California:
The crystalline potassium nitrate market remained at $910/st FOB Stockton for bulk tons, $980/st FOB for bulk bags, and $1,000/st FOB for 50-pound bags.
All posts by mickeybarb@charter.net
Potassium Thiosulfate
Eastern Cornbelt:
Potassium thiosulfate pricing was unchanged at the $650/st level FOB Terre Haute, Ind.
Crops/Weather
Eastern Cornbelt:
Cool, wet weather settled over much of the Eastern Cornbelt during the week. Sources in southern Illinois reported showers and temperatures in the 60s, while highs in central Indiana struggled to break out of the 50s at midweek.
Up to 2-3 inches of rain was reported at midweek in central Indiana, while parts of northeastern Ohio picked up nearly four inches, prompting flood watches for a number of counties. A wind advisory was also in effect for parts of northern Ohio, with reports of 45 mph gusts on Sept. 22-23.
The corn harvest had progressed to 11 percent complete in Illinois by Sept. 19, compared with 9 percent in Indiana and 3 percent in Ohio. All three states were tracking slightly ahead of their five-year averages, with good or excellent ratings assigned to 74 percent of the acreage in Illinois and Ohio, and 69 percent in Indiana.
The soybean harvest was 8 percent complete in Indiana by Sept. 19, compared with 1-2 percent in Illinois and Ohio. Soybeans rated as good or excellent totaled 75 percent of the crop in Illinois, 67 percent in Ohio, and 66 percent in Indiana.
Western Cornbelt:
After some stormy weather at the beginning of the week that prompted severe thunderstorm watches for 41 Iowa counties, most of the state enjoyed beautiful harvest weather for the duration of the week.
Ideal weather conditions were also reported in Nebraska, while highs across Missouri dropped to the 60s during the week, roughly 15-25 degrees cooler than the previous weekend. The mostly dry weather allowed growers to move quickly on the harvest of corn, soybeans, rice, and sorghum and in the region.
The corn harvest as of Sept. 19 was 17 percent complete in Missouri, 7 percent in Nebraska, and 4 percent in Missouri, while the regional soybean harvest was estimated at 1-4 percent complete in the region. USDA assigned good or excellent ratings to 68-71 percent of Nebraska’s corn and soybeans, compared with 62-66 percent in Missouri and 58-61 percent in Iowa.
Missouri’s rice crop was 26 percent harvested by Sept. 19, with 68 percent of the acreage rated as good or excellent. The state’s cotton crop was 71 percent good or excellent on that date. Nebraska’s sorghum harvest was 3 percent complete, with 48 percent of the crop rated as good or excellent.
California:
Hot, windy weather continued to fan wildfires throughout California at mid-month. Forecasts warned of 40-50 mph wind gusts and 97 degree temperatures in the mountains west of Los Angeles, the Santa Clarita Valley, and the eastern Ventura County mountains and valleys.
Red flag warnings were also in effect in Northern California, including portions of the Bay Area and Sacramento, and as far north as Redding. The prior weekend brought cooler temperatures and rain showers to some northern areas of the state, but heat and gusty winds returned immediately after.
The harvest of rice and other crops continued in mid-September. USDA reported that 18 percent of California’s rice was harvested by Sept. 19, with 90 percent of the acreage rated as good or excellent. California’s cotton crop was 80 percent good or excellent, with bolls opening on 70 percent of the acreage.
Pacific Northwest:
Rainfall over much of western Washington at mid-month helped alleviate worsening drought conditions, and also aided firefighting efforts. Cooler weather and weekend rains also pushed Idaho toward the end of its wildfire season.
Warm weather continued over much of Oregon in late September. Temperatures climbed to the 80s again in Portland, the Willamette Valley, and the Columbia River Gorge during the week, tying the record for the most 80-degree days in one year. Temperatures in the 60s and 70s were reported across Montana, with weekend highs expected to reach the low-80s in some areas.
