All posts by mickeybarb@charter.net

Uralchem – Management Brief

Management Briefs, Potash, Russia

Uralchem owner and Chairman Dmitry Mazepin has taken over as CEO of Uralchem JSC, effective May 12, the company said in a statement. Former CEO Alexander Prygunkov resigned from the position effective April 26 at his own request (GM April 30, p. 29).

Dmitry Konyaev, who previously held the position of Uralchem’s Deputy Chairman, has been appointed Chairman.

“A fundamentally new stage in the development of Uralkali and Uralchem has begun, which is designed to give synergy to our joint work, reduce operational and organizational costs, and increase the efficiency of the management unit,” said Mazepin, who is also Uralkali’s majority shareholder and the potash company’s Co-Deputy Chairman.

Russian media sources were of the view late last year that in 2021 the management of Uralkali and Uralchem would be merged, amid speculation of merger plans for the two companies (GM Nov. 20, 2020). The merger plans were refuted by Mazepin.

Waggaman Ammonia Plant Goes Down Again

Ammonia, Australia, Featured, News

Incitec Pivot Ltd. (IPL), Southbank, Victoria, reported that its Waggaman, La., ammonia plant went down again on May 8 due to a coupling failure on the refrigeration compressor, upon which the facility was safely shut down.

The company said the Waggaman plant had restarted production in mid-April as expected and operated successfully at nameplate capacity for two weeks, when it unexpectedly tripped upon the failure of a vibration probe. But after repairs, the subsequent restart process was stopped on May 8.

Waggaman has a nameplate capacity of 800,000 mt/y. The plant went down for a major turnaround in January and has been up and down ever since. IPL said bringing the plant back to full operation is the company’s highest priority, with all appropriate internal and external resources being deployed to achieve this.

Based on current information, IPL said repairs and a restart are expected to take two to three weeks.

The company estimates the additional impact to FY2021 earnings before interest and tax (EBIT) from the initial trip to the expected restart of the plant to be between A$33 million and A$42 million (approximately US$25.7 million and US$32.6 million at current rates, or A$26m and A$33m on a net profit after tax basis).

In all other respects, IPL said its business performance remains in line with the updates provided on Feb. 15 and April 6, 2021 (GM April 9, p. 1; Feb. 19, p. 33).

The company will report its first-half FY2021 financial results on May 17.

Vessel Traffic Resumes after Bridge Crack Prompts Closure of Lower Mississippi River

Featured, Mississippi RIver, News, South Central, U.S.

The U.S. Coast Guard (USCG) on May 11 closed the Lower Mississippi River to all vessel traffic between mile markers 736 and 737 due to a crack discovered on the center span of the Hernando de Soto Bridge on Interstate 40 in Memphis, Tenn. The USCG lifted the restrictions on May 14 after determining that transit under the bridge was safe.

“The Coast Guard is currently working with Arkansas Department of Transportation, Tennessee Department of Transportation, and river industry stakeholders on this developing situation,” said Capt. Ryan Rhodes of the Port of Memphis on May 12. The USCG said the river closure was implemented “out of an abundance of caution” and to “ensure the safety of the maritime environment and surrounding community.”

Some industry sources had speculated that a partial reopening of the river would occur late in the week, but the USCG said the waterway would open “without restriction” to all vessel traffic. “Based on information provided to us by the Tennessee Department of Transportation, the Coast Guard has determined that transit under the I-40 bridge is safe for maritime traffic,” Rhodes said on May. 14.

The crack was discovered by workers with Arkansas Department of Transportation during a routine inspection, prompting a 911 call to enlist authorities to enforce an immediate closure. The last thorough inspection of the bridge, which opened in 1973 and has two 900-foot spans, occurred in September 2019.

In its first announcement on May 12, the USCG said there were 16 vessels with a total of 229 barges in the queue. By Thursday, that number had swelled to 44 vessels with more than 700 barges waiting to travel the river in either direction. When restrictions were lifted on May 14, the USCG said 62 vessels and 1,058 barges were waiting in the queue.

