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Supreme Court to Hear Case that May Resolve Contentious WOTUS Issue

Featured, News, U.S.

Supreme Court to Hear Case that May Resolve
Contentious WOTUS Issue

The U.S. Supreme Court on Jan. 24 said it will consider a case that may resolve the long battle over the Environmental Protection Agency’s (EPA) and U.S. Army Corps of Engineers’ definition of waters of the U.S. (WOTUS), Bloomberg Law reported.

The case involves Chantell and Michael Sackett of Idaho, who have been attempting since 2007 to build a house on land that the federal government said includes federal wetlands that are subject to Clean Water Act (CWA) jurisdiction. The Supreme Court will likely hear the case in the term beginning in October.

The news comes just weeks after the Corps and EPA on Jan. 5 announced that they had halted implementation nationwide of the Navigable Waters Protection Rule (NWPR), the Trump-era WOTUS standard that drastically scaled back the types of waters falling under CWA jurisdiction.

Until further notice, the two agencies said they will instead rely on WOTUS standards in place prior to a 2015 framework developed under the Obama administration to expand CWA jurisdiction. The Corps also said that any permitting decisions made after an Aug. 30, 2021, decision by the U.S. District Court for the District of Arizona to vacate the NWPR may be modified, suspended, or revoked.

Under the Biden administration, EPA and the Corps announced last June (GM June 11, 2021) that they intended to draft yet another WOTUS definition that builds upon the pre-2015 rule, the Obama-era rule, and the Trump-era NWPR.

On Nov. 18, 2021, the agencies announced the signing of a proposed rule to do just that, putting back in place the pre-2015 WOTUS definition, but updated to reflect consideration of Supreme Court decisions, along with input from states, tribes, local governments, and a broad array of stakeholders. A public comment period on the proposal concludes on Feb. 7.

Questions about the federal government’s ability to broadly define WOTUS have remained contentious since the high court failed in 2006 to definitively answer the question in Rapanos v. U.S., and instead produced two different standards for deciding what constitutes WOTUS.

In that decision, four judges, led by the late Justice Scalia, concluded that navigable waters and wetlands with a “continuous surface connection” should be subject to CWA regulation. Justice Kennedy, however, wrote a separate concurring opinion indicating that wetlands should be regulated if they have a “significant nexus” to navigable waters and would potentially affect them, even if they aren’t directly connected.

It was Kennedy’s “significant nexus” standard that drove the 2015 WOTUS redefinition, which was almost immediately challenged by 31 states and numerous stakeholders in multiple lawsuits, prompting the Sixth Circuit in October 2015 to issue a nationwide stay (GM Oct. 19, 2015). That stay was lifted in January 2017, when the U.S. Supreme Court determined that review of the rule falls within the jurisdiction of the district courts.

The Trump administration then tried to delay the 2015 rule’s compliance deadline while it worked on a new version (GM June 30, 2018) that hued more closely to the Scalia WOTUS definition, but those delays were challenged in court (GM Aug. 24, 2018). Subsequent decisions by a number of U.S. district courts left a patchwork of enforcement, with the 2015 rule enjoined in 28 states and in effect for the remaining 22 states.

The Trump administration then announced in September 2019 that it was repealing the 2015 rule (GM Sept. 13, 2019) entirely and replacing it with the NWPR, which was heavily criticized by environmental groups. Both The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA) were strong supporters of the NWPR upon its publication in 2020 (GM Jan. 24, 2020), and were highly critical of the 2015 rule.

“We’ve supported the NWPR in the past and we continue to do so,” ARA President and CEO Daren Coppock told Green Markets on Jan. 27. “The changes made in how wetlands are delineated are much easier to understand and implement for landowners, and we believe they are more consistent with Congressional intent in the Clean Water Act than the 2015 rule was. What we really need is durable certainty. This ping-pong game between different administrations and federal courts makes it impossible to plan for the long-term.”

Several ag and environmental groups testified during a WOTUS hearing on Capitol Hill on Jan. 18, also pressing for clarity in the definition. “We as farmers support clean water, but we also need clear rules so that we can do what we do best, and that’s produce food, fiber, and fuel,” Missouri Farm Bureau President Garrett Hawkins said during the hearing.

“The Clean Water Act simply doesn’t allow the agencies to insert themselves into local and farmer land-use decisions in the manner that was proposed” in the 2015 definition, said National Corn Growers Association President Chris Edington during testimony. “There is a limit under the CWA to the direct federal control over land-use decision and policies.”

