All posts by mickeybarb@charter.net

Russian Gas Producer Novatek Plans Arctic Ammonia, Hydrogen Plant

Ammonia, Hydrogen, News, News Briefs, Russia

Russia’s Pao Novatek, the country’s largest independent natural gas producer, plans to build a plant in the Arctic with capacity to produce 2.2 million mt/y of ammonia and 130,000 mt/y of hydrogen, Interfax reported on Oct. 15, citing the company. No other details are readily available.

Novatek inked a Memorandum of Cooperation early last month with Japan’s Ministry of Economy, Trade, and Industry on ammonia, hydrogen, and carbon capture, utilization, and storage.

The Russian gas producer said at the time of the signing on Sept. 2 that the parties intended to mutually support projects in producing and marketing of ammonia and hydrogen, as well as implementing technologies for carbon capture and storage in Russia and Japan.

Ammonia

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

U.S. Gulf/Tampa:

Tampa ammonia prices for November are expected to see a significant increase from October’s $665/mt CFR. European plant outages and skyrocketing domestic ammonia prices are cited as the main drivers.

Eastern Cornbelt:

Prices continued to climb for ammonia in the region. Sources said limited ammonia offers were now solidly at the $1,090-$1,100/st FOB level in the Eastern Cornbelt, with the higher numbers in Indiana and Ohio.

Western Cornbelt:

The last confirmed ammonia prices remained at $1,085-$1,090/st FOB in Nebraska and $1,090-$1,110/st FOB in Iowa, depending on location. Sources reported pricing offers out of Oklahoma terminals firmly at the $1,000/st FOB level at midweek.

Northern Plains:

Ammonia prices continued to surge in the Northern Plains, with reports of limited new offers in North Dakota and Minnesota firming to $1,210-$1,240/st FOB, up from the last confirmed business in the $1,000-$1,125/st FOB range during the previous week. Sources reported difficulty sourcing new bids as the week progressed, however, with a number of producers reportedly sold out of product.

No current delivered ammonia prices were reported in the region, although new offers are expected at the end of the month when the Dakota Gasification plant in Beulah, N.D., returns to production after a planned turnaround in October.

Pacific Northwest:

New pricing indications in the Pacific Northwest saw truck-DEL ammonia firming to $1,100-$1,130/st during the week, up from the last official postings at the $900/st truck-DEL level in late September.

Black Sea:

The spot price remains in the $700s/mt FOB, only because there are no spot tons available to explore new price marks. The limited number of tons from the area all seem to be tied to contracts and formula-based deals.

Sources said transportation through the Bosporus Straits is proceeding smoothly. Even the fog that often comes at this time of year has done little to hinder the smooth transfer from the Black Sea to the Mediterranean.

Middle East:

There were reports circulating that 10,000 mt of ammonia is being offered to a European buyer from the UAE. Industry watchers are tossing around a price of $900/mt C&F for a netback of $800/mt FOB to the Arab Gulf. However, sources said nothing has been confirmed at that level, leaving the Arab Gulf price in the $620/mt FOB range.

The higher price is expected to be hit soon, however. Sources said $800/mt FOB out of the Arab Gulf is a rational price, given the tightness of the market and the limited supplies due to high natural gas prices.

Iranian ammonia exports for the first nine months of the year were up 32 percent, to 448,000 mt from 339,000 mt during the same period last year, according to Trade Data Monitor. The main buyers of Iranian ammonia this year were India at 298,000 mt, China at 71,000 mt, and Taiwan at 68,000 mt.

Third-quarter 2021 exports were down 23 percent, to 132,000 mt from 172,000 mt during the same period in 2020. September 2021 exports were reported at 25,000 mt, compared to September 2020 exports of 88,000 mt.

India:

Only contract tons seem to be flowing into India. Sources said the lack of tonnage from major suppliers means Indian buyers will need to keep searching for the tons they need, and must be prepared to pay more for each ton.

Northwest Europe:

No new deals have happened to move the price off the $800-$810/mt C&F mark. Talk of a possible sale into Europe from the UAE could move prices to $900/mt C&F, but no new deals at that higher level have been reported so far.