“It will be a number of weeks at least until we can have a repair in place, probably six to eight weeks minimum,” Paul Degges, Chief Engineer of the Tennessee Department of Transportation told CNN. “Hopefully, we can pull a rabbit out of a hat sooner, but public safety is most important. There are lots of moving parts to look at.”

The Tennessee Department of Transportation has hired an engineering firm, and a full mathematical analysis is under way to look at dead load data and models and discuss potential repair solutions. With more than 35,000 vehicles crossing the bridge every day between Memphis and eastern Arkansas, authorities are rerouting ground traffic to another bridge on Interstate 55, about three miles south.

Fertilizer industry sources minimized the immediate impact of the closure on fertilizer shipments and pricing, although sources relayed rumors of at least one supplier repricing an upriver urea cargo at a $450/st FOB NOLA equivalent, with no buyers. Sources agreed that a prolonged closure would add to upriver premiums, however.

“It’s not critical at this moment, but if it’s still shut down by next Monday, it’ll be a big deal,” one industry source told Green Markets on May 13. “It’s got a lot of people wanting to buy upriver barges, and any that are up there might go into hiding if this thing continues. We’re trying to refrain from panic buying, as I’m optimistic they’ll get this thing going again in a couple of days. But if things are still shut down by Monday, there’ll be a lot of people looking for product.”

Several sources also noted a rainy forecast for much of the Midwest over the coming weekend and early next week, which could ease demand and soften the blow of a sustained closure. Others speculated that fertilizer tons could be offloaded in Memphis and trucked north if the river closure is prolonged.

“Prices in some areas of already tight supply could be impacted, with others likely to follow depending on how long it is closed,” said another industry contact.

Bloomberg noted that a lengthy halt to barge traffic could also further roil crop markets at a time when soybeans and corn futures have hit multiyear highs amid adverse weather in Latin America and a buying spree from China. The New Orleans Port Region moved 47 percent of waterborne agricultural exports in 2017, according to the U.S. Department of Agriculture, most of which was bulk grains such as corn, soybeans, rice, and animal feed, as well as soybean and corn oils.

“The river is the jugular for the export market in the Midwest for both corn and beans,” Colin Hulse, a Senior Risk Management Consultant at StoneX in Kansas City, told Bloomberg. “The length of the blockage is important. If they cannot quickly get movement, then it is a big deal. If it slows or restricts movement for a longer period, it can be a big deal as well.”

Yara, Japan’s JERA Ink MOU for Blue & Green Ammonia

Featured, Green Ammonia, Japan, News, Scandinavia

Yara International ASA, Oslo, and Japan’s largest power generation company, JERA Co. Inc., have signed a Memorandum of Understanding (MOU) to collaborate on the production, delivery, and supply chain development for blue and green ammonia to enable zero-emission thermal power generation in Japan.

Under the MOU, the two companies are targeting collaboration in the supply and development of new ammonia demand in Japan, including for power generation purposes, as well as the sequestration of already captured CO2(carbon capture and storage (CCS) at Yara’s ammonia plant in Pilbara, Western Australia, enabling the production and supply of blue ammonia to JERA.

Japan recently announced plans to introduce ammonia into the fuel mix for thermal power generation as part of its measures to cut CO2 emissions and reach carbon neutrality by 2050. As part of its Green Growth Strategy, the Japanese government targets ammonia imports of 3 million mt by 2030.

Collaboration under the MOU will also include new clean ammonia – blue and green – project development and the optimization of ammonia logistics in Japan.

The collaboration aims to decarbonize JERA’s power production and provide Yara with a footprint in the strategically important Japanese market, Yara International President and CEO Svein Tore Holsether said in a May 11 statement announcing the MOU.

JERA Corporate Vice President Yukio Kani said the cross-sector collaboration will not only expand business opportunities for both companies, but also accelerate the transition to a decarbonized society.

JERA produces about 30 percent of Japan’s electricity.