Several legal experts contacted by Bloomberg Law said the Sackett case now before the Supreme Court case may, in fact, resolve the WOTUS definition once and for all. “The decision to take this case is an earthquake,” Neal McAliley, an attorney with the Miami office of Carlton Fields P.A., told Bloomberg Law. “The Supreme Court is likely to resolve the scope of the waters of the U.S.”

Many environmentalists fear that the high court’s conservative majority will significantly limit the scope of federal regulatory power under the CWA. If you’re someone who cares about water quality and wetlands, “you’re sick to your stomach,” Dave Owen, an Environmental Law Professor at the University of California Hastings College of the Law, told Bloomberg Law. “This is a very big deal.”

Two House Republicans – Reps. Sam Graves (R-Mo.) and David Rouzer (R-N.C.) – on Jan. 24 called on EPA to halt any new WOTUS rulemaking until the Supreme Court rules. “Given this significant development, the Biden administration should immediately cease its efforts to issue a new WOTUS definition rule that will greatly broaden the federal government’s jurisdiction over privately owned land,” Graves and Rouzer said in a joint statement.

McAliley told Bloomberg Law that the Supreme Court’s ruling in the Sackett case may force EPA to revisit and re-write its rules to account for the court’s decision. If EPA can complete its rulemakings before a ruling, however, the government would likely try to persuade the justices to remand the case to the U.S. Court of Appeals for the Ninth Circuit with instructions to reconsider the lower court’s opinion, Kevin Minoli, a partner at Alston & Bird LLP., told Bloomberg Law.

Marubeni Sells Gavilon Grain, Keeps Fertilizer

Featured, Japan, News, U.S.

Marubeni Corp., Tokyo, said on Jan. 26 it is selling the bulk of its Omaha, Neb.-based grain business of Gavilon Agriculture Investment Inc. to Glencore Plc’s Viterra Ltd., Rotterdam, The Netherlands, with the Gavilon fertilizer business restructured under Marubeni Americas.

“This change is an exciting time for Gavilon Fertilizer’s employees, suppliers, and customers,” said Brent Harlander, Gavilon Fertilizer CEO. “We have a world-class team of employees, and we expect to grow upon our reputation of premium customer service and customized crop nutrients, becoming an even larger player in the global fertilizer industry.”

“Gavilon Fertilizer’s role in the market-place is essential to the global supply chain,” added Tomomi Otsuka, Chief Administrative Officer, Gavilon Fertilizer. “Marubeni Americas looks forward to providing the corporate resources and capital for new growth projects, innovative products, and distribution assets in both the U.S. and international markets.”

Effective April 1, 2022, the Savannah, Ga.-based Gavilon Fertilizer announced the promotion of Ryan Burke to COO and Executive Vice President of Strategy; David Rizik to CFO; Ryan Solti as Treasurer; Matt Benda to Senior Director of Operations; and Otsuka as CAO. Also, effective immediately, Ron Cardenas has been hired as Executive Vice President of Human Resources and Compliance.

Since 1978, Gavilon Fertilizer has been a wholesale distributor and specialty-product manufacturer of crop nutrients around the world, offering product through over 75 terminals in the U.S., Mexico, Peru, and South Africa.

Viterra said it is buying the Gavilon assets for US$1.125 billion, and the deal is expected to close in second-half 2022.

Despite the sale, Marubeni said it is looking to enhance the ability of its grain business to meet demand for grain in the Asian market, particularly Japan. It is also looking to concentrate on reinforcing the handling of specialty crops, as well as developing its processing and downstream businesses.

As a result, it will retain eight of the grain elevators operated by Gavilon in the northern U.S., transferring them to another Marubeni subsidiary – Columbia Grain International LLC (CGI). In addition, part of the equity interest in a joint venture grain export business on the U.S. West Coast that is now held by Gavilon will also be transferred to CGI.

For the year ending March 31, 2021, Marubeni put Gavilon Agriculture’s consolidated profit before taxes at $300 million on revenues of $18.38 billion, up from a 2020 loss of $1 billion on revenues of $17.8 billion.

In the meantime, Glencore, the world’s largest commodity trader, has had a longstanding goal to enter the U.S. grain market and expand its mid-sized agriculture business. “The acquisition of Gavilon firmly establishes Viterra in the important U.S. grains and oilseeds markets,” said Glencore CEO Gary Nagle, in a Bloomberg report. “Viterra is now present in all major agricultural origination regions of the world. This will enable the company to take advantage of structural opportunities across global agricultural markets.”

Buying Gavilon will give Viterra a significant agriculture footprint after largely being concentrated in countries like Canada and Australia. Gavilon has assets throughout the Plains and Midwest, as well as indirect minority ownership in two West Coast port terminals, which offer a gateway to Asia.