Sources said buyers are anxious for tons and appear willing to pay for what they need. More cargoes are coming into Europe from Trinidad to fill in the gaps created by cutbacks in production in Eastern and Central Europe, as well as the tightness in the Arab Gulf.

The unscheduled shutdown of the Grondo plant will further tighten ammonia supplies into Europe. Sources said the company has not announced how long the repairs are expected to take.

Southeast Asia:

Sources said the ammonia prices being quoted in the area are artificially low because of the long-term, formula-based deals that dominate the market. One trader said the contracts will soon be ending and buyers will face much higher prices.

Adding to the tightness in the region, sources said the PAU joint-venture facility remains down for routine maintenance and is expected to be down for the rest of October. At the same time, Kaltim is focusing more on urea production, therefore having less ammonia for sale.

South Korean imports of ammonia for January through September 2021 were reported at 1.1 million mt, up 20 percent from the 928,000 mt imported during the same period in 2020, Trade Data Monitor reported.

Third-quarter imports were reported at 384,000 mt for 2021, compared with 314,000 mt during the same period in 2020.September 2021 imports of 116,000 mt were down from September 2020 imports of 128,000 mt.

Chinese ammonia imports for the first nine months of the year were down 20 percent, according to Trade Data Monitor, to 665,000 mt from 829,000 mt during the same period in 2020.Third-quarter imports were down 44 percent, to 166,000 mt from 296,000 mt, while September imports were reported at 65,000 mt, compared with 115,000 mt in September 2020.

Urea

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

U.S. Gulf:

NOLA granular urea prices were reported to have topped out in the $680-$700/st FOB range this week, versus the week-ago $685-$710/st FOB.

Eastern Cornbelt:

Urea prices remained at a solid $740-$750/st FOB in the Eastern Cornbelt, unchanged from last report, with the low reported at Cincinnati, Ohio. Out of Michigan terminals, urea pricing had reportedly inched up to $800/st FOB at some locations.

Western Cornbelt:

Urea was quoted at $730-$750/st FOB range in the Western Cornbelt, with the low reported at St. Louis, Mo. The Catoosa/Inola, Okla., urea market was pegged in the $735-$745/st FOB range at midweek, with Enid, Okla., pricing reported at the $735-$740/st FOB level for prompt shipment.

Northern Plains:

The last urea offers were reported at $770-$775/st FOB St. Paul, Minn., up $15-$20/st from the prior week, with delivered tons pegged in the $810-$840/st range in North Dakota, depending on location.

Northeast:

The urea market was quoted at $750-$760/st FOB in the Northeast, up another $10-$20/st from the previous week and a full $100/st higher than late September levels, with the low end of the range confirmed at Fairless Hills, Pa., and the high at Baltimore, Md. In the Southeast, new pricing FOB Savannah, Ga., was reported at the $730/st level at midweek.

Eastern Canada:

Urea pricing in Eastern Canada had reportedly firmed to a wide C$960-$1,200/mt FOB range, depending on location, up from C$745-$835/mt FOB in late September.

China:

A virtual ban on urea exports is in place. Urea not cleared by customs on Oct. 15 was not allowed to be shipped. Sources said there have been as many interpretations of the rules as there are ports. The main issue seemed to be properly processing the paperwork necessary to export the product.

Rather than holding up tons at the ports, sources said factories were denied access to the rail transportation normally used to take the urea to ports. Local and regional authorities, who also had to sign off on the shipments, were reportedly responsible for blocking the tons leaving the factories.

The end result of the government’s action is to kill the once-active urea market. Sources said buyers have talked about what they think prices could be or should be, but the absence of any urea for offshore sales makes the discussion moot. Without any new spot deals to test market, the published price based on the RCF tender still stands in the low-$620s/mt FOB.

Reports circulated this week that at least two cargoes slated for India under the Oct. 1 RCF tender were not allowed to be shipped. Sources said Swiss Singapore and Medallion were the companies hoping to export the material. Swiss Singapore reportedly pulled out all the stops looking for replacement tons.

Sources said Medallion also went looking. With fewer resources than Swiss Singapore, however, Medallion may end up having to declare a force majeure on their award.Besides shipments to India being affected, sources said cargoes slated for South Korea and Australia were also canceled because of the new orders.