ICL Touts Brazil Acquisitions

Brazil, Israel, News, News Briefs, Specialty

ICL Group Ltd.’s agreement in March to acquire the South American plant nutrition business of Compass Minerals combined with its recently completed acquisition of Brazilian specialty plant nutrition company Fertiláqua, when added to its existing operations in Brazil, is set to make the Israeli company Brazil’s leading specialty plant nutrition company, ICL said.

“This will allow us to deliver the critical mass [of production distribution] we have been seeking in Brazil,” ICL President and CEO Raviv Zoller told analysts at a first-quarter earnings call last week.

“Our acquisitions in Brazil expand both our product portfolio and our profitability, while providing a seasonal balance of business between the Northern and Southern hemispheres. In addition, we expect to realize significant commercial and operational benefits,” he said.

“Brazil is the number one market in the world for specialty fertilizers. The country, together with China, accounts for 70 percent of the growth in global markets,” Zoller told analysts.

“In Brazil, it is not very effective to compete from outside going into a market that has volatility in exchange rate and local inflation. So in order to reach a critical mass of production distribution, it is clear we need significant production and distribution in Brazil,” he said.

“We targeted a few companies, but acquiring the Compass South American business – as the leading player in Brazil – makes our dream come true,” Zoller added. “This M&A is the basis for all our business in Brazil. So some of our traditional business in the country will be consolidated into this new acquisition.”

He said Fertiláqua plays into the biostimulants niche of the market, and “on that foundation, ICL intends to focus on organic growth in Brazil, because both businesses are growing at double-digit rates.”

ICL entered into a definitive agreement with Overland Park, Kan.-based Compass Minerals in late March to buy the South America Plant Nutrition business (Compass Minerals América do Sul SA) via subsidiary ICL Brasil Ltda. for approximately $418 million (GM March 26, p. 1).

The Compass South American business has an existing presence in 25 out of 26 Brazilian states. It serves more than 2,000 farms directly and more than 30,000 farms indirectly, with direct-to-farm sales accounting for approximately 50 percent of total sales. It also serves more than 250 ag-input retailers and co-operatives.

While closing of the transaction is anticipated in the third quarter, Zoller said ICL does not yet have any final clarity on when the closing of the Compass South American plant nutrition business will happen. But he is “optimistic” that the results of that Brazil acquisition will be consolidated for most of the second half of this year. If that happens, he said, there will be room for an additional update of ICL’s earnings guidance.

Last week the Israeli company, as part of its first-quarter earnings reporting, raised its full-year 2021 adjusted EBITDA guidance to between $1.09 billion and $1.18 billion, compared with the previous guidance of $1.02 billion to $1.12 billion, due to improved market conditions combined with prompt execution in the first quarter (GM May 7, p. 37).

ICL completed the acquisition of Fertiláqua in January for $122 million, which included the assumption of approximately $40 million of net debt (GM Jan. 8, p. 30). Fertiláqua operates in 24 Brazilian states with a staff of 350 employees and a portfolio of more than 100 products.

For China speciality fertilizer business, Zoller said ICL’s strategy is based more on organic growth and leveraging some of the capabilities of its YPH phosphate joint venture .

E.C. Proposes New Tool to Strengthen Its Ability to Tackle Distortive Subsidies

Europe, News, News Briefs

The European Commission (E.C.) last week proposed a new instrument to address potential distortive effects of foreign subsidies in the Single Market. The legislative proposal follows the adoption of the White Paper in June 2020 and an extensive consultation process with stakeholders.

The proposal aims at closing the regulatory gap in the Single Market, whereby subsidies granted by non-E.U. governments currently go largely unchecked, while subsidies granted by Member States are subject to close scrutiny, the E.C. said in a May 5 statement.

The new tool is designed to effectively tackle foreign subsidies that cause distortions and harm the level playing field in the Single Market in any market situation. It is also a key element to deliver on the updated E.U. Industrial Strategy also adopted on May 5, by promoting a fair and competitive Single Market, thereby setting the right conditions for the European industry to thrive, according to the statement.

