All posts by mickeybarb@charter.net

Vynova to Build New Potassium Carbonate Plant in Tessenderlo

Europe, News, News Briefs

Vynova, a leading European PVC and chlor-alkali company, will build a new production plant for liquid potassium carbonate (K2CO3) at its site in Tessenderlo, Belgium.

The company said the new and larger facility will replace its existing potassium carbonate plant in Tessenderlo, and is expected to be operational by mid-2022. Construction is due to start in the current quarter. A total of €4 million (approximately $4.7 million at current exchange rates) is being invested in the new plant, which will be the largest plant of its kind in Europe, Vynova said.

The new facility will be fully HACCP (Hazard Analysis Critical (Control Point) compliant, which will allow the company to continue producing product “that is fit for demanding applications in the food, cosmetics, and pharmaceutical industries.”

The investment is part of a wider company program to support the expansion of Vynova’s potassium derivatives business, and further strengthen its position as Europe’s biggest supplier of potassium derivatives, it said.

Explosion Reported at Ukraine’s Rivneazot

News, News Briefs, Nitrogen, Ukraine

Ukraine nitrogen fertilizer plant Rivneazot suffered an explosion resulting in an emission of nitrous gases, BBC Monitoring reported on July 20, citing the Interfax-Ukraine news agency.

There were no casualties, and the company was able to “completely neutralize” the consequences of the incident, with no danger to people or the environment, according to a statement by Rivneazot’s press service, as cited by the news agency.

Rivneazot, which is part of Group DF, said the plant is operating as usual and product shipments are being carried out in accordance with signed contracts.

Summer Heat Boosts Natural Gas Prices

News, News Briefs, U.S.

Natural gas futures soared to $4.00/mmBtu in the U.S. for the first time since December 2018 as summer heat intensified concerns about tight supplies later this year, according to a July 22 Bloomberg report.

Gas for August delivery settled at $4.003, the highest closing price in 31 months. The premium for March 2022 gas over April futures – essentially a bet on how undersupplied the market will be at the end of next winter – reached 62.9 cents, hovering near a record high.

Prices for the fuel are soaring across the globe as scorching weather stokes demand for electricity to run air conditioners. In the U.S., however, the rally is also underpinned by concern about a potential supply shortfall in the winter, when gas consumption peaks as homes and businesses crank up the heat. Stockpiles are already below normal for the time of year, and production growth has been restrained as drillers heed investor calls for capital discipline.

“You generally have a heat situation that justifies this kind of rally. It’s largely a function of the weather, and it’s not going to go away,” Bob Yawger, director of the futures division at Mizuho Securities, said in an interview. “We haven’t seen this kind of heat in a long time.”

Intense summer heat could push power demand in Texas to near-record levels next week, but the state’s grid operator said it has more than enough electricity to keep blackouts at bay. Temperatures are expected to soar to 101 Fahrenheit (38 Celsius) in Dallas as soon as Monday, the National Weather Service said, breaking the 100-degree mark for the first time this year.

Exports are also contributing to tight gas supplies. In May, the U.S. shipments of liquefied natural gas exceeded Australia’s for the first time ever as buyers around the world continued to purchase record amounts of the super-chilled fuel. The next month, gas deliveries to Mexico from the U.S. via pipeline also reached an all-time high.

U.S. gas in underground storage is 6.2 percent below normal for the time of year, government data show.

The market is on pace to go into the winter with “the least amount of gas in storage we’ve had on hand in years,” said John Kilduff, founding partner at hedge fund Again Capital LLC.

DOC Initiates AD, CVD Investigations

Caribbean, Featured, News, Russia, UAN

The U.S. Department of Commerce (DOC) said on July 21 it has initiated antidumping (AD) and countervailing duty (CVD) investigations of urea ammonium nitrate (UAN) from Russia and Trinidad and Tobago.

The initial petition was filed by CF Industries Nitrogen and two of its units on June 30 (GM July 16, p. 1; July 2, p. 1). CF has argued that imports from Russia and Trinidad surged after the European Union imposed duties on the two countries and the U.S. in 2019, with U.S. domestic prices collapsing.

The dumping margin on UAN from Russia is 169.96-433.37 percent, and from Trinidad 158.81 percent.