The deal may spur questions about Glencore’s future plans for the agriculture business. The company sold almost half of the unit to the Canada Pension Plan Investment Board and British Columbia Investment Management Corp. five years ago, and has since rebranded it as Viterra – the name of a Canadian crop handler it acquired in 2012. Analysts have speculated that Glencore could either further sell down the unit or spin it off in a public listing.

Marubeni bought Gavilon for $2.7 billion in 2013 in hopes that it would allow the Japanese trader to expand its sourcing of corn and soybeans to better compete with other top global grain traders in Asia. However, the business suffered through a series of challenges including a U.S. drought, low commodity prices, and the U.S.-China trade war. Marubeni was forced to take multiple write-downs.

The trading giant sounded out buyers for Gavilon in 2019, Bloomberg reported at the time, although Marubeni denied that it intended to sell the unit.

Marubeni said it expects to get as much as 400 billion yen ($3.51 billion) from the sale to Viterra, when including the collection of loans. The decision was made after considering the “uptrend in the grain supply industry,” Marubeni said. The company saw an opportunity to transfer Gavilon’s grain business on “appropriate terms,” and assessed that it would be able to maximize its own consolidated asset value, it added.

The trading house expects a record profit this fiscal year through March, along with its domestic peers, as commodity prices surged. Cargill and ADM have recently reported their highest-ever annual profit.

Analysts said Viterra should expect scrutiny about the deal in the U.S. farm belt. The deal will further consolidate an industry at a time farmers are worried about a lack of competition among the few grain traders they can sell their crops to.

The White House has expressed concerns about concentration in agribusiness, although, so far, focusing on beef. With U.S. mid-term elections around the corner, politics could play a bigger role.

Viterra is already the world’s largest wheat trader, thanks to its investments in major exporting regions including Canada, Australia, Argentina, and the former Soviet Union.

Upstart Nebraska NH3 Producer to Receive $1 B Loan Guarantee

Ammonia, Featured, Hydrogen, News, U.S.

The Biden administration has issued its first clean energy loan, guaranteeing up to $1 billion in loans to help a Nebraska company scale up production of “clean” hydrogen to convert natural gas into commercial products including ammonia, according to the Associated Press. Clean energy technology company Monolith Materials, Lincoln, Neb., plans a 275,000 mt/y carbon-free ammonia plant in Hallam, Neb. (GM Oct. 9, 2020).

The ammonia would be produced at Olive Creek 2, (OC2), a $1 billion complex. Ammonia production would be integrated with a new 180,000 mt/y carbon black production facility. Monolith expects to sell its ammonia into the Cornbelt and the carbon black to tire manufacturers. The Goodyear Tire & Rubber Co. and Michelin North America have already stepped up.

Monolith’s Olive Creek 1 plant is already producing carbon black and hydrogen in smaller quantities at the Hallam site.

KBR, Houston, is the technology provider for the planned ammonia plant, and was awarded the contract for the ammonia synthesis loop (GM Dec. 18, 2020). Kiewit Corp., Omaha, was selected for the engineering, procurement, and construction (EPC) for the project.

Monolith said its methane pyrolysis technology would be used to convert conventional and renewable natural gas into carbon black, hydrogen, and ammonia. While DOE was confident in its $1 billion decision, not everyone was on board. Cornell University Professor of Ecology and Environmental Biology Robert Howarth was quoted by the AP as saying he was “highly skeptical that this can be done with low emissions,” and added that he was “very disappointed” in DOE’s decision.

Monolith is backed by Azimuth Capital Management, Cornell Capital LLC, Imperative Ventures, Warburg Pincus, Perry Creek Capital, SK Inc., NextEra Energy Resources Inc., and Mitsubishi Heavy Industries America (GM Dec. 4, 2020).

CAAR Conference Goes Virtual due to Omicron

Canada, News, News Briefs

The annual Canadian Association of Agri-Retailers (CAAR) conference, originally scheduled for Feb. 8-10 in Edmonton, Alta., will take place as a virtual event due to surging Omicron cases. This marks the second consecutive year that the event has been held virtually because of Covid-19.

“After a thorough review of current and future health risks, advisories to limit domestic and international travel, Federal and Provincial models indicating significant increase of Covid-19 positive tests over the next three weeks, consultation with the CAAR Executive Committee Board of Directors and CAAR staff, CAAR has decided to cancel the in-person 2022 CAAR Conference scheduled for Feb. 8-10, 2022, in Edmonton, Alberta,” the organization posted on its website.