The small grains harvest was virtually complete across the Pacific Northwest, and growers were busy harvesting potatoes and sugar beets, with progress on the latter estimated at 14 percent complete in Idaho by Sept. 19. Winter wheat planting was also underway, with progress as of Sept. 19 rated at 7 percent complete in Oregon, 26 percent in Montana, 34 percent in Idaho, and 58 percent in Washington.
Western Canada:
Summer-like temperatures in the low- to mid-20s C were reported across southern Saskatchewan and Manitoba at midweek. A brief cold front accompanied by scattered showers was in the forecast for later in the week, but sunshine and heat were once again on tap for the coming weekend.
A frost advisory was issued for much of central and northern Alberta at mid-month, but sources said the fall harvest was well advanced in Alberta and throughout Western Canada. Alberta reported that 61 percent of the province’s major crops had been combined as of Sept. 14, well ahead of last year’s 30 percent progress at this time and the 28 percent five-year average.
Saskatchewan’s harvest was 74 percent complete by Sept. 16, also well ahead of the 50 percent five-year average. One contact in southern Saskatchewan estimated that fully 95 percent of the fall harvest was over in his trade area at midweek. “Harvest is still moving forward sooner than expected; should be good for fall application,” added another regional contact.
Transportation
U.S. Gulf and Atlantic:
Pockets of restricted navigation persisted throughout the Gulf during the week due to the lingering effects of Hurricane Ida.
The Corps announced a shutdown of the West Canal between New Orleans and Morgan City due to a need for widespread dredging expected to run into October. Previously, the West Canal was shut at Miles 18-20 due to a channel blockage, while shoaling reported at Miles 23-33 proved difficult for passing vessels. Untethered barges and sunken storage tanks were previously noted at Miles 53-54.
Floodgate maintenance limited towing widths in the Houma Canal, while movements were unavailable through the waterway below Bayou Provost. Passage through the Claiborne Avenue Bridge, located near Industrial Lock, was limited to the hours between 9:00 a.m. and 3:00 p.m. daily due to a bridgetender shortage.
Unassisted movements through Algiers Lock remained capped at four standard barges or two 30,000 mt tankers, although longer tows were reportedly possible when accompanied by industry assistance.
Belle Chasse Bridge construction will prompt intermittent navigation shutdowns at the West Canal’s Mile 3 through late 2022. Delays are expected up to 12 hours at a stretch.
Delays were noted up to 55 hours through Port Allen Lock, with 41 tows counted in line to lock on Sept. 21. Most Bayou Sorrel Lock travel fell in the 4-9 hour range, and movements through Industrial Lock climbed to as high as 76 hours for the period. Waits ran up to 5.5 hours through the Colorado Floodgates.
Tropical Storms Peter and Rose were reported forming in the Atlantic during the week. The National Hurricane Center (NHC) noted Peter weakening on Sept. 21 as it passed north of Puerto Rico, while Rose, located in the central Atlantic, was “barely a tropical storm,” according to the NHC on Sept. 21. Both storms weakened below tropical cyclone status by midweek.
Tropical Storm Sam formed in the mid-south Atlantic on Sept. 23. Sam was forecast to consolidate into a Category 1 hurricane on Sept. 25, with further strengthening expected by Sept. 26.
Mississippi River:
Due to continued salvage operations necessitated by Hurricane Ida, restrictions remained in force for lower Mississippi River travel through Miles 108-168. Vessel speeds were limited to minimum safe levels, while barge counts were capped at 36 units in the southbound direction. Tows moving upriver were permitted to run a maximum of 42 barges. Six-barge width limits were also noted through the area.
Towing cuts in the 5-10 barge range continued below St. Louis due to low levels and fast flows. Dredge Hurley was reported working at the lower river’s Mile 742, although no travel delays were anticipated. Lock 27 delays were generally seen in the 4-10 hour range for the week.
Illinois River:
Wickets remained in the raised position at both Peoria Lock and LaGrange Lock for the week, forcing lockages through both locations.
