All posts by mickeybarb@charter.net

Yara, EuroChem Ink $410M Deal for Salitre Phosphate Project

Featured, News, Phosphate, Russia, Scandinavia

Yara International ASA has signed a Share Purchase Agreement with EuroChem Group AG to sell its Serra do Salitre phosphate project located in Brazil’s southeastern Minas Gerais state for a cash consideration of $410 million, subject to final purchase price adjustments.

“Our ongoing transformation has a strategic focus on food solutions, premium products, and enabling the hydrogen economy,” said Yara in an Aug. 1 statement. “Salitre remains an attractive project, but as previously communicated, the project progress has been impacted by COVID-19, and significant construction time and capital expenditure remains to reach completion.”

The Salitre divestment therefore supports Yara’s transformation by reallocating capital and risk appetite in the coming years towards Yara’s strategic focus areas, the company said.

EuroChem said initsAug.1 statement the acquisition will strengthen its production and distribution capabilities in one of the world’s most important crop nutrient markets.

Yara acquired the Salitre phosphate project in late 2014 via its acquisition of a 60 percent stake in Galvani Indústria, Comércio e Serviços S/A (Galvani) (GM Aug.11, 2014). Yara paid US$185 million in deferred consideration and capital injection for the project, based on project progress and in accordance with the Galvani stake acquisition agreements (GM Nov 16, 2015).

The Serra do Salitre assets comprise phosphate mining operations at an open pit, including a tailings dam, with an annual production capacity of approximately 1.2 million mt/y of phosphate rock and an ongoing project to construct phosphate fertilizer operations with a projected production capacity of approximately 1.0 million mt/y  at completion. 

Last month, Yara International EVP & Chief Financial Officer Thor Giæver said the Salitre project “was progressing” after earlier COVID-19 related and other delays, and Yara was re-evaluating the timeline on the project, but was unable to provide a new completion date (GM July 23, p. 31; July 16, p. 26).

According to EuroChem, the phosphate fertilizer plant is 50 percent complete and is expected to come on stream in 2023, reaching full capacity in 2024. The plant will have capacity to produce MAP/NP and SSP/TSP products. The project will further include a sulfuric acid unit and a phosphoric acid plant, as well as a 0.4 million mt storage facility for granulated fertilizer, including urea and potash.

The mine and beneficiation plant are producing around 500,000-600,000 mt/y of phosphate rock and “already generating positive EBITDA from third-party concentrate sales,” the group noted. The mine has more than 350 million mt of reserves.

According to Yara, the estimated capital expenditure required to reach completion is of a similar magnitude to the divestment value. EuroChem said the remaining development capex to reach full capacity “is close to the deal value”.

EuroChem Group CEO Vladimir Rashevskiy said the acquisition expansion will allow the group to reduce its dependency on third-party phosphate supplies, and also creates the potential for phosphates and complex fertilizer production in Brazil.

“It significantly improves our competitive position in Brazil, and enables us to leverage the extensive blending and distribution capabilities brought by the acquisition of Fertilizantes Tocantins, which we completed last year,” Rashevskiy said.

EuroChem completed the purchase of the remaining 50 percent interest minus one share in Fertilizantes Tocantins (FTO) in August 2020 for a total consideration of R1.26 billion (US$229.68 million), fully integrating the Brazilian firm into the EuroChem Group (GM Aug. 21, 2020). The group acquired the initial 50 percent plus one share controlling stake in FTO in July 2016 (GM July 8, 2016).

The transaction with Yara, which will give EuroChem full control of all of Serra do Salitre’s assets, is expected to be completed in approximately six months, and remains conditional, among other things, of obtaining approval from the Brazilian antitrust authority (CADE)  and customary closing conditions.

After deal closing, EuroChem will undertake to complete the construction works of Salitre.

When brought on stream and fully ramped up, Serra do Salitre will take EuroChem’s existing annual phosphate and complex fertilizer product output to 5 million mt/y, the group said.

Yara President and CEO Svein Tore Holsether said Yara Brazil will continue to play “an essential role” in the company’s growth agenda, and the transaction enables that growth to be driven with a sharper downstream focus.

Following the decision to divest, the Norwegian major expects the impacted assets will be classified as a held-for-sale disposal group in the third quarter of 2021 and that an impairment charge of approximately $400 million will be recognized in the same quarter.

Lithuania Threatens to Halt Transit of Belarus Potash

Belarus, Europe, Featured, News, Potash

Lithuania is threatening to stop the export of Belarusian potash and other fertilizers through its Klaipeda port, according to a report by Belarus pro-democracy and pro-human rights news site Charter 97. Belarus rails most of its potash for export through Klaipeda, using Lithuanian railways, with some 10-11 million mt transshipped annually via the port.

According to the report, Lithuania’s Minister of Foreign Affairs Gabrielius Landsbergis said in an interview with Delfi, a Baltic States’ major news portal, that Lithuania already has formally submitted proposals to Brussels for an extension of the European Union’s (E.U.) sectoral sanctions, including on Belarusian potash. 

However, according to the report, citing the minister, formal negotiations have not yet begun, and will not be discussed until September. Green Markets was unable to confirm the proposal by press time.