Exports for January through September 2021 were reported at 4 million mt, up 37 percent from the 2.9 million tons exported during the same period in 2020, according to Trade Data Monitor. The main customers for the nine months were India at 1.9 million mt, South Korea at 564,000 mt, and Mexico at 286,000 mt.

Third-quarter 2021 exports were up about 32 percent, to 1.6 million mt from 1.2 million mt shipped during the same period in 2020. September shipments were reported at 1.1 million mt against September 2020 exports of 828,000 mt.

Sources said because of the export ban taking effect on Oct. 15, the next report on offshore sales will show a drop in tonnage. November and December exports are expected to be dramatically lower as the full impact of the ban is felt.

India:

People are still saying a tender will be called “any day.” Sources said even if the tender is called, the Indian buyer will face dramatically higher prices and severely limited tonnage because of the Chinese urea export ban.

To try to ease the pressure to buy massive quantities in upcoming tenders, Indian buyers reportedly opened talks with OMIFCO in Oman for immediate shipments. The Indian-Omani joint venture once supplied India with 2.2 million mt at deeply discounted prices. When the contract expired last year and the two sides could not reach a new accord, OMIFCO allocated some of its tons to Ameropa, Swiss Singapore, and Yara to find new markets.

Purchases of the OMIFCO tons by buyers in Brazil, Thailand, and the U.S. picked up dramatically as a result. Some of the OMIFCO tons were also included in previous Indian tenders, but at much higher rates than the previous contract allowed.

By the end of the week, sources reported the two parties were still talking about OMIFCO supplying at least 1.1 million mt to India. Now, however, the tonnage all seems to be earmarked for 2022 shipment. Sources also said they did not know what pricing levels were being discussed between the two. An OMIFCO sale this week of 10,000 mt of granular urea at $760/mt FOB will make it more difficult for India to get any serious discounts.

Middle East:

Bids in an OMIFCO tender for 10,000 mt of granular urea showed a high price of $760/mt FOB. Reportedly, the Indian-Omani joint venture is ready to issue an award at that level.Sources said about four companies participated in the tender as the urea market tightened following the Chinese urea export ban.

At the beginning of the week, there were rumors OMIFCO had reached a deal to ship about 2 million mt to India through the first quarter of 2022. However, as the week progressed, the number of tons being discussed dropped, the “sure thing” became less sure, and the time frame shifted to deliveries only in early 2022.

Reportedly, OMIFCO cancelled the tons it was going to allot to Yara and Swiss Singapore for offshore sales. The tonnage is expected to be shipped to India early next year. The deal is being handled through the OMIFCO trading arm, OQ.

Sources said OMIFCO parceled out tons to Ameropa, Swiss Singapore, and Yara to move its tons as quickly as possible and give it time to set up its trading arm. Reportedly, OQ is not ready to handle the urea deals without outside assistance from traditional trading houses.

The rest of the Arab Gulf producers continue to turn out urea for their contracts, leaving precious little for any spot business. Sources said when India comes back in with a tender, it will have to depend on the limited supplies coming from the Arab Gulf.The paper market for the Arab Gulf is reported at $810/mt FOB for October and November.

Abu Qir in Egypt sold 7,000 mt of granular urea at $845/mt FOB. The buyer was most likely in Europe. Sources said European buyers have been willing to keep paying more for product from Egypt as demand in Europe picks up.The paper market for Egyptian urea is now pegged at $845/mt FOB for October and November.

Iranian urea exports for January-September 2021 were up 52 percent, according to Trade Data Monitor, to 2.9 million mt from 1.9 million mt exported during the same period in 2020. The main buyers this year were Turkey at 1 million mt, South Africa at 301,000 mt, and Brazil at 299,000 mt.

Third-quarter 2021 exports were reported at 1.2 million mt, up from 1 million during the same period in 2020.September 2021 exports of 405,000 mt were about the same as September 2020.

Pakistan:

Sources now speculate that TCP will not call a urea tender for 100,000 mt.The Pakistan government authorized the importing of the tonnage to fill in gaps from the domestic production. However, the limited tons that are available and the ever-rising prices may give the government and TCP second thoughts about jumping in at this time.