In the Russia investigation, there are 11 alleged subsidy programs that include numerous tax programs; preferential lending; and the provision of natural gas, natural-gas extraction rights, and phosphate mining rights for “less than adequate remuneration,” said DOC. In the Trinidad and Tobago investigation, there are three alleged subsidy programs.

Country 2018 2019 2020
Russia st 1,227,252 1,706,930 1,186,295
Value $ 186,097,918 251,335,402 137,784,739
Trinidad st 769,642 942,578 996,136
Value $ 96,794,442 119,194,536 99,707,872
Schedule AD CVD
ITC Preliminary Determination Aug. 16, 2021 Aug. 16, 2021
DOC Preliminary Determination Dec. 7, 2021 Sept. 23, 2021
DOC Final Determination Feb. 22, 2022 Dec. 7, 2021
ITC Final Determination April 8, 2022 Jan. 21, 2022

E.C. Outlines Plan for Carbon Border Adjustment Mechanism

Europe, News, News Briefs

The European Commission (E.C.) last week put forward its plans for its Carbon Border Adjustment Mechanism (CBAM), a move designed to put European Union (E.U.) companies on an equal footing with competitors outside the bloc with weaker carbon policies (GM March 26, p. 35).

The measure initially will be applied to imports of goods considered to be at high risk of carbon leakage: fertilizers, cement, aluminum, iron and steel, and electricity generation, and will be phased in from 2023, with full implementation from 2026. It will apply to direct emissions, those involved in the production of goods, and indirect emissions, such as electricity consumed during the production process of products.

Under the proposal, in the transitional period from 2023 through 2025, importers will be required to monitor and report emissions.

Under the CBAM system, E.U. importers would be required to buy digital carbon certificates, with each one representing a metric ton of carbon dioxide emissions embedded in their imported goods. The price of the certificates will be linked to the cost of permits in the E.U. carbon market and based on the average price of auctions of E.U. carbon permits each week.

However, the border levies can be reduced. According to an E.C. factsheet outlining the policy, if importers can prove, based on verified information from third-country producers, that a carbon price already has been paid during the production of the imported goods, the corresponding amount can be deducted from their final bill.

The plans are an integral part of the E.C.’s strategy to meet its new climate target. The “European Green Deal” sets out a clear path towards realizing the E.U.’s ambitious target of a 55 percent reduction in carbon emissions compared to 1990 levels by 2030, and to become a climate-neutral continent by 2050.

Carbon Border Adjustment Mechanisms are already in place in some regions around the world, such as California, where an adjustment is applied to certain imports of electricity. A number of countries, such as Canada and Japan, are planning similar initiatives.

Martin Sulfur Income Off 15 Percent in 2Q

Earnings, News, Sulfur

Martin Midstream Partners LP (MMLP) Kilgore, Texas, reported a 15 percent drop in operating income for its Sulfur Services segment, which includes fertilizer, for the second quarter ending June 30, 2021. Operating income was $6.3 million, down from $7.4 million, while revenues were up 15 percent, to $38.3 million from $33.4 million. Adjusted segment EBITDA was $8.9 million, down from the year-ago $10.8 million.

Total second-quarter volumes were off 11 percent to 230,000 lt from 257,000 lt. This included a 12 percent drop for sulfur to 146,000 lt from 166,000 lt and an 8 percent decline for fertilizer to 84,000 lt from 91,000 lt.

Six-month Sulfur Services income was off 32 percent to $12.7 million from the year-ago $18.7 million, with revenues up 18 percent to $73.1 million from $61.7 million. Total volumes were off 23 percent to 398,000 lt from 514,000 lt. Fertilizer volumes were up 8 percent to 179,000 lt from 165,000 lt, while sulfur was off 37 percent to 219,000 lt from 349,000 lt.

“For the second quarter of 2021, the partnership had a solid performance in line with our annual projected cash flows of between $95 million to $102 million,” said Bob Bondurant, President and CEO of Martin Midstream GP LLC, the general partner of the partnership. “As the country returns to a more open economy and refinery utilization increases, we have seen heightened demand for our services particularly within the land transportation and lubricants businesses.

“However, the impact of COVID-19 is still reflected in a reduction in sulfur service volumes and lower marine day rates year over year. As expected, marine utilization has increased from last quarter and we anticipate the continued economic recovery will drive demand upward allowing for the further utilization of our asset base,” he continued.