Lithuania’s Foreign Ministry had warned earlier that such action might be taken if the flow of illegal migrants from the Middle East and Africa across Lithuania’s 680-km border with Belarus did not stop. Several hundred migrants have entered Lithuania in recent weeks, according to a report by Deutshe Presse-Agentur (DPA). The Baltic country said the influx is retaliation by the Belarus regime to the E.U.’s latest sanctions. Lithuania declared a state of emergency on July 2 due to the numbers of migrants now crossing its border (GM July 9, p. 29).

Belarus’ Foreign Ministry said on June 28 Belarus would move to suspend a readmission agreement with the E.U. that is aimed to stem illegal migration, (GM July 2, p. 1). This week, reports emerged that Belarus plans to close part of the country’s border with Lithuania in order to stop migrants who have crossed into Lithuania from coming back, according to a DPA report.

The latest set of measures, imposed by the E.U. on June 24 against the Belarusian regime, and implemented on June 25, include restrictions on the imports of Belarus potash into E.U. countries and a transit ban via E.U countries, as well as Belarus NPK fertilizers (GM June 25, p. 1).

But crucially, the current measures do not apply to the export of a key grade of Belarus potash, that is, “potassium chloride with a potassium content evaluated as K2O by weight, exceeding 40 percent but not exceeding 60 percent on the dry anhydrous product.”

Critics argue that E.U. restrictions imposed on Belarus potash exports as they currently stand have put limits on only about 20 percent of exports of the nutrient shipped by Lithuania.  

Belarus potash shipped via Lithuania is handled at Klaipeda by Biriu Kroviniu Terminalas (Bulk Cargo Terminal [BKT]), in which Belaruskali owns a 30 percent stake.

OCI 2Q/1H Swings to the Black; Sees Robust Outlook Into 2022

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

OCI NV, Amsterdam, reported a second-quarter adjusted net income attributable to shareholders of $121.1 million on revenues of $1.46 billion, compared with the year-ago net loss of $19.9 million and revenues of $875.4 million.

Diluted earnings per share were $0.693, versus the previous year’s $0.011 per share loss.

Adjusted EBITDA increased 144 percent to a record $535.4 million, up from $219.5 million. Revenues grew by 67 percent.

“During the quarter we continued to benefit from our diversified stream of global revenues and our competitive position on the global cost curve, with around half of our global gas requirement at fixed gas prices,” said OCI NV CEO Ahmed El-Hoshy.

“Nitrogen markets reached an inflection point this year following a five-year downturn, with sustainably higher prices compared to 2020, reflecting healthy farm economics, strong demand, and limited new supply,” he said.

The CEO highlighted the “particularly strong” performance improvements at Fertiglobe, with “a significantly strengthened competitive position” “in light of higher feedstock pricing in other regions – Europe in particular – and at the methanol group. The latter saw good onstream performance, volume growth of almost 70 percent year-on-year, strong pricing support, and access to key European and U.S. markets.

Six-month adjusted net income attributable to shareholders came in at $215.5 on revenues of $2.58 billion, versus the prior-year net loss of $101.9 million and revenues of $1.69 billion. Diluted earnings per share were $1.160 versus the previous year’s $0.400 per share loss.

First-half adjusted EBITDA more than doubled to $987.2 million, up from $412.5 million. Revenues increased 53 percent.

OCI Nitrogen Segment

$ million Nitrogen U.S. Europe  Fertiglobe Elim. Total Nitrogen
2Q-2021
Total Revenues 237.6 263.8 716.6 (25.4) 1,192.6
Adjusted EBITDA 86.5 56.8 304.2 0.3 447.8
2Q-2020
Total Revenues 165.3 229.9 374.2 (21.6) 747.8
Adjusted EBITDA 58.1 53.6 95.5 0.9 208.1
           
1H-2021
Total Revenues 341.5 484.0 1,260.0 (43.3) 2,042.2
Adjusted EBITDA 166.2 83.2 537.2 0.5 787.1
IH-2020
Total Revenues 284.0 392.3 737.5 (33.5) 1,380.3
Adjusted EBITDA 99.2 78.9 209.1 1.9 389.1

OCI’s total product sold volumes increased 2 percent in the second quarter, reaching 4.03 million mt, up from the year-ago 3.95 million mt. But own-produced sold volumes dipped 1 percent to 3.23 million mt, down from 3.26 million mt the previous year.

Own-produced nitrogen sales volumes fell 9 percent during the second quarter from a year-ago, with the company citing timing of sales between quarters, and due to turnarounds in EFC and OCI nitrogen. However, OCI said this was more than offset by higher nitrogen pricing during the quarter.

Traded third-party volume sales increased by 18 percent in the quarter compared with a year ago, to 803,000 mt.

Six-month total volumes sold grew 4 percent, to 7.56 million mt, while OCI-produced sold volumes increased 4 percent, to 6.22 million mt. First-half traded third-party volume sales were up 8 percent, to 1.34 million mt.

El-Hoshy said the outlook for OCI and its nitrogen and methanol end markets remains robust for the remainder of this year and beyond, supported by strong underlying demand for nitrogen fertilizers driven by healthy farm economics, and a continued recovery in the company’s industrial markets for ammonia, methanol, melamine, and DEF.