Indonesia:

The tightness of the global urea market is affecting the Indonesian market. Tons awarded last month in a tender to Liven are now being held back for November shipment, said traders. Additional tons sold to Amber have been cancelled.

South Korea:

Sources reported that at least two urea cargoes slated for shipment to South Korea from China were denied permission to be sent under the new rules limiting exports from China. No details as to why the tons were held back were forthcoming. One trader suggested the export paperwork was not completed in time to meet the Oct. 15 deadline.

Urea imports for January through September 2021 were reported at 703,000 mt, up from 647,000 mt during the same period last year, according to Trade Data Monitor. Third-quarter imports were up 66 percent, to 214,000 mt from 129,000 mt during the same period in 2020.September 2021 imports were up dramatically, to 84,000 mt from 23,000 mt in September 2020.

Brazil:

The lack of new urea deals at Paranagua has kept the price at $800-$830/mt CFR. However, this price may not hold, according to international traders. The lack of Chinese urea on the global market and India’s demands for product could push the price higher.

Brazil has imported 819,000 mt of urea from Oman so far this year. In the past six years, according to Trade Data Monitor, Brazil imported an average of 265,000 mt each year. Sources said if OMIFCO does cut a deal to move more tons into India, Brazil could face the loss of a major new source for its urea.

The price in Rondonopolis has shifted to $920/mt FOB ex-warehouse. The lack of a range indicates how the local market has tightened. The price in Sorriso has also moved up to $1,000/mt FOB ex-warehouse.

The price of crops has not kept pace with the rising cost of urea. The Sorriso barter rate has moved to 111 bags of corn for 1 mt of urea.

UAN

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

U.S. Gulf:

CF was reported to be out with posted prices as high as $535/st ($16.72/unit) FOB. Sources put the NOLA barge market in the $525-$535/st ($16.41-$16.72/unit) FOB range, up from the most recent $500/st ($15.63/unit) FOB.

Eastern Cornbelt:

Sources described limited UAN-32 offers in the $570-$600/st ($17.81-$18.75/unit) FOB range in the region, with the low reported at Cincinnati for Q1 shipment. There were reports of new UAN-28 pricing moving to the $535/st ($19.11/unit) FOB level in the Michigan market.

Western Cornbelt:

UAN-32 pricing continued to firm in the Western Cornbelt. Sources reported new offers at $590-$600/st ($18.44-$18.75/unit) FOB Port Neal, Iowa, with the high for December-January shipment. Pricing at Fort Dodge, Iowa, was also reported at the $600/st ($18.75/unit) FOB level or higher.

New UAN-32 offers in Oklahoma included $580/st ($18.13/unit) FOB Verdigris and Woodward, with pricing at Enid and Dodge City, Kan., reportedly firming from $590/st ($18.44/unit) up to $600/st ($18.75/unit) FOB as the week progressed.

Northern Plains:

Limited UAN-28 offers were confirmed at $540-$550/st ($19.29-$19.64/unit) FOB in North Dakota, with no current UAN-32 pricing reported at Winona, Minn., at mid-month.

Northeast:

The UAN-32 market was reported at $505/st ($15.78/unit) FOB Fairless Hills and $530-$550/st ($16.56-$17.19/unit) FOB Baltimore, with the Baltimore price reflecting an increase from the previous week’s $520/st ($16.25/unit) FOB level.

New UAN-32 pricing out of terminals in upstate New York had reportedly firmed to $580/st ($18.13/unit) FOB, up $60/st since late September.

Eastern Canada:

The UAN-28 market was pegged at C$735-$772/mt (C$26.25-$27.57/unit) FOB in Eastern Canada, up dramatically from the last reported offers at C$460/mt, with reports of UAN-32 pricing at the C$840/mt (C$26.25/unit) FOB level in Ontario on a spot basis.

One regional source offered a frank assessment of the dramatically higher prices in October, and what the steep prices might do to demand going forward. “I’m good with stopping this train of idiocy at any time,” he said. “I’d like to get off.”