“Looking to the third quarter, which is seasonally our weakest due to the cyclical nature of both the fertilizer and butane businesses, we amended our revolving credit facility in response to rising commodity prices and the continued impact of COVID-19 on the partnership’s trailing twelve month cash flows. I’d like thank our lenders for recognizing our ongoing commitment to capital discipline through their support of the amendment,” Bondurant added.

While the Sulfur Services segment remained in the black, company-wide MMLP dug deeper into the red, posting a second-quarter net loss of $6.6 million ($0.17 per unit attributable to the limited partners – diluted) on revenues of $184.3 million, compared to the year-ago loss of $2.2 million ($0.06 per unit) and $140.6 million, respectively.

For the first six months, MMLP posted a net loss of $4.1 million ($0.10 per unit) on revenues of $385.3 million, down from the year-ago positive $6.6 million ($0.17 per unit) and $339.5 million, respectively.

LSB Inks Stock Exchange Agreement

Fertilizer Stocks, News, News Briefs

LSB Industries Inc., Oklahoma City, reported on July 20 that a Special Committee of the Board of Directors representing the disinterested stockholders of the company has signed a definitive agreement with LSB Funding LLC, an affiliate of Eldridge, to exchange the shares of LSB Series E-1 and Series F-1 Redeemable Preferred Stock held by Eldridge for shares of LSB common stock.

Under the agreement, LSB would exchange, at the closing, approximately $300 million of preferred stock held by Eldridge into an equivalent value of LSB common stock based on an exchange price of $6.16, which is equal to the 30-day volume weighted average price as of the date of the Exchange Agreement. In connection with the transaction, existing unaffiliated LSB common stockholders will receive a special dividend in the form of 0.30 shares of LSB common stock for every share owned as of the record date.

LSB said the transaction eliminates the current financial impact and repayment of the accrued compounding preferred stock and future accruing dividends at 14.5 percent (increasing to 16.0 percent in April 2023), unburdening the company and unlocking shareholder value.

In addition, it believes this could lead to a rating upgrade, potentially allowing the company to refinance its senior secured notes at a lower interest rate and on improved terms, which would reduce its cash interest expense and overall cost of capital.

Citing nitrogen prices at multi-year highs, LSB President and CEO Mark Behrman said “now is an opportune time to take these actions, especially given our desire to refinance our senior secured notes and our need for flexibility to take advantage of numerous attractive organic growth opportunities, including the emerging blue/green ammonia and clean energy markets. Additionally, we regularly evaluate M&A prospects that we believe could be accretive to earnings as a result of the increased scale and expanded production capabilities that they would provide us.”

LSB added that the agreement preserves the company’s significant tax attributes, including approximately $620 million of federal net operating losses, thereby protecting potentially significant future cash savings and stockholder value.

Completion of the exchange transaction is subject to a number of customary closing conditions, including receipt of stockholder approval from the holders of a majority of the shares of our outstanding common stock not held by Eldridge or any of its affiliates.

LSB expects to file a preliminary proxy for a Special Meeting of Stockholders and deliver additional information related to the special meeting to stockholders within the next few weeks. Results of the stockholder vote will be tabulated at the Special Meeting of Stockholders expected to be held in the third quarter of 2021.

Pivot Bio Lines Up $430 M in Funding

California, News, News Briefs, Specialty

Specialty producer Pivot Bio, Berkeley, Calif., reported on July 19 that it has closed on $430 million Series D funding led by California-based DCVC and Temasek Holdings, Singapore, bringing the total equity raised to more than $600 million.

The company said that since it introduced the industry’s first commercially available microbial nitrogen in 2019, Pivot Bio has replaced synthetic nitrogen on more than 1 million crop acres in 2021 alone, representing more than 300 percent growth year-over-year and unprecedented agricultural product adoption.

It said Pivot Bio Proven® 40, the company’s fourth commercial product in three years, enables farmers to replace up to 40 pounds per acre of synthetic nitrogen, almost double the performance of Pivot Bio’s inaugural product.

The company said its next stage of growth will focus on rapidly scaling its U.S. business and expanding into key international markets.