“Shorter-term, we have good visibility into the third quarter with a healthy order book across our core markets and we are benefiting from further increases in selling prices in quarter three compared to both the second quarter of 2021 and the third quarter of 2020,” the CEO said.

OCI Product Sales Volumes

‘000 mt 2Q-2021 2Q-2020 % change 1H-2021 1H-2020 % change
Own product            
Ammonia 517.9 346.8 49 1,104.9 888.3 24
Urea 1,137.6 1,240.7 (8) 2,240.8 2,357.0 (5)
CAN 318.4 670.6 (53) 646.8 840.8 (23)
UAN 443.9 496.1 (11) 723.8 836.1 (13)
Total fertilizer 2,417.8 2,754.2 (12) 4,716.3 4,922.2 (4)
Melamine 32.8 29.3 12 67.0 59.8 12
DEF 186.0 129.0 44 336.8 269.4 25
Total nitrogen products 2,636.6 2,912.5 (9) 5,120.1 5,251.4 (3)
Methanol1 594.7 352.2 69 1,101.8 751.2 47
Total own products sold 3,231.3 3,264.7 (1) 6,221.9 6,002.6 4
Traded third party            
Ammonia 80.2 70.3 14 121.2 144.6 (16)
Urea 501.9 297.8 69 722.4 455.9 58
UAN 6.9 6.7 3 20.5 12.5 64
Methanol 20.7 88.6 (77) 99.4 188.4 (47)
AS 114.1 169.6 (33) 232.6 328.2 (29)
DEF 79.2 50.3 57 139.1 106.0 31
Total traded third party 803.0 683.3 18 1,335.2 1,235.6 8
Total own product and traded third party 4,034.3 3,948.0 2 7,557.1 7,238.2 4

1 Including OCI’s 50 percent share of Natgasoline volumes

K+S Boosts EBITDA Outlook for FY2021, Antitrust Completion of REKS JV Delayed

Earnings, Germany, News

K+S Group, Kassel, this week raised its full-year EBITDA forecast for 2021, and now is expecting an EBITDA range of €700 million to €800 million, up from the previous forecast of €500 million to €600 million. The full-year EBITDA, if achieved, beats the average analyst estimate of €609.8 million, according to a Bloomberg Consensus (range €363.0 million to €842.0 million).

K+S cited a continued improvement in prices and demand for fertilizers, as well as a strong industrial business. It said production is also running “at full speed,” and that costs have been reduced.

Both sets of guidance include the forecast one-off gain associated with the REKS joint venture waste management transaction of about €200 million (GM Dec. 31, 2020).

Full-year EBITDA in 2019 was €267 million.

The increase in its full-year 2021 guidance follows the company’s announcement last month of expectations of “a significantly above last year” second-quarter EBITDA, at €110 million, more than double the previous year’s €52.7 million (GM July 23, p. 27). Analyst expectations were for a €92.9 million second-quarter EBITDA.

K+S is due to publish its complete half-year financial report on Aug. 12.

The company now expects the completion of the antitrust review of the REKS jv in the fourth quarter of this year, later than the previous expectation of this summer. K+S and Germany’s Remex GmbH reached an agreement in December last year to partner up to bundle their respective waste management activities in a new jv, REKS GmbH & Co. KG, in which both companies are equal partners each with 50 percent participation.

PhosAgro Posts Small Uptick in 1H Fertilizer Output, Sales Flat

DAP/MAP, Earnings, News, NPK, NPS, Russia

PhosAgro, Moscow, reported a small uptick in first-half fertilizer production, while fertilizer sales were flat versus the year-ago period.

Fertilizer output increased by 0.7 percent to 5.06 million mt, up from 5.02 million mt, with the company citing capacity upgrades to increase production of NPK fertilizers as behind the uptick.

Six-month sales of fertilizers totalled 5.16 million mt, a marginal dip (0.5 percent) on the previous year’s 5.19 million mt. However, sales of nitrogen-based fertilizer increased 8 percent to 1.41 million mt, up from the year-ago1.31 million mt, on the back of strong seasonal demand.

Fertilizer sales in the second quarter amounted to 2.29 million mt, a 4 percent decline on the prior-year’s 2.4 million mt. The company blamed a delay in the start of seasonal demand in India due to a late decision on subsidies and “the relatively small level of subsidies.” This, it said, had postponed some sales to the third quarter.

Second-quarter sales of phosphate-based fertilizers fell by 7 percent to 1.67 million mt, down from the year-ago 1.79 million mt. PhosAgro cited “the high base” in the comparable period, when the decrease in fertilizer production in China and India enabled the company not only to sell stocks carried over from the first quarter, but also to reduce its winter stocks. It noted that sales in the second-quarter had remained at “a normal level” despite the sharp increase in product prices.

Sales of nitrogen-based fertilizers in the second quarter increased by 3 percent, to 626,300 mt, up from the year-ago 606,100 mt. PhosAgro said sales rose for all grades of nitrogen-based fertilizers, driven by both high seasonal demand and the affordability of fertilizers for end-users.

Regarding the outlook for sales, PhosAgro CEO Andrey Guryev in the short term expects the traditional seasonal increase in demand in the Indian and Brazilian markets to support global demand for fertilizers, which, he said, “may help keep fertilizer prices at current levels.”