“We are disappointed with the cancellation of the in-person conference for a second year in a row, [but] our industry safety and potential disruption of business operations overrides the benefits associated with hosting an in-person conference,” the notice stated. “Registration refunds will be processed in the coming weeks leading up to the conference for the difference of our in-person and virtual fees. Thank you for your patience and your support as we navigate through this situation.”

CAAR said the virtual conference will feature educational keynote and concurrent sessions, with agenda details to be released soon. The speaker slate includes Michael Kirwin, Canadian Federation of Independent Business; Chuck Penner, LeftField Commodity Research; Josh Linville, Stone X; Derek Rolstone, Stone Strategies; Karen Haugen-Kozyra, Viresco Solutions; Ted McKinney, National Association of State Departments of Agriculture; Gord Kurbis, Canadian Grains Council; and Dan McTeague, Canadians for Affordable Energy.

More information is available at https://caar.org/caar-conference.

DOC Issues Affirmative Preliminary Determinations on UAN Dumping

Caribbean, Featured, News, Russia, U.S., UAN

The U.S. Department of Commerce (DOC) announced that it has made affirmative preliminary determinations in its antidumping duty investigations of imports of UAN from Russia and Trinidad and Tobago.

DOC found that Russian UAN imports were dumped into the U.S. market at rates ranging from 9.15-127.19 percent, and Trinidadian UAN imports at a rate of 63.08 percent. As a result, DOC will impose cash deposit requirements on imports of UAN from Russia and Trinidad based on the preliminary rates of dumping.

For Russia, the 9.15 percent rate is for the Acron Group, 23.98 percent for EuroChem, 127.19 percent for Kuibyshev Azot and SBUT Azot, and 15.48 percent for all others. Trinidad only has one producer, Methanol Holdings (Trinidad) Ltd. (MTHL), and the rate is 63.08 percent. While UAN and other major fertilizer prices soared in 2021, the period of investigation was April 1, 2020, through March 31, 2021.

Additional countervailing duty (CVD) cash deposit requirements are already in place based on DOC’s previous preliminary finding that Russian UAN imports are unfairly subsidized at rates ranging from 9.66-9.84 percent, and that Trinidadian UAN imports are unfairly subsidized at a rate of 1.83 percent (GM Aug. 20, 2021).

DOC and the International Trade Commission are expected to make final determinations in the summer of 2022.

“Commerce’s affirmative preliminary antidumping and countervailing duty determinations not only address unfair trade practices that have harmed the U.S. UAN industry and its workers, but also help ensure that this vital product remains readily available to U.S. farmers from reliable domestic suppliers,” said Tony Will, President and CEO of CF Industries Holdings Inc., Deerfield, Ill.

“We appreciate the thorough, fact-driven investigations conducted by Commerce professionals and their impartial application of U.S. law,” he added. “We look forward to participating in the post-preliminary phase of these investigations.”

DOC initiated the AD and CVD investigations in July 2021 (GM July 23, 2021) in response to petitions filed by CF (GM July 2, 2021) alleging that unfairly dumped and subsidized imports of UAN from Russia and Trinidad are injuring the U.S. UAN industry.

Yara, Linde to Build 24 MW Green Hydrogen Plant at Herøya

Ammonia, Germany, Green Hydrogen, News, News Briefs, Scandinavia

Yara International ASA, Oslo, has inked a contract with Germany’s Linde Engineering for the construction and delivery of a 24 MW green hydrogen demonstration plant at Yara’s ammonia production plant at Herøya Industripark in Porsgrunn, Norway.

The plant will have an annual capacity of around 10,000 kg/day of hydrogen, and will provide enough hydrogen to produce 20,500 mt/y of ammonia, which can be converted to between 60,000 and 80,000 mt/y of green fertilizer – roughly five times the annual production of food grade wheat in Norway, Yara said in a Jan. 28 statement.

The project will be realized by water electrolysis, which will produce green hydrogen to partially replace the hydrocarbon-based hydrogen production in the Herøya plant using proton exchange membrane (PEM) technology.

The facility will replace ethane as raw material in production, thereby reducing 41,000 mt of carbon dioxide emissions annually. The electricity will be delivered from renewable sources.

Yara Clean Ammonia President Magnus Ankarstrand said the project aims to supply the first green ammonia products to market as early as mid-2023, “both as fossil-free fertilizers, as well as emissions-free shipping fuel.”

Yara said the project will demonstrate that ammonia produced using renewal energy can reduce the impact of carbon dioxide in fertilizer production, and is a first step towards decarbonization of the ammonia industry.

The project is being supported by a NOK283 million (approximately $31.6 million at current exchange rates) grant from Enova, a state enterprise owned by Norway’s Ministry of Climate and Environment, announced in December. The Herøya PEM electrolysis plant will be the second 24 MW such unit designed and constructed by Linde Engineering.