Heliogen, Bloom Energy Partner on Hydrogen

California, Hydrogen, News, News Briefs

Renewable energy technology company Heliogen, Pasadena, Calif., and Bloom Energy, San Jose, Calif., on July 22 announced plans to produce green hydrogen using only concentrated solar power and water.

They will combine nearly 24/7 carbon-free power and steam, generated by Heliogen’s Sunlight Refinery solar power generation system, with Bloom Energy’s solid oxide electrolyzer. Bloom Energy said its electrolyzers operating on steam are nearly 30 percent more efficient than low-temperature electrolyzers such as polymer electrolyte membrane (PEM) and alkaline.

The companies’ first integrated solution is intended to be deployed at Heliogen’s facility in Lancaster, Calif., by the end of 2021.

In other news, on July 7, 2021, Heliogen announced a definitive business combination agreement with Athena Technology Acquisition Corp. Upon the closing of the combination, Heliogen will become publicly traded on the New York Stock Exchange under the new ticker symbol “HLGN.”

Ammonia

Ammonia, Black Sea, California, China, Eastern Cornbelt, India, Market Watch, Middle East, North Africa, Northwestern Europe, Pacific N.W., South Korea, Southeast Asia, Tampa, U.S. Gulf, Western Canada, Western Cornbelt

U.S. Gulf/Tampa:

July Tampa ammonia prices continued at $585/mt CFR, with the industry awaiting a decision for August. Producers are eyeing yet another increase, citing high international prices. Sources reported another Trinidad export to South Korea at high numbers, as well as higher prices to Europe, where natural gas prices have shot up.

On the other hand, NOLA observers said the U.S. Gulf itself has plenty of ammonia with all the major plants back in production, including IPL’s Waggaman plant. They said there is no need for higher prices either at Tampa or NOLA.

A NOLA barge trade was reported at $585/st CFR, which equates to $645/mt CFR and is in line with recent reports of exports out of the Caribbean at a reported $605-$610/mt FOB. However, the new barge trade was producer-to-producer, with some players saying a better deal could be had. Another factor is that Gulf Coast trucks have been going for as low as $525/st FOB.

Eastern Cornbelt:

Ammonia prompt and fall prepay prices were steady at $635-$650/st FOB in the Eastern Cornbelt, depending on location and supplier.

Western Cornbelt:

Ammonia pricing was unchanged at $635-$650/st FOB in the Western Cornbelt for prompt or fall prepay offers, with the low confirmed at Palmyra, Mo., and the high at Fort Dodge, Iowa.

California:

Anhydrous ammonia was unchanged at $626/st DEL in California, with aqua ammonia referenced at $172/st FOB.

Pacific Northwest:

Ammonia prices were quoted at $635/st FOB terminals in the Pacific Northwest, up $15-$20/st from last report, with rail-DEL offers pegged at the $675/st level. Aqua ammonia remained at $168/st FOB Kennewick, Wash.

Western Canada:

Ammonia pricing in Western Canada was quoted at C$960-$1,020/mt DEL for limited offers of fall tons, depending on location. That range was up significantly from the last prompt business reported in June.

Nutrien confirmed that its Redwater, Alta., nitrogen facility will be completing a planned maintenance outage at its larger ammonia and urea plants from late July through early October. The company said all other assets at the site will continue to operate as planned.

Black Sea:

Sellers keep pushing for $600/mt FOB, and a couple of weeks ago many thought it would be achieved. Now, however, the movement up on prices is slowing down.

Sources said ammonia prices out of Yuzhnyy have edged up slightly, to $555-$560/mt FOB. Even with the increase, traders said the price is close to its apex. One trader said moving the price beyond the $560s/mt FOB will be difficult.

Sources are talking about prices beginning to soften as buyers begin to look for September shipments. The big unknown, however, will be how soon production picks up again in Saudi Arabia and Indonesia. Until Ma’aden and the Mitsubishi PAU facilities come fully back online, sources said there will be a shortage of ammonia that keeps upward pressure on prices.

Middle East:

The ammonia price in the region held steady in the $620s/mt FOB only because of the lack of material to reposition the spot price. Sources said sales out of the area were all based on long-term contract sales.

