FOB range, falling from $850-$860/st FOB at last report. Some voiced expectations of a move below the $800/st FOB mark in the next round of business.

Western Cornbelt:

TSP pricing was reported at $850-$885/st FOB in the Western Cornbelt, depending on location, reflecting a drop of $20-$35/st from last report.