U.S. Natural Gas Jumps Most on Record

Natural Gas, News, News Briefs, U.S.

U.S. natural gas futures suddenly spiked the most on record on Thursday afternoon, Jan. 27, a sharp move that could be a sign of bearish wagers being squeezed out of the market, according to Bloomberg. A spokesperson for CME Group confirmed a price jump of as much as 72 percent, the most since the contract launched in 1990. The surge came ahead of the February contract expiration.

The futures were trading below $4.50/mmBtu for most of the session until around 12:45 p.m. in New York, when an upward surge kicked in that pushed prices above $7.00/mmBtu. The February contract settled at $6.265/mmBtu.

Though hedge funds have been net-long on U.S. gas contracts, indicating they expect prices to rise, money managers still held substantial short positions, according to data compiled by Bloomberg. In a squeeze, traders exposed to wrong-way bets on lower prices are forced to close out those positions by purchasing higher-priced contracts.

Gas prices have been volatile in recent weeks as traders try to gauge whether winter cold will strain stockpiles of the power-plant and heating fuel. Although inventories are only 1 percent below normal for the time of year, exports have been near a record and production from shale basins has been relatively restrained.

The frenzy rippled through to later-month contracts: The much more widely traded March futures climbed as much as 9.5 percent.

On Friday morning, Jan. 28, prices were up as much as 14 percent, as fears of a Northeastern winter storm drove the market higher.

Ammonia

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

U.S. Gulf/Tampa:

Tampa anhydrous ammonia for February moved up $20/mt to close at $1,135/mt CFR, an increase from January’s $1,115/mt CFR. Leading up to the news, Nutrien had procured some 15,000 mt from Algeria for delivery to the U.S. Gulf at $1,175/mt CFR, thereby giving some guidance for Tampa.

While Tampa was up, some observers argued that it was a small increase and not much better than a rollover compared to the surges seen in recent months. As a result, there was speculation that the price may have topped out for now, though the European winter and gas prices may still be a major factor for March.

In the meantime, actual NOLA spot barge trades remain scarce, with the last wave reported a while ago at $1,030/st FOB. With U.S. Gulf import vessels now put at $1,175/mt CFR, the barge equivalent would be $1,066/st FOB.

Eastern Cornbelt:

The ammonia market was unchanged at $1,300-$1,400/st FOB regional terminals in the Eastern Cornbelt, depending on location and time of shipment, with the low confirmed for prompt tons in Illinois and the high reported in Ohio for both prompt and spring prepay pricing. Most prepay offers in Illinois and Indiana fell in the $1,375-$1,385/st FOB range.

Western Cornbelt:

Ammonia pricing remained in the $1,350-$1,395/st FOB range in the Western Cornbelt, with the low reported for limited January-February offers. Most of the spring prepay business was pegged in the $1,365-$1,395/st FOB range in the region, depending on location and supplier.

Northern Plains:

Sources continued to describe the Northern Plains ammonia market as quiet in late January, with most of the attention focused on urea prices instead. Prompt and/or prepay ammonia pricing was unchanged at $1,450/st FOB terminals in the Northern Plains, with the last delivered offers in North Dakota remaining at the $1,550/st level.

Black Sea:

Sources said players in the area remain nervous about the situation between Ukraine and Russia, but not enough to stop ammonia shipments from the area.The lack of any excess tons prevented any new price testing, leaving the Yuzhnyy level at $1,100-$1,120/mt FOB. Sources said a sale to OCP/Morocco confirmed this level.

If Ukraine and Russia come to blows, sources said the ammonia and natural gas pipelines will most likely be some of the first casualties. While the shutdown of ammonia to Yuzhnyy would be disruptive to those who need it, one trader said the bigger threat to the global economy would be the shutting down of natural gas transmission.

Middle East:

Arab Gulf producers are handling their contracts with little left over for spot deals. Sources said production is picking up, but it will take a while before the backlog of orders are covered so that some reserves can be built for spot deals.

For now, sources seem to think $900/mt FOB is about where the market is hitting a plateau. A trader noted that business into India is showing prices at $900-$950/mt CFR. The upper end of that range would work for the $900/mt FOB prices seen in the Arab Gulf. Anything higher, and buyers will walk away.

There are reports that not all producers are operating the way they want. Reportedly, Muntajat has delayed loading a vessel because of some unnamed production issue. At the same time, the new Ma’aden line is still not fully operational. Within the next several months, sources said these blips will be worked out and the region should be able to start building reserves to handle more customers.