Nearly everyone in the industry agrees with producers that there is no available spot material. The lack of even a few extra tons of ammonia from the Arab Gulf is having an impact across the globe. Buyers in Asia have turned to Russia and Trinidad to fulfill their needs.

There is no word out of Saudi Arabia when the Ma’aden plant will be back up, but there are reports that production may restart in late August. Even if the plant comes back up, sources said the ammonia produced will most likely be turned over to the DAP processing operation, leaving nothing for the export market.

Iranian ammonia exports during the first half of this year were up 89 percent, to 316,000 mt from 167,000 mt during the same period last year, according to Trade Data Monitor. The main buyers so far this year were India at 188,000 mt and China at 71,000 mt.

Second-quarter exports were up 14 percent, to 191,000 mt from 167,000 mt last year. India dominated again, taking 109,000 mt in the April-June period. Second-quarter exports were up 66,000 mt from the first quarter.

June exports remained relatively stable at 65,000 mt, compared with 64,000 mt in June 2020. Taiwan and India took the June business, with 33,000 mt and 31,000 mt, respectively.

India:

Companies are anxious for product. However, the high price of ammonia makes it difficult for many buyers to cut a deal.

The July 13 FACT tender was scrapped. Sources said no reason was given, but the usual excuses are either that no offers were made, or the offers submitted had prices so high that buyers had to reject the tons.

The current price of ammonia is hitting the DAP producers in India at a time when they really need the product. The high price of ammonia is also being matched by expensive inputs such as sulfur and phos rock. As a result, the final product price is beyond the maximum retail price allowed by the Indian government, so producers lose money with each sale.

Even with the high prices, sources said a number of large buyers are making inquiries in the freight market for vessels. Sources said the cargoes appear to all be contracted tons, which are priced much lower than where any spot deal would be.

Southeast Asia:

Traders said there are more inquiries coming out for September shipments, and buyers are looking far from the usual regional suppliers because of limited tons in the area.

Sources said there is still no word on when the PAU facility run by Mitsubishi in Indonesia will be fully operating. Many regional buyers had pinned their hopes on the facility to ensure a steady and local source of ammonia.

Northwest Europe:

Early in the week, sources said Borealis paid in the upper-$660s/mt CFR for product from Trinidad. Traders in the area said the price was more likely closer to $660/mt CFR, but it was quickly followed with other deals at $665/mt CFR.

One trader noted that the Borealis deal and the movement in Yuzhnyy have moved the Northwest Europe price to $630/mt C&F.Talks for the August Baltic price are not expected to start until next week, but a price increase is expected.

North Africa:

Sources said phosphate giant OCP in Morocco is absorbing all the ammonia it can get. Reportedly, the company is adjusting its production between DAP, MAP, or NPKs to fit with its ammonia supply.

Sources reported that Abu Qir in Egypt sold a cargo to Yara. Trammo also picked up a Libyan cargo. Destinations and prices for both cargoes were not revealed.

China:

China imported 500,000 mt of ammonia in the first half of the year, according to Trade Data Monitor, down 6 percent from the 532,000 mt imported during the same period last year. June imports were down 78 percent, to 28,000 mt from 131,000 mt in June 2020. Second-quarter 2021 imports were down 56 percent, to 144,000 mt from 324,000 mt last year.

The problems of production in Saudi Arabia and Indonesia affected the sources of China’s imports. Bahrain and Oman came in with fair-sized cargoes in the second quarter after sending nothing in previous periods.

Some of the reduction of imports was also attributed to the cutback in power to the Chinese industrial sector. Phosphate producers had to throttle back in May and June so electricity could be diverted to residential use as air conditioning demand kicked in.

South Korea:

First-half ammonia imports in South Korea were up 19 percent this year, to 731,000 mt from 614,000 mt during the same period last year, according to Trade Data Monitor.

June 2021 imports were up dramatically, to 137,000 mt from the 70,000 mt total in June 2020. Indonesia was the main supplier in June, but Egypt and Mexico each showed up for the first time at 21,000 mt and 24,000 mt, respectively. These cargoes show clearly how buyers have had to step away from the usual sources of Southeast Asia or the Arab Gulf to ensure a steady supply of ammonia.

Second-quarter ammonia imports were up by almost 50 percent, to 350,000 mt from 238,000 mt during the same period in 2020.