Ohio River:
Construction activities were noted shutting the Pike Island Lock primary chamber between 8:00 a.m. and 4:00 p.m. on Sept. 21-23, leaving tows to pass through the auxiliary chamber. The shutdowns were slated to repeat on Sept. 28-30.
Maintenance in progress at the Cannelton Lock main chamber is projected to prompt detours through the secondary lock chamber through Nov. 19. Auxiliary chamber closures were also planned or the Nov. 1-19 period.
The Montgomery Lock main chamber was slated to shut Oct. 18 through Dec. 17. A recent main chamber shutdown at Montgomery produced delays up to 4-6 days.
A round of planned repairs has halted movements through the Hannibal Lock primary chamber through Oct. 29. Tows were heard passing through the 600-foot secondary unit while the project is underway.
An underwater obstruction was noted knocking the Dashields Lock auxiliary chamber offline during the week. The blockage was reportedly impeding normal miter gate operation.
Willow Island Lock’s auxiliary chamber, which has been shut since Aug. 16 for repairs, was slated to return to service on Sept. 30. A main chamber closure is due to follow on Oct. 1-31, with delays expected.
The secondary chamber at Markland Lock is offline through an estimated Oct. 29 due to a damaged miter gate. First reported in early 2020, movements have been relegated to the site’s main chamber for the entirety of the closure.
Rising water levels were projected to allow Olmsted Lock operators to begin lowering wickets during the week. Upon the completion of the typically 24-hour process, tows were expected to begin passing the site via the nonlocking navigational pass.
The Tennessee River’s Wilson Lock was reportedly shut for inspections from 7:00 a.m. to 2:00 p.m. on Sept. 22. Staggered one-way lockages continued through the location, with southbound tows passing during daytime hours, followed by northbound vessels at night. Corps data revealed intermittent delays up to 16 hours for the week.
Kentucky Lock is slated to shut Nov. 1 through Dec. 10. The Corps has scheduled one four-day reopening period during the closure to pass waiting traffic, tentatively slated for Nov. 25-28. Most waits for the week were noted in the 5-16 hour range.
Bio-acoustic fish fence (BAFF) maintenance that kicked off on Sept. 16 at the Cumberland River’s Barkley Lock was scheduled to disrupt navigation daily, from 6:00 a.m. to 6:00 p.m., through Oct. 5.
The Monongahela River’s Lock 2 main chamber is closed to traffic through Oct. 15. Tows were heard detouring through the auxiliary chamber while work is underway, with waits quoted up to eight hours for the week.
On the Allegheny River, Lock 6 has remained in an emergency shutdown situation since Aug. 30, sources indicated. The site’s reopening timeline remained murky on Sept. 22.
Arkansas River:
Emergency dredging operations necessitated by a quick decline in water levels was noted forcing a full navigation shutdown in the vicinity of Mile 9-10 at midweek. Transit was projected to remain unavailable through at least the end of the week, and possibly into the next.
Intermittent daytime transit outages were scheduled at Joe Hardin Lock on Oct. 19-21, a Corps posting indicated. On the heels of the Joe Hardin project, similar daylight-hour stoppages are on the books for Emmett Sanders Lock on Oct. 26-28.
Yara, CF Cut European Production Due to Soaring Natural Gas Prices
Yara International ASA, Oslo, announced on Sept. 17 that it is curtailing production at a number of its plants due to record high natural gas prices in Europe. Including optimization of ongoing maintenance, by next week Yara will have curtailed around 40 percent of its European ammonia production capacity.
The company said it will continue to monitor the situation, with the objective of supplying customers while curtailing production where necessary.
CF Industries Holdings Inc., Deerfield, Ill., got the ball rolling on Sept. 15, announcing that it was halting operations at both its Billingham and Ince, U.K., manufacturing complexes due to high natural gas prices. CF said it does not have an estimate for when production will resume at the facilities.
For CF, shutting down these plants, which largely produce ammonium nitrate, will cause the company to lose some production volume, according to Alexis Maxwell, Green Markets Director of Research. The bigger potential impact will likely be on global pricing for fertilizer as concerns grow that other producers will follow suit, she said.