The CEO highlighted the company’s output profile this year as “continuing to move in the direction of a greater share of high-margin complex NPK fertilizers.

“Over the first half of the year, we increased production of these fertilizers by more than 11 percent year-on-year,” he said. “This demonstrates the soundness of the company’s development strategy, which is aimed at increasing our presence in premium market segments by offering customers comprehensive solutions.”

PhosAgro produced 1.54 million mt of NPK fertilizers in the first six months of 2021, up from 1.39 million mt in the same year-ago period. First-half sales of NPK fertilizers increased by 4.5 percent to 1.42 million mt, up from 1.36 million mt.

The company is celebrating its 20th anniversary this year, and this week, the 10th anniversary of the listing of its shares and GDRs on the Moscow and London Stock Exchanges.

PhosAgro fertilizer production and sales volumes (‘000 mt)

  1H-2021 1H-2020 % change 2Q-2021 2Q-2020 % change
Production
Phosphate-based fertilizers and MCP 3,825.5 3,807.5 0.5 1,842.4 1,869.6 (1.5)
Nitrogen-based fertilizers 1,231.6 1,215.2 1.3 600.2 597.8 0.4
Total fertilizers 5,057.1 5,022.7 0.7 2,442.6 2,467.4 (1.0)
             
Sales
Phosphate-based fertilizers and MCP 3,743.6 3,876.7 (3.4) 1,667.1 1,789.4 (6.8)
DAP/MAP 1,692.7 1,745.6 (3.0) 815.3 820.7 (0.7)
NPK 1,418.2 1,357.3 4.5 607.1 575.7 5.5
NPS 309.2 419.7 (26.3) 100.5 220.3 (54.4)
APP 104.2 109.8 (5.1) 40.8 46.7 (12.6)
MCP 211.8 199.5 6.2 98.1 102.1 (3.9)
PKS 7.5 44.8 (83.3) 5.3 23.9 (77.8)
             
Nitrogen-based fertilizers 1,413.6 1,308.9 8.0 623.3 606.1 3.3
AN 438.9 394.4 11.3 186.1 158.4 17.5
Urea 934.7 911.9 2.5 430.5 445.1 (3.3)
AS 40.0 2.6 1,438.5 9.7 2.6 273.1
             
Total fertilizer sales 5,157.2 5,185.6 (0.5) 2,293.4 2,295.5 (4.3)

OCI Continues Preparations for Fertiglobe IPO

ADNOC - Abu Dhabi, Egypt, Europe, News, News Briefs

OCI NV this week said work continues on preparations for a potential IPO of its Fertiglobe joint venture (with Abu Dhabi National Oil Co. [ADNOC]) in Abu Dhabi, subject to market conditions.

OCI confirmed that the company and ADNOC were considering a potential IPO in early April (GM April 16, p. 1), and in early May said preparations had begun for the IPO following board approvals, but provided few details (GM May 7, p. 43).

The company sees the IPO as helping “crystallize” the value of Fertiglobe’s underlying business in the future.

OCI Group CFO Hassan Badrawi told analysts at a company earnings call on Aug. 2 that the company has always said the IPO is subject to market conditions. However, he added that the current market backdrop for OCI’s products, specifically the nitrogen export market, is “extremely robust” and “certainly bodes well” for the IPO project. OCI, he said, believes the offering would be attractive for all shareholders.

Fertiglobe was established in September 2019,  and combines ADNOC’s fertilizer business into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform (GM Oct. 4, 2019). OCI holds a 58 percent stake and ADNOC a 42 percent stake in the jv, which has a total production capacity of 5 million mt/y of urea and 1.5 million mt/y of merchant ammonia.

In its earnings report, OCI reported “particularly strong” performance improvements at Fertiglobe in the second quarter and for the first half of 2021. It highlighted the joint venture’s “significantly strengthened competitive position” in light of higher feedstock pricing in other regions, Europe in particular, given that it has attractive long-term fixed gas arrangements in place. Consequently, the recovery of nitrogen end markets is benefitting Fertiglobe in particular, said OCI.

Fertiglobe’s second-quarter adjusted EBITDA increased 219 percent over a year-ago, reaching $304.2 million, up from the year-ago $95.5 million, and its adjusted EBITDA margin expanded to 42 percent from 26 percent in second-quarter 2020.

Fertiglobe’s total own-produced volumes increased by 6 percent in quarter two, driven by a doubling in ammonia own-produced sales volumes to 316,000 mt, up from the year-ago 158,000 mt. But this was partly offset by a 6 percent drop in urea own-produced sales volumes from 1.19 million mt to 1.12 million mt.

Six-month ammonia sales for the jv increased 48 percent to 734,000 mt, while urea volumes were flat year-on-year, at 2.21 million mt.

Fertiglobe’s six-month traded third party sales (ammonia and urea) grew by 62 percent, to 522,000 mt from the year-ago 322,000 mt.