Belgian Unions Reported to Be Planning Strike Action in Chemicals Sector

Europe, News, News Briefs

There are reports that Belgian trade unions were planning strike action across the country’s chemical industry for Oct. 29. According to local media, the trade unions ACV, ABVV, and ACLVB have announced a strike notice for actions in all Belgian chemical companies.


According to the reports, the strike has been called because the chemical umbrella organization “Essenscia” abruptly left the negotiations on a new sectoral agreement on the evening of Oct. 15. The unions and Essenscia have been in talks for a new sectoral agreement since the end of September.

Belgium Pushes for Loosening up of E.U. Sanctions on Belarusian Potash

Belarus, Europe, News, News Briefs, Potash

Belgium is seeking a loosening up of the European Union (E.U.) sanctions on Belarus’ potash industry in a bid to ease the difficulties it claims companies within the European bloc face in implementing the measures.

According to a Bloomberg report, diplomats in Brussels have written to other E.U. Member States asking for changes to the potassium content of Belarusian potash and other fertilizer imports covered by the E.U. sanctions that were implemented on Belarus in June (GM June 25, p. 1)

Belgium is reportedly proposing that the E.U. allow for a deviation of as much as 2 percent from currently permitted levels of potassium content in the Belarusian potash the European bloc imports.

The sanctions imposed in June by the E.U. prohibit the import into Member States of Belarusian potassium chloride with “a potassium content evaluated as K2O, by weight, not exceeding 40 percent on the dry anhydrous product,” and potassium chloride with “a potassium content evaluated as K2O, by weight, exceeding 62 percent on the dry anhydrous product,” as well as Belarus NPK fertilizers.

However, the E.U. did not include in its list of potash to be sanctioned, “potassium chloride with a potassium content evaluated as K2O by weight, exceeding 40 percent but not exceeding 60 percent on the dry anhydrous product.”

This latter grade is one of Belarus’ key potash export products, and accounts for about 80 percent of Belarus’ potash supplies to the E.U. The sanctions cover a transit ban via E.U countries; most of Belarus’ potash is transhipped via Lithuania for export at the country’s port of Klaipeda.

Bloomberg, citing the diplomats’ letter, reported the diplomats argue that sanctions imposed on Belaruskali OAO in June have caused an “implementation problem” for E.U. companies and the “potash sector should not be singled out.”

According to the letter, a large Belgian company that supplies water to cities is facing customs issues because the grade of potash it was importing was at times higher than is allowed by the E.U. under the sanctions. Other firms are also facing similar problems, and there are concerns that if European companies are forced to source potash supply from elsewhere it could led to price spikes, the letter indicated,

Bloomberg, citing a separate document, reported that more than one E.U. Member State is backing the request to amend the potassium levels in Belarus potash under sanction, ahead of a meeting of the bloc’s diplomats this week.

Poland Mulls Temporary Fertilizer Export Ban

News, News Briefs, Poland

Poland’s government is reported to be considering a temporary ban on exporting fertilizers amid a surge in fertilizer prices as a result of soaring natural gas prices, Bloomberg reported on Oct. 20, citing the country’s private radio RMF FM. The radio report did not cite any sources.

Grupa Azoty SA, one of the country’s two key fertilizer producers, already is prioritizing access to its fertilizers for the domestic market and has limited exports, with the exception of long-term contracts (GM Oct. 15, p. 28). Fellow fertilizer and chemicals producer Anwil SA even in normal times typically sells some 70 percent of its fertilizers to the domestic market.

The government over the weekend said it may look at alleviating some of the rising price pressure in the domestic fertilizer market through subsidies or intervention purchases if fertilizer prices keep soaring, the Polish Press Agency (PAP) reported on Oct. 16, citing the country’s Prime Minister Mateusz Morawiecki.

Poland’s fertilizer prices have increased three-fold of late, Morawiecki noted, attributing the situation to high natural gas prices.

Azoty said earlier this month in order to keep production going, it was inevitable that the rising natural gas prices and CO2 emission allowance prices be passed on in the price of fertilizers. Azoty reported that it was taking “all possible measures” not to limit production despite “the record-breaking” gas prices.