“The market will read this as other European producers are likely to shut down, and nitrogen prices will continue to rise on the supply-side shortage,” Maxwell said.
“We wouldn’t be surprised to see more nitrogen and chemicals production across Europe idled in the coming days until gas prices moderate,” Joel Jackson, an analyst at BMO Capital Markets, said in a report.
The Billingham facility, located in the Teeside chemical area, consists of an ammonia plant, three nitric acid plants, a carbon dioxide plant, and an AN plant. In 2018, CF invested some $55 million over a two-year period to upgrade the facility (GM March 9, 2018).
Ince, in northwest England, consists of an ammonia plant, three nitric acid plants, an AN plant, and three NPK fertilizer compound plants.
CF took full control of the two former-GrowHow UK Ltd.’s manufacturing sites in 2015 when it bought out Yara International ASA’s 50 percent stake in GrowHow, making GrowHow a wholly-owned subsidiary (GM July 6, 2015). CF acquired its original 50 percent interest in GrowHow when it bought Terra Industries Inc. in 2010.
Benchmark natural gas prices in Europe and the U.K. have tripled this year. The crunch worsened on Wednesday after a fire knocked out a key power cable connecting Britain to France, its top electricity supplier, boosting gas demand for electricity production within the U.K.
European gas and power futures tumbled Thursday, Sept. 16, on signs that energy-intensive industries are curbing consumption.
The move comes as Europe is facing an extreme squeeze for energy supplies, with gas and power prices breaking records day after day. The continent is running out of time to refill storage facilities before the start of the winter, as flows from top suppliers Russia and Norway remain limited. There is also a fight for shipments of liquefied natural gas, with Asia buying up cargoes to meet its own demand.
The crisis could have severe economic consequences. Soaring prices are exposing the risk of power outages this winter, according to Goldman Sachs Group Inc. Blackouts would likely send energy prices even higher, compounding concerns about inflation and adding to the rising costs businesses are already shouldering for raw materials.
High energy prices are creating “inflationary pressure on every other cost” that will end up being passed on to customers, said Pascal Leroy, Senior Vice President of Core Ingredients at Roquette Freres SA, a food processing company based in northern France. And France’s top sugar producer, Tereos, warned of surging natural gas prices raising production cost for the company “tremendously.”
Europe’s energy markets are also just the latest example of the tolls that soaring commodity prices are having on the global economy. Tight supplies of everything from aluminum to grains to oil have sparked concerns over a lasting run for inflation. Higher costs for heating homes will bite into consumer wallets at a time when they are also paying more food and many are still struggling from the pandemic’s economic fallout.
Michigan Potash Air Permit Out for Comments
The Michigan Department of Environment, Great Lakes, and Energy (EGLE) has opened a public comment period on a draft air permit for a new salt and potash manufacturing facility being proposed by Michigan Potash & Salt Co., Denver, in Evart Township in Osceola County (GM June 18, p. 1).
The opportunity for the public to submit comments will be open until Oct. 18, 2021. An online informational session and public hearing will be held on Oct. 7, 2021, to talk to residents about what Michigan Potash is proposing, answer questions from the community, and take comments on the record.
The company has argued that the U.S. needs a stable domestic supply of potash, rather than relying on imports. “The market is so unsettled right now,” Michigan Potash Found and CEO Ted Pagano told Green Markets this week. “Nobody can get product for pharmaceutical and other specialty needs.” He said this is exactly the reason for domestic and alternative sources that are not reliant on international supply chain disruption.
The company has cited recent disruptions, including The Mosaic Co.’s in Saskatchewan and international sanctions against Belarus. It noted that 96 percent of U.S. potash imports come from Belarus, Russia, and Canada.
Michigan Potash plans to use solution mining to initially produce 650,000 mt/y of potash and 780,000 mt/y of salt, eventually ramping up to 1 million mt/y and 1.2 million mt/y, respectively.
The potash would be agricultural and industrial grade and the company said the salt would be food grade, which could serve all available markets – food, bulk, water softening, and road.