Fertiglobe Product Sales Volumes

‘000 mt 1H-2021 1H-2020 FY2020
Own product      
Ammonia 734 495 896
Urea 2,209 2,232 4,565
Total own product sold 2,943 2,726 5,460
       
Traded third party      
Ammonia 64 51 130
Urea 458 270 563
Total traded third-party products 522 322 693
Total own product and traded third party 3,465 3,048 6,154

Fertiglobe Acquires 15 Percent Stake in EBIC from KBR-Led Consortium

Egypt, Europe, News, News Briefs

OCI NV, Amsterdam, this week announced that its Fertiglobe joint venture has agreed with a KBR Inc.-led consortium, which includes Japan’s Mitsubishi, JGC and Itochu, to buy their combined 15 percent stake in Egypt Basic Industries Corp. (EBIC) for a total consideration of $43 million. This brings Fertiglobe’s stake in EBIC to 75 percent, further streamlining the group’s ownership structure, OCI said.

EBIC consists of one 748,000 mt/y capacity ammonia line located in Ain Sokhna. The plant has direct pipeline connections to Sokhna port, one of the region’s largest export jetties on the Red Sea.

EBIC was constructed by OCI in partnership with KBR and uses KBR Advanced Ammonia Process (KAAP) technology. Construction of the plant was completed in 2009.

Most recently, EBIC began developing Egypt’s first green ammonia pilot project, for which KBR conducted an engineering study, OCI said in its Aug. 2 statement announcing the KBR consortium stake acquisition. The project will use “attractively priced” wind/solar energy.

This EBIC facility is well-positioned for the energy transition, given that is the only world-scale dedicated ammonia export plant, OCI NV Group CFO Hassan Badrawi told analysts at a company earnings call on Aug. 2.

Responding to an analyst’s question, Badrawi confirmed the residual shareholders in EBIC are a combination of private investors and Egyptian state-owned gas provider EGAS.

Fertiglobe is a joint venture with Abu Dhabi National Oil Co. (ADNOC), established in September 2019, and combines ADNOC’s fertilizer business into OCI’s Middle East and North Africa (MENA) nitrogen fertilizer platform (GM Oct. 4, 2019). OCI holds a 58 percent stake and ADNOC a 42 percent stake in the jv, which has a total production capacity of 5 million mt/y of urea and 1.5 million mt/y of merchant ammonia.

Anglo Updates on Woodsmith Polyhalite Project; Responds to BHP Comparison

England, News, News Briefs, Polyhalite, Specialty

Anglo American Plc last week reported development of its Woodsmith polyhalite mining and processing project in Yorkshire, northeast England has continued to progress.

Excavation of the conveyor tunnel had passed 15 km at the end of June, beyond the intermediate shaft location at Lockwood Beck, which is located some 32 km from the main mine site.

Last summer, Anglo abandoned plans to construct the intermediate shaft using drill and blast techniques and announced plans to use “blind boring” techniques instead. The Lockwood shaft will just be used for ventilation allowing it to use the simpler shaft sinking method.

The company last week said the shaft sinking at Lockwood Beck is now complete, having reached the target depth of 383 metres, and shaft lining is under way.

At the mine head, shaft boring has started in the services shaft, while good progress is also being made on the production shaft infrastructure.

Anglo American said the detailed technical review of the project’s development plan is now completed (GM March 5, p. 1), with the objectives of optimizing the project and aligning it with the company’s technical and other standards.

The company is targeting the completion of the review and subsequent finalization of project design and timing for the end of this year, including final capital and schedule estimates. As previously indicated by the company, it re-iterated last week the investment in additional ventilation to increase early production flexibility is likely to be brought forward. Anglo said it is also working through the detailed scheduling of the two shaft installations.

Anglo American CEO Mark Cutifani admitted to analysts at a company first-half earnings call on July 29 that the company does see “some challenges” in the timing of the project’s two shafts. But he emphasized this was not unexpected as the shafts were picked up as “an issue” when the company did its due diligence for the acquisition of Woodsmith’s owner, Sirius Minerals Plc, completed in  March 2020 in a US$0.5 billion deal (GM March 20, 2020).

Cutifani said the first shaft boring roadheader (SBR) will start operations during August, adding that will help inform the company what the shafts will look like, “which will then inform our investments going forward.”

He emphasized Anglo will program out the shafts to make sure that the company manages the costs “in a very tight envelope.”

“Even if we take an envelope of good and bad, it is still an overwhelmingly positive, strong project,” said the CEO. “We bought Sirius to build and take forward [the polyhalite] project, and that has not changed from anything we have seen.”

According to the CEO, Anglo plans to provide by February 2022 the full plan and projected timing of the Woodsmith project.

An analyst at the earnings call drew parallels with “another big mining company in Canada,” questioning whether “this [Woodsmith] movie might also not play well,” given that the project is not formally Board approved, and Anglo is spending “quite significantly” on preparatory works with a final investment decision to be taken later. Responding, Cutifani said he believes Anglo will be going forward with the project, and the only debate will be the date of acceleration.

Cutifani reported the company is now in “full commercial trials” of the polyhalite products from Woodsmith, with about 550 commercial trials in progress or complete.

“This is about building up the customer base for long-term use of the product,” he said, reiterating about the nature of the product. “It is not potash; it is a multi-nutrient, low chloride fertilizer certified for organic use.”