India:

Sources reported some small ammonia sales into India at $920/mt CFR. With strong demand still reported in the country, sources said the price could move to $950/mt CFR. However, no one is saying that this higher level has yet been reached.

There was a report that 10,000 mt slated to ship from China has been scrapped, and the cargo is being replaced with tons from Bangladesh.

North Africa:

Sources reported a spot sale to OCP in Morocco by Trammo. The move was unusual, said one trader, because OCP rarely engages in spot deals, preferring to lean on its contract suppliers for extra material when needed.

The price of the deal was calculated off the Tampa January price. Sources said at that level, it also confirmed a steady price out of Yuzhnyy.

The producers in the area all seem to be back online. Reportedly, Abu Qir in Egypt is shopping around a small cargo, and Libya is said to have large quantities available for February loadings, as does Algeria.

The return to the markets of these producers is helping hold prices steady in Europe and providing a base and a ceiling for the Arab Gulf.

Northwest Europe:

The influx of lower-cost natural gas and the return of production in North Africa has helped keep ammonia prices steady at $1,180-$1,250/mt C&F.With the lower-priced gas, plants are slowly coming back online. There is even talk of some Polish material being offered into Western Europe.

February pricing will depend on what happens with the Baltic price. The slight uptick in Tampa indicated to sources in Europe that the market is not ready for a drop, but is approaching its peak. Where the negotiators for Baltic ammonia settle will either confirm this view or move the market in ways not easily predicted.

One trader in Europe noted that the slight move in Tampa and discussions in the area helped dispel a growing fear that the record rise in prices would soon be followed by a dramatic crash. He noted that the 2008 collapse in pricing came as part of the general global financial crisis. This year the main issue driving up the price of ammonia is the cost of production.

Sources estimated it currently takes about $900/mt just for the basic input for ammonia. If natural gas prices come off, the ammonia price will also drop. No one expects to see a collapse of gas prices, sources said, and so ammonia prices might dip, but they will not crash.

Southeast Asia:

Stepped up demand for goods from regional manufacturers have these same factories demanding more ammonia. The market in the area remains tight, with little wiggle room for prices.

Sources are looking to reported reduced output in Indonesia and Malaysia as a potential problem for the area. So far, said one trader, demand is only slightly stronger than supply. Once production steps up in the area and in the Arab Gulf, sources expect prices to stabilize – and maybe soften a bit.

Thailand:

Imports of ammonia for 2021 came in at 438,000 mt, according to Trade Data Monitor, up 25 percent up from the 350,000 mt imported in 2020.

The main suppliers to Thailand were Malaysia with 268,000 mt, representing 61 percent of the import market; Australia with 98,000 mt, for 22 percent of the market; and Indonesia at 53,000 mt, for 12 percent of the market.

December 2021 imports were up slightly at 62,000 mt, compared with December 2020 purchases of 57,000 mt.

Urea

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

U.S. Gulf:

Yet another week of very volatile prices was reported in the NOLA granular urea market, with trades again spanning a broad range at $485-$590/st FOB, compared with the week-ago $545-$610/st FOB. Sources reported that the week started as high as $590/st FOB, but early-week trades soon dropped to as low as $500-$525/st FOB before hitting $485/st FOB and then bouncing back to $560-$570/st FOB.

Why the rebound? Some were still scratching their heads, but others said rumors that India might soon tender for urea had once again lit a fire under prices.

Very thinly-traded NOLA prills were hard to peg, with the last done called $585/st FOB.

Eastern Cornbelt:

The regional urea market fell to $630-$650/st FOB, depending on location, with the low confirmed in Illinois and at Toledo, Ohio, as the week progressed. The Cincinnati, Ohio, market was pegged at $640/st FOB for prompt and $650/st FOB for 2Q offers.

Terminal pricing in Michigan, by contrast, remained as high as $815/st FOB in some locations.

Western Cornbelt:

Urea prices ranged broadly at $620-$655/st FOB in the Western Cornbelt, with the low reported at St. Louis, Mo., and the high at Port Neal, Iowa. Sources said the Catoosa/Inola, Okla., urea market rebounded to $645-$655/st FOB as the week progressed, up from a low of $620/st FOB.

Northern Plains:

Urea pricing in the St. Paul, Minn., market ranged widely at $610-$670/st FOB at midweek for river-open offers, sources reported, down dramatically from prices reported at the start of the year. In North Dakota, delivered urea pricing also ranged broadly, with the low confirmed at $675-$705/st DEL for prompt tons and the high at $765-$795/st DEL for prepay.

Northeast:

Urea prices were pegged at $690-$720/st FOB in the Northeast, with the high reported at Fairless Hills, Pa., as the week began. In the Southeast, new pricing was confirmed at $640/st FOB Savannah, Ga.