But Warsaw-based Pekao Bank SA analyst Krzysztof Kozieł warned the realization that high gas prices will continue may be especially negative for Azoty given that the company has rejected cutting output, a step taken by many of its European peers, Bloomberg reported.

BDM SA, Poland, Equity Research Head Krystian Brymora expects the weakening of Azoty’s earnings due to rising gas prices in the third quarter may even deepen in the fourth quarter, which is a key period for fertilizer production.

The Polish analysts believe potential government support to the country’s farmers could improve sentiment for Azoty’s stock.

Anwil last week experienced a road blockade of its plants by representatives of agricultural organizations protesting rising prices of the company’s nitrogen fertilizers. The company warned the blockade could lead to a production stoppage if finished product was prevented from leaving its storage facilities.

Anwil early this week confirmed to Green Markets that all its plants were “running smoothly,” although the company did not comment on capacity utilization levels. But a spokesperson for Anwil said the company was meeting “100 percent” of its contractual obligations.

“We emphasize that the company, while bearing the increasingly higher costs of fertilizer production [due to escalating natural gas costs] is making every effort to ensure the recipients of the fertilizers, i.e., the farmers, feel the changes as little as possible,” said the Anwil spokesperson.

Russian Workers to Stay Home for a Week to Stem COVID Surge

News, News Briefs, Russia

Russian President Vladimir Putin on Oct. 20 backed a Cabinet proposal for workers to stay home for a week in a move to stem a dramatic increase in COVID-19 cases in the country, the German Press Agency, dpa, reported.

Russian workers are being told to stay home from Oct. 30 to Nov. 7, but they will continue to be paid their wages, according to the report. Regions where the situation is particularly bad can extend the duration.

Russia used a similar strategy last year at the beginning of the pandemic. It was met by criticism from businesses, who argued that the government was placing an unfair burden on employers.

Russian statistics showed 1,028 COVID-19-related deaths within 24 hours on Oct. 20, more than ever before.

OCI, ADNOC Raise Over $795 M in Fertiglobe IPO

ADNOC - Abu Dhabi, Europe, News, News Briefs

OCI NV, Amsterdam, and Abu Dhabi’s state-energy company, ADNOC, raised gross proceeds of over $795 million in the initial public offering (IPO) of their Middle Eastern fertilizer joint venture Fertiglobe, now successfully completed, following strong demand from international, regional, and local investors.

Total gross demand for the IPO amounted to over $17.4 billion, implying an oversubscription level of 22 times in aggregate, OCI and ADNOC said on Oct. 20.

Fertiglobe’s shares were sold at AED2.55 each, the middle of the previously set price range of between AED2.45-AED2.65 per share. The offering size was confirmed at about 1.15 billion shares, equivalent to 13.8 percent of Fertiglobe’s issued share capital (GM Oct. 15, p. 29).

Based on the final offer price, Fertiglobe’s market capitalization upon listing is expected to be about $5.8 billion, said OCI and ADNOC. Listing and start of trading on the Abu Dhabi Securities Exchange (ADX) are expected to start at 10.00 am (UAE time) on Oct. 27, subject to customary closing conditions.

Following the listing, OCI said it will indirectly continue to own a majority of Fertiglobe’s share capital, while ADNOC will indirectly own 36.2 percent. According to Bloomberg calculations, OCI now owns around half of the jv company’s shares. Prior to the IPO, it owned a 58 percent stake and ADNOC a 42 percent holding.

Inclusive Capital Partners LP, Singapore’s sovereign wealth fund GIC Pte., and Abu Dhabi Pension Fund had committed about $231 million between them under cornerstone investment agreements on Oct. 12 ahead of the IPO (GM Oct. 15, p. 29).

OCI said last week Inclusive Capital Partners’ Founder and Managing Partner and U.S. activist investor Jeff Urban will join Fertiglobe as an independent board member following the listing.

The IPO will be the third largest ever on the ADX, and undoubtedly benefited from the rebound in global fertilizers prices over the past 12 months, as well as Fertiglobe’s advantage of locked-in cheap gas supplies as soaring natural gas prices in Europe has forced some fertilizer companies to curtail ammonia output in recent weeks (GM Oct. 8, p. 1).