EGLE said the Michigan Potash facility will be in Osceola County, which currently meets all National Ambient Air Quality Standards (NAAQS). EGLE said computer models used to look at the expected impacts from the project showed that expected emissions, plus existing levels, will still be less than applicable NAAQS.
EGLE’s Air Quality Division (AGD) has prepared a proposed permit, and EGLE recommended its approval. However, prior to acting on the permit, the agency is seeking public comment. Thereafter, it may approve, approve with modifications, or deny.
BHP Reports Prelim Jansen Deals, Says Overspend Will Eventually Pay Dividends
BHP Group, Melbourne, has signed nonbinding Memorandums of Understanding (MOU) with importers to cover 100 percent of Stage 1 future production of potash from its Jansen project in Saskatchewan, the mining major said in a Jansen briefing held on Sept. 15.
An expanded marketing team bringing in more specific regional sales experience would have six years prior to market entry – and a further two years in ramp-up – to secure binding sales ahead of first production targeted for the 2027 calendar year, the group said. BHP plans to replicate its model of marketing directly to major customers via regional offices “leveraging the group’s broader commercial resources.”
It said Jansen Stage 1 (Jansen S1) will sell two established agricultural red potash products, and sales would target large buyers across growth regions in the Americas, Asia, and the rest of the world – including, for example, Africa.
In addition to offshore export sales via Vancouver, the Jansen operation will also benefit from being able to direct rail potash to the North American market.
“Jansen has a logistics optionality and flexible granular processing capacity; that means we will be able to shift sales between export markets and North America, depending on the market,” said BHP Head of Sales and Marketing for Potash Mark Swan.
Swan noted, however, that BHP would be “underweight” in China, given its exclusive red potash offering in Stage 1.
BHP said it expects the majority of the sales would be on a term contract basis.
The mining group’s board gave the go-ahead for Jansen S1 last month, approving US$5.7 billion in capital expenditure for Stage 1 (GM Aug. 20, p. 1). This first stage is expected to produce some 4.35 million mt/y of potash.
BHP remains positive about the potash demand outlook going forward.
“Our central view is that demand will catch up to excess supply by the late 2020s or early 2030s, and the major potash supply basins are mature,” said BHP Chief Economist Huw McKay.
As previously reported, construction of the two shafts at Jansen was 93 percent complete at the time of board sanction for Jansen S1. Completion of the shafts remains on track for calendar year 2022, “removing our principal barrier to entry and significantly reducing the overall development risk for the project,” the mining group said.
BHP said it erred by building shafts that were bigger than required for its first potash mine, but told briefing participants the consolation would be cheaper expansion of the mine going forward, according to an Australian Financial Review report.
When the mining group first started investing in the project in 2013, it envisaged a mine producing some 10 million mt/y of potash.
BHP confirmed last month that it already has sunk US$4.5 billion (pre-tax) into Jansen, including US$2.972 billion to finish the current investment program to complete the two shafts and associated infrastructure and utilities at the site, as well as engineering and procurement activities, and preparation works related to Jansen S1 underground infrastructure.
It took a US2.1 billion (after tax) impairment on its Jansen spending to date in its FY2021 financial year ended June 30. BHP Minerals Americas President Ragnar Udd told briefing participants that the size of the shafts was the major error. According to the Australian Financial Review report, Udd said the shafts were built to accommodate 16 million to 17 million mt of finished potash, in terms of capacity.
He reiterated earlier comments by CEO Mike Henry that BHP is not happy with the amount of capital it has sunk into Jansen.
According to Udd, the initial overspend would eventually “pay dividends” for BHP when it is ready to expand into further stages of the mine, and will provide the group with “a lower capital intensity” in terms of future phases in terms of stages two through four at Jansen.
The mining group plans to take capacity at Jansen to 16-17 million mt/y, in four stages of development. But it emphasized again at the briefing that each subsequent stage beyond Stage 1 will be subject to the group’s disciplined capital allocation framework.