Eastern Canada:

Urea pricing in Eastern Canada remained at C$1,200-$1,235/mt FOB in late January, unchanged from last report in spite of the rapidly softening markets reported at NOLA and in the Midwest in recent weeks.

Some regional suppliers were reportedly “looking at a lower wholesale number” while continuing to watch the market “for signs of a sustained price decline.”

India:

As the week closed, urea markets around the world began shifting as word circulated that India was ready to step back in with a tender.

Reportedly, the financing has been finalized for IPL to call a tender no later than Feb. 15. One of the driving forces, said one trader, was making sure all the tons awarded in the December IPL tender were in the process of being loaded. The shipping deadline for that tender is Jan. 31. Green Markets earlier reported that vessels had been nominated for all the tonnage awarded.

The tender could come as early as next week. It is no secret that India is more than 1 million mt short of supplying its urea needs for the current season. Any urea awarded in the upcoming tender is expected to have a shipping deadline of March 31. This would keep the entire order in the current fiscal year, which also ends March 31.

Normally, tenders are not called in February. However, the shortage of urea in the country has forced the government’s hand. Usually at this time the market is quiet as buyers assess their upcoming seasonal needs and as producers take maintenance turnarounds. Even with the shutdowns, normally reserves would be building up. This year, unlike others, the global reserves are not as large as in the past.

With China out of the urea export market, a major contributor to urea supplies is gone. Other producing areas are building reserves because of limited interest so far this year. However, sources said it will be difficult to secure all the tons India needs. Domestic demands in Indonesia and Russia will limit what can be offered from there. Long-term contracts with Arab Gulf producers will also limit how many spot tons will be allowed to be offered to India.

On the plus side, India did secure a multi-year 1 million mt/y deal with OMIFCO. Sources said none of the material from the 2022 allotment will be ready during this quarter, but it will ease the pressure to use the pending tender to also build reserves for the next season.

Middle East:

Arab Gulf producers are fulfilling the last of the award in the December 2021 IPL/India tender and covering long-term contract sales. No new spot business from the area was reported, leaving prices steady until the next Indian tender is called.

Late last week and earlier this week reports circulated of a series of small orders totaling about 20,000 mt out of Egypt at $700-$710/mt FOB. Traders said these deals were older ones that occurred quietly. At the same time, producers tried to stem any discussion of a major downward trend in the market.

Sources said bids for February material came in at $600/mt FOB, but with producers pushing back at $650-$690/mt FOB. The impasse seemed to hold until the end of the week, when sources reported deals concluded for February shipment at $620-$630/mt FOB. Producers disputed this level, but tended to agree that prices had dropped below $650/mt FOB. By Friday, MOPCO reported it sold 40,000 mt of granular urea at $640-$660/mt FOB.

The MOPCO deal was immediately surpassed by another sale of 10,000 mt from the same company at $690/mt FOB, to be followed by another 10,000 mt at $700/mt FOB. AlexFert joined in and sold 6,000 mt at $700/mt FOB. The MOPCO sales were for second half February, while the AlexFert tons are to be shipped in early March.

The paper market for Egyptian material was initially reported at $510/mt FOB for February and March this week. However, as news of a pending Indian tender circulated, sources reported that the paper market jumped $120/mt and is now running behind the actual market.

International traders expect Algeria to play a role in the upcoming Indian tender. Sources said AOA had material available for February and March loadings. Prices under discussion were reported at $600-$620/mt FOB. By the end of the week, sources said deals were done at that level, and possibly up to $640/mt FOB. Algeria is reportedly now sold out through February.

Black Sea:

Despite tensions between Russia and Ukraine and the possible disruption that this dispute might cause, Black Sea urea prices are tending down. Sources said previous business that might have been completed in the upper-$840s/mt FOB is now under discussion at $840/mt FOB and below.

China:

No urea of any serious quantity is expected to come out of China until at least April. Some small lots may be allowed for Japan or South Korea for their emissions control needs. However, both countries have begun to search for alternate sources and may not need to seek an exemption from Beijing to get what they need.

Producers used this week to move as much product out of their warehouses as possible to regional distributors. The upcoming week-long celebration of the Lunar New Year is already causing shortages in offices and mills as workers take off early for the traditional visits to families and hometowns.

The push to move out product caused the domestic price to soften. The export ban had already dropped the local price more than $200/mt when compared to the global price. This week showed an export-equivalent price of $700-$750/mt FOB.

Traders are expected to pick up talks with urea producers for April shipments at the end of February. Immediately following the Lunar New Year celebrations, China will host the Winter Olympics. The central government has ordered factories of all types to cut back on production or shut down completely to reduce air pollution.