Anglo is targeting the production of up to 10 million mt/y of Poly4, the marketed form of polyhalite. Anglo’s capital expenditure on Woodsmith, which is part of the company’s Crop Nutrients business division, was US$279 million in the first half of 2021, and the expected capex for the full year is unchanged at around US$0.5 billion.

Ammonia

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

U.S. Gulf/Tampa:

August Tampa ammonia prices remained at $625/mt CFR. It may be too early to predict September prices. Both international and inland U.S. prices moved up after the Tampa uptick, though international markets appear to have stabilized despite tight supplies still being reported.

Mosaic President and CEO Joc O’Rourke told analysts on Aug. 3 that with the high Tampa spot prices, it has increased its take of contracted CF tons in the second-half. With those tons added to its own production, he said 75 percent of the company’s total ammonia needs will be based on natural gas and below the Tampa spot market.

Traditionally, the company splits its ammonia needs in thirds between its own production, CF, and Tampa spot.

Eastern Cornbelt:

Ammonia prices were quoted in the $645-$675/st range FOB Eastern Cornbelt terminals for prompt or fall prepay, up from the prior $635-$650/st FOB level, with the stronger terminal values reportedly following the higher Tampa price for August. Sources confirmed the low end of the range at Lima, Ohio, with the high in Indiana. Most Illinois terminals were pegged at the $665/st FOB level for fall prepay in early August.

Western Cornbelt:

Ammonia pricing had reportedly firmed to $645-$665/st FOB for prompt or prepay in the Western Cornbelt, up $10-$15/st from last report, with the low quoted in Nebraska and the high at Palmyra, Mo. Sources reported most Iowa terminals at the $655/st FOB level in early August.

Southern Plains:

Prompt or fall prepay ammonia offers had reportedly firmed to $615-$635/st FOB Oklahoma production points, up from $580-$600/st FOB at last report. Gulf Coast terminals were also higher at $570/st FOB for truck tons. Sources said preplant ammonia applications on winter wheat ground were running in western and north-central Kansas.

South Central:

The ammonia market was pegged in the $570-$595/st FOB range out of terminals in the South Central region, up $30/st at the low end of the range, with the high reported for the last prompt offers at Memphis, Tenn., and the low for new truck offers out of Louisiana production points.

No current offers were reported out of El Dorado, Ark., Cherokee, Ala., or Hopewell, Va.

Black Sea:

The ammonia market went quiet this week as buyers and sellers met to discuss deals for the end of August and into September. So far, no news of prices or quantities have floated out of the sessions.The absence of any new deals in the area leaves the price at $590/mt FOB.

Turkish imports of ammonia for the first half of the year were down 34 percent, to 435,000 mt from 660,000 mt during the first semester of 2020, according to Trade Data Monitor. Russia was the main supplier at 298,000 mt.

June 2021 imports were reported at 45,000 mt, down from 94,000 mt in June 2020, while second-quarter imports were down 38 percent, to 192,000 mt from the 310,000 mt imported during the same period last year. Russia was again the main supplier in the second quarter at 131,000 mt, down from 181,000 mt last year.

Middle East:

Ammonia supplies remain tight. Sources said the lack of any excess material prevents any new spot deals, leaving the public spot price at $620-$630/mt FOB.

Industry watchers are awaiting news of when the Ma’aden operation will be back up and running. Even when it does come back online, sources said most of the ammonia will be used for its own urea production. One trader noted, however, that this will put an end to Ma’aden looking around for product, and could free up ammonia for some other market.

India:

Sources said FACT needs ammonia for September and October deliveries, but there is no word yet on another tender. Recent efforts to buy have been stymied by either a lack of response from sellers due to no available material, or prices so high that the tenders had to be scrapped.

Reportedly, Indian buyers that take cargoes larger than the 7,500 mt that FACT is limited to are searching around for product from any source possible, but there is no word if any have been successful.

Northwest Europe:

The ammonia price held steady at $678/mt C&F as the regional market quieted down. Sources said a deal was struck with Eurochem for Baltic ammonia at $588/mt FOB for August shipment. There are other deals that appear to rely on a formula based on the Yuzhnyy price.

Southeast Asia:

Ammonia demand in Southeast Asia remains strong. Buyers are reportedly hopeful that the Ma’aden plant will restart and free up some extra ammonia from the Arab Gulf.

Indonesia exports have been helping buyers looking for material. Exports for the first half of this year were up 18 percent, to 956,000 mt from 812,000 mt during the same period last year, according to Trade Data Monitor. South Korea, China, and Taiwan accounted for about two-thirds of all exports in the January-June period.

June 2021 exports were up 13 percent, to 130,000 mt from 115,000 mt in June 2020. Second-quarter exports were up 23 percent, to 436,000 mt from 355,000 mt in last year’s second quarter.

Brazil:

Imports of ammonia into Brazil for January-July this year were up 82 percent, to 385,000 mt from 211,000 mt for the same period last year, according to Trade Data Monitor. The main supplier was Trinidad with 370,000 mt. The remaining 15,000 mt came from Algeria.

July imports of 62,000 mt were solely from Trinidad. This amount more than doubled imports from July 2020 of 30,000 mt.

Urea

Brazil, China, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, South Central, Southeast, Southern Plains, Turkey, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf:

The NOLA granular urea range slipped this week to $400-$417/st FOB, down from the week-ago $420-$432/st FOB.