At consensus prices, BHP estimated internal rate of returns on the second, third, and fourth stages of Jansen will be between 18-20 percent. This compares to the 12-14 percent returns that the group believes the first stage of the mine will deliver.
That estimate for Stage 1 excludes BHP’s spending to date on Jansen. If it were be included, the first stage of the project would yield “a much lower level internal rate of return,” the group told investors last month.
Macquarie analysts were cited this week in the Australian Financial Review report as putting the returns on Jansen S1 at closer to 6 percent if the 2013 to 2021 spending was included.
Udd highlighted that BHP is now familiar with the geology, engineering, and procurement challenges at Jansen and believes investors should not expect further spending errors on the project.
In the note cited by the report, Macquarie analysts see the second stage of Jansen beginning construction around 2032, but acknowledged that market conditions would be the chief determinant. Macquarie estimates BHP will spend a total of US$21 billion as it gradually expands Jansen over 30 years.
Udd was cited by the report as reiterating earlier comments by BHP on project partners – that the group remains open to a partnership. But he said it would be really only “for value,” and that up to this point BHP has been unable “to make that marriage work.” Udd reiterated BHP doesn’t need a partner to make Jansen work.
Media reports were circulating in early summer that the mining major was in talks with Nutrien Ltd., Saskatoon, about a potential partnership in Jansen (GM May 28, p.1).
New York City-based Goldman Sachs analysts this week, as cited by a Dow Jones report, described BHP’s Jansen potash project as one of its most “contentious growth options,” given “the huge amount of cash the mining major is having to pour up front into a project that will have low returns and a long payback in a market that won’t be attractive for some time”.
However, Goldman Sachs added that Jansen is “one of the assets with the greatest ability to grow value and earnings for BHP over the long term given the significant resource optionality and low cost position.”
K+S Recommended as 2H Trading Idea on Rising Potash Demand, Says Baader
Baader Bank, Unterschleißheim, Germany, this week reiterated K+S Group, Kassel, as a trading idea for the second half of this year as it sees the European potash market environment as favorable during that period and in 2022.
Baader analyst Markus Mayer, as cited by a Bloomberg report, said European demand is increasing amid concerns around sanctions on Belarusian potash exports, while buyers of potash in Brazil and Southeast Asia “appear to have stepped back temporarily.”
Russia Mulls Dividends, Capex-Linked Profit Tax on Metals, Minerals Companies
Russia is reported to be considering a profit tax, linked to dividends and investment, for minerals and metals companies when markets are strong to benefit from some of the windfall.
The profit tax rate would rise with higher dividends and lower investments, according to an Interfax report on Sept. 15, citing unnamed sources with knowledge of government discussions held between First Deputy Prime Minister Andrey Belousov and executives.
Russia’s government already is looking at how to implement a “floating” mineral extraction tax (MET) rate for producers of fertilizers and metals linked to global prices (GM Sept. 3, p. 31).
Russia’s Deputy Finance Minister Alexey Sazanov in August was cited by a Bloomberg report as saying it may propose the new scheme by the start of October. This week, the Finance Ministry was reported to be proposing the new MET change for Sept. 20, according to a Kommersant report.
The country already has in place a MET applicable to a number of fertilizer raw materials, including potassium salts, and apatite-nepheline, apatite, and phosphate ores, which is typically set annually (GM Oct. 2, 2020).
Acron Launches Online Trading Platform
Acron Group, Moscow, this week reported that since launching its own online trading platform for procurement a year ago, some 3,206 transactions for a total of RUB1.6 billion (approximately $22 million) net of VAT have been approved based on tenders on the platform.
Today, Acron’s three production facilities – Acron at Veliky Novgorod, in northwest Russia, Dorogobuzh in the country’s Smolensk region, and NWPC in Russia’s Murmansk region – purchase all of their commodities and materials on the ETP platform (etp.acron.ru).
Acron said the ETP platform is enabling the group to expand its pool of suppliers and ensure transparency. It added that ETP users are increasing by an average of 900 suppliers each quarter.