Brazil:

Urea prices came off in Brazil as local distributors move to close out as many deals as possible before new tonnage arrives. The lower end of the imported price dropped $50/mt, and the upper end by significantly more. Sources now put the portside price of urea at $540-$600/mt CFR, with new bids at $500-$520/mt CFR.

The large influx of urea slated for Brazil might be tempered if India comes in for a tender soon. Tonnage that was designated for Brazil could be diverted to India. Such a move would relieve the downward pressure on prices by not building up excess reserves in Brazil.

Prices dropped about $150/mt in Rondonopolis as excess stocks of urea inland are not finding buyers. Sources now peg the Rondonopolis price at $780/mt FOB ex-warehouse.

Just as holders of urea at the ports are desperate to find a way to unload their holdings, inland distributors are also seeing full warehouses and no takers. Sources said they expect to see continued softness in the market through March.

Indonesia:

The government continues to require producers to focus on the domestic market, leaving nothing for exports. The lack of any new tenders leaves the posted urea price higher than where sources think the market will be once a new selling tender is authorized.

One observer noted that once the next Indian tender is closed, market watchers will be able to calculate what the price could be if Indonesian material was awarded. Until then, the public price reflects business prior to the December 2021 IPL tender.

Thailand:

Urea imports for 2021 were reported at 1.87 million mt by Trade Data Monitor, down about 2 percent from the 1.9 million mt imported in 2020.

The main supplier in 2021 was Saudi Arabia at 698,000 mt, for 37 percent of the import market. Sources noted that the Saudi suppliers offered a lower netback than other buyers. Often the landed price in Thailand was close to the FOB price cited by the Saudis to other buyers.

Other suppliers included Malaysia with 350,000 mt, for 19 percent of the import market; Oman at 317,000 mt, for 17 percent of the market; and Qatar at 285,000 mt, for 15 percent of the market.

December 2021 imports were down 61 percent, to 20,000 mt from the 51,000 mt imported during December 2020.

Serbia:

Serbia has secured 400,000 mt of nitrogen fertilizers, which will be available before the sowing season, according to a SeeNews report, citing the country’s Agriculture Minister Branislav Nedimovic on Jan. 25. He said there would be “a large-enough” supply of both urea and NPK fertilizers.

The ministry also announced that it will remove the 10 percent customs duty levied on fertilizer imports from developing countries in order to help combat soaring fertilizer prices. The ministry additionally said it will provide zero-interest loans to farmers to help them buy nitrogen fertilizers, according to the report.

UAN

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

U.S. Gulf:

NOLA UAN barges remained at $545-$550/st ($17.03-$17.19/unit) FOB. March continued to be put at $560/st and second-quarter at $575/st FOB or higher.

Eastern Cornbelt:

UAN-28 pricing remained at $521-$534/st ($18.61-$19.07/unit) FOB Cincinnati for prompt tons and $551/st ($19.68/unit) FOB for spring prepay. Reference UAN-32 prices for spring tons included $610/st ($19.06/unit) FOB Cincinnati and Peru, Ill., and $615/st ($19.22/unit) FOB Albany, Ill.

In the Michigan market, UAN-28 offers were reported at the $595/st ($21.25/unit) level FOB Bay City for 2Q tons.

Western Cornbelt:

The UAN-32 market was steady at $590/st ($18.44/unit) FOB St. Louis for March tons and $605/st ($18.91/unit) for April-June, with the upper end of the regional market pegged at $635/st ($19.84/unit) FOB Bigelow, Iowa, and Fremont, Neb., for 2Q tons.

Northern Plains:

UAN-32 pricing was unchanged at $610-$635/st ($19.06-$19.84/unit) FOB Minnesota terminals, depending on location and time of delivery, with the low reported at Pine Bend and the high at Winona for 2Q tons. The last UAN-28 prices confirmed in the North Dakota market remained at $540-$550/st ($19.29-$19.64/unit) FOB.

Northeast:

The UAN-32 market remained at $620/st ($19.38/unit) FOB Baltimore, Md., with UAN-30 pricing pegged at $603/st ($20.10/unit) DEL in eastern Pennsylvania. The UAN-32 market FOB terminals in upstate New York was quoted at $672/st ($21.00/unit) in late January, down $13/st from last report.

Eastern Canada:

The UAN-28 market was quoted at C$775-$783/mt (C$27.68-$27.96/unit) in Eastern Canada in late January, down slightly at the upper end of the range. UAN-32 pricing was also lower at C$895/mt (C$27.93/unit) FOB on a spot basis in Ontario.