Eastern Cornbelt:

Urea prices slipped to $453-$470/st FOB regional terminals in the Eastern Cornbelt, down from $465-$480/st the week before, with the low reported at East Dubuque, Ill., for August-September tons. Pricing FOB Illinois and Ohio River terminals generally fell in the $460-$470/st FOB range in early August.

Western Cornbelt:

Sources reported softer urea prices in in the Western Cornbelt in early August. The urea market was quoted at $453-$475/st FOB, down from $465-$480/st FOB at last report, with the low reported at Camanche, Iowa, and the high at Caruthersville, Mo. The St. Louis, Mo., market was pegged in the $460-$465/st FOB range, down $10/st from the prior week.

In the Northern Plains, urea pricing at St. Paul, Minn., had reportedly slipped to as low as $455/st FOB from some suppliers, down from $470-$475/st FOB at last report.

Southern Plains:

Urea prices were slipping in the Southern Plains in the wake of softer NOLA barge values. The Catoosa/Inola, Okla., market was quoted at $460-$475/st FOB during the week, down from recent highs at the $490/st FOB level or above. Sources continued to quote the Houston, Texas, price at the $490/st FOB level early in the week.

South Central:

Despite a softening NOLA barge market, urea pricing remained at $470-$480/st FOB terminals in the South Central region, with the low reported at Memphis and the high at Little Rock, Ark. The last price reported out of Convent, La., was steady at the $475/st FOB level in late July.

Southeast:

Sources reported some urea and ammonium sulfate blends moving on cotton in secondary applications in parts of the Southeast, particularly in areas of recent heavy precipitation. Urea prices remained at $470-$480/st FOB port terminals in the region in early August, down slightly from last report.

India:

Things have quieted down as RCF handles the paperwork to deal with cargoes being shipped under two different tenders.

The June 24 tender has a shipping deadline of Aug. 11. Sources said there are still a couple of cargoes outstanding in that tender. On top of that, RCF has to address the issue of importing 1.2 million mt under its most recent tender, with a shipping deadline of Aug. 30.

Sources said the country is still behind expected urea needs by about 1.5 million mt. Another tender is expected to be called soon, most likely in the next 14 days. Many are betting the call will take place after the Aug. 11 shipping deadline for the June 24 tender and will include only a limited crossover with the most recent tender shipping period.

Industry watchers said RCF will most likely call the next tender as well. Reportedly, there are some issues between the Department of Fertilizers and MMTC, the other major buying house for urea. Sources said they could not describe the exact nature of the disputes, but they all report conflicts that need to be worked out between the cabinet office and the state-run company.

In a reply to a parliamentary inquiry, Chemicals and Fertilizers Minister Mansukh Mandaviya said India had imported 9.8 million mt of urea during the April 2020-April 2021 fiscal year. This amount was up from the 9.1 million mt imported during the 2019-2020 FY, the minister said.

Sales from April through July this year are down about 13 percent compared to the same period last year. Government figures reported in the local press showed that sales were at 4.4 million mt so far this fiscal year. Production was reported at 2.2 million mt and imports at 680,000 mt, leaving a deficit in supply that still needs to be filled.

Some of the demand may ease, according to government numbers. Farmers have planted 4 percent less land than in April-July 2020 due to erratic monsoon rains. While June rainfall was slightly above average, July totals were down and sporadic dry spells continue to plague the country, leaving many wondering how successful the current and upcoming seasons will be.

The price and availability of urea also remains a constant concern. The recent softening of global urea prices has given hope to Indian buyers, but recent actions by the Chinese central government to limit exports of urea could again lead to a shortage in the international market and higher prices.

China:

Sources said urea prices are backing off. Many traders are saying the price movement is a much-anticipated correction.

Sources reported sales to Asian buyers of prilled urea at $461/mt FOB, a major drop from prices based on the RCF tender netbacks in the $480s/mt FOB. Most discussions are now centered on $460-$465/mt FOB for prills, and no one is talking about granular.

The reluctance of traders to engage in pricing discussion with producers comes from repeated efforts by the national government to limit urea exports. Already state-owned plants have declared they will not export urea until they are sure the domestic market is fully supplied. The joint-venture and private plants are said to be looking at ways of lining up with the government’s intentions and offering some tons for export.

Reportedly, the decision to withhold urea will not affect tons already under contract for the RCF/India tender. There are still concerns, however, about what constitutes a contract to move the tons. A strict interpretation, said one trader, would mean only cargoes covered by signed contracts. Others argue that letters of intent and handshake deals should also be covered, but some said they might not.

Sources pointed to the vessel nominations that started coming in at the end of the week as evidence the no-export policy will not affect supplying the RCF tender. So far, ships have been named to move 575,000 mt out of China into India.

At the same time, the National Development Reform Commission is reportedly looking into the rapid rise in urea prices in recent months. The probe was announced at the end of June on WeChat and is gaining more attention from the industry. The commission is looking to see if any of the urea producers conspired to limit urea availability and drive up prices. At the time of the announcement, sources said the investigation could be used as an excuse to impose an export duty on urea to increase domestic reserves and force down prices.

Besides facing uncertainty about how much urea will be available in the near future, sources said restrictions on foreign vessels at loading ports could also play a role in how much urea is exported and how quickly. The restrictions are being put in place to combat the Delta variant of COVID-19, said traders.

Indonesia:

Kaltim scrapped its June 30 tender for 6,000-90,000 mt because no bid reached the reserve price of $479/mt FOB. Sources said the highest bid was by Medallion at $470/mt FOB, with all the other bids in the $450s/mt FOB and below.

After Kaltim entered into talks with Medallion, sources said the potential buyer realized the market had moved in such a way that placing tons at $470/mt FOB would be difficult. The talks broke down, and Kaltim called another tender that closed on Aug. 4.

Sources said the second tender did not have a reserve price, but expectations were for higher prices to be offered. In a way, Kaltim got its wish. However, the higher price only came from those who initially bid in the low- to mid-$450s/mt FOB.

The highest bid came from Swiss Singapore at $457/mt FOB. After the tender closed, Kaltim opened talks with Swiss Singapore and the other traders who participated in the tender. In the end, they agreed on $457/mt FOB. Swiss Singapore and Ameropa were each awarded 30,000 mt. Aries got 24,000 mt.

Sources speculated that some of the material might be used to fill in for cargoes slated for India under the RCF tender. Another view is that tons will be set aside for the next Indian tender or maybe sent to Nepal or Australia.

Indonesia urea exports were up about 10 percent in the first half of the year, to 1.14 million mt from 1.03 million mt during the same period last year, according to Trade Data Monitor.

More than half of the buying took place in the second quarter of the year. April-June exports were reported at 676,000 mt, against second quarter 2020 exports of 605,000 mt.June exports were up dramatically at 271,000 mt, compared with 139,000 mt in June 2020.

Turkey:

Imports of urea were down about 12 percent in the first six months of the year, to 1.4 million mt from 1.6 million mt during the same period last year, according to Trade Data Monitor.

Second-quarter imports showed a slight uptick, however, to 675,000 mt from 665,000 mt last year. June 2021 imports were up dramatically, to 206,000 mt from 113,000 mt in June 2020.

Middle East:

Urea supplies remain tight in the region, offering no new spot deals to adjust pricing. However, buyers are now bidding in the $450s/mt FOB, a significant drop from the $480s/mt FOB calculated to be the netback from the RCF/India tender.

The paper market is following the view of traders and the general perception that the urea market is facing a price correction. The August paper price is reported at $472/mt FOB and September at $452/mt FOB.

Sources reported a small cargo of 4,000 mt sold by Alexfert at $472/mt FOB, dropping the upper end of the range from the earlier $476/mt FOB. There are now reports that buyers are bidding in the $460s/mt FOB – and producers are listening. No deals under $470/mt FOB had been reported as Green Markets went to press, but sources said it is only a matter of time.

The paper market for Egypt reflects the softer view of the general market. August paper is put at $462.50/mt FOB, and September at $455/mt FOB.

Brazil:

International reports of deals being discussed in the low-$480s/mt CFR at Paranagua did not match up with the actual deals reported. Sources in Brazil put the landed price at Paranagua at $485-$498/mt CFR, but with a definite downward trend.

There was a lot of discussion about cargoes from Algeria and Turkmenistan being settled at $481/mt CFR into Brazil. Sources said large-scale buying by Brazil in the first half of the year has put a lot of urea into warehouses for later distribution, and is putting some downward pressure on prices. Some traders are even saying that the price will drop into the $470s/mt CFR by the middle of the month.

Traders are looking at the softer prices being discussed around the globe and hoping that Brazilian prices will follow suit. The turnaround in pricing was also seen in Rondonopolis, where the market slipped to $580-$658/mt FOB ex-warehouse.

How much softer the inland price goes will depend on the transportation situation from ports to distributors, sources said. Along with a steady drumbeat for a strike by independent truckers, sources said more and more distributors are finding it difficult to locate enough trucks to move their cargo.

Uncooperative weather is also raising concerns. Dry spells within the country are playing havoc with the crops, leaving many farmers in a quandary about what to do about fertilizer applications for the next season.

The barter rate for 1 mt of urea is now pegged at 40 bags of corn, down from last week’s 41 bags or 17 bags of soy.

Imports of urea for January-July 2021 this year were up about 26 percent, to 4.1 million mt from 3.3 million mt during the same period last year, according to Trade Data Monitor.

The biggest change between the two years was the inclusion of Oman in the mix. Imports from Oman – probably OMIFCO – were reported at 759,000 mt this year, compared with no tons in 2020 or 2019. During that time, OMIFCO had an agreement to exclusively supply India. That contract has since ended, allowing for OMIFCO exports to the world.

Algeria took the biggest hit, dropping 34 percent to 461,000 mt from 698,000 mt. The largest gain came from Turkmenistan at 134,000 mt, up 309 percent from last year’s 33,000 mt total to Brazil.

July 2021 imports were up 10 percent, to 637,000 mt from 580,000 mt in July 2020. Qatar and Oman were the two major supplier in July at 131,000 mt and 125,000 mt, respectively. Imports from Qatar were down about 12 percent compared with July 2020. No tons were imported from Oman in the past two years.