Fertilizers Europe has welcomed the Commission’s proposal.

“The European fertilizer industry acknowledges the Commission’s proposal to add a new instrument in their toolbox to tackle distortions caused by foreign subsidies,” said the Brussels-based organization that represents the majority of Europe’s major fertilizer manufacturers.

“At a time when the E.U. fertilizer industry is engaged in the ‘Green Deal’ decarbonization transformation, it is important that fair competition conditions prevail especially on the E.U.’s Single Market,” it said.

The fertilizer producer’s body said it can foresee this proposal as “a contribution to both strengthening E.U. competition law and, in part, a contribution to the E.U.’s strategic trade policy direction of ‘Open Strategic Autonomy.’”

“Over the past years, the E.U. fertilizer industry has employed trade defense instruments to correct injurious dumping and subsidy campaigns often based on subsidized non-market gas costs in competitor countries exporting to the E.U.,” said Fertilizers Europe Director General Jacob Hansen.

“Given that the E.U. anti-dumping and anti-subsidy instruments cannot address every particular market distortion situation arising, this new instrument might have potential corrective powers,” he said.

For the European fertilizer producers, distortions arising from foreign subsidies that impact the general Single Market situation or acquisitions on the Single Market are the most relevant new channels set down in the E.C.’s proposal for a new regulation.

“On paper, this new instrument will help the E.U. to effectively tackle foreign subsidies that harm the level playing field in the Single Market. However, the true workability and effectiveness of this proposal will need to be proven in practice,” said Hansen.

“At a time when the E.U. fertilizer industry is engaged in the Green Deal decarbonization transformation, it is all the more important to ensure a level playing field, allowing European industry to stay competitive and fit to invest in low carbon technologies,” he said.

The European Parliament and the Member States will now discuss the Commission’s proposal with a view to adopt a final text of the regulation. The proposal will be open for feedback for eight weeks.

K+S Develops News Strategy Post Americas OU Sale, Optimistic on Underground Storage Permits

Germany, News, News Briefs, Specialty

K+S Group, Kassel, provided an early insight into its new strategy under development following the sale of its Americas operating unit at a company first-quarter earnings call on May 11. The company expects to complete the new strategy process by the late summer.

“We are now a mid-sized company, with a clear focus on agriculture and smaller industry business,” said K+S Chairman Burkhard Lohr.

Following the divestment, the sale of the Americas operating unit, K+S has combined the business of its Communities and Consumers business segments into its Industry+ business segment given the ensuing reduction in the Communities and Consumers segments’ business following the sale (GM April 23, p. 34).

“Our new mission statement is: we enrich life for generations,” Lohr told analysts. “This clearly demonstrates our commitment to making the great sources of nature available in an environmentally responsible way to create value and health for people. Our range of products and services will be developed for generations to come.”

He outlined the five principles that reflect the company’s new approach: ensuring nutrition, health, and safety; enabling the success of its customers; being committed to sustainable mining; leveraging its unique infrastructure for economic efficiency; and acting as a partner with the company’s communities.

Lohr said the company is focusing on four key aspects in developing the new strategy.

Firstly, K+S will make its existing businesses more robust, and by 2023 at the latest, the company is targeting to be capable of generating a positive free cash flow at each of its production sites “even at low potash prices.” It plans to do this not only by focusing on cost efficiencies, but also optimizing the product and regional mix. It said first measures in this respect already will have been implemented by 2022.

The company said while from 2023 its capital expenditure will stabilize again, this year and in 2022, it once again faces high environmental expenditures due to ongoing expansions to its tailing pile capacities in Germany.

K+S expects its overall capex this year to remain at approximately 2020’s level, which totaled €427.6 million. The company expects to see the first decline next year” by about €50 million,” and another step-down in 2023.

Secondly, K+S will continue to further develop its existing businesses, for example, in the fertigation business, and thirdly, it will tap into new business areas.

“We are recognizing our incredible infrastructure as a potential source for new businesses. The REKs (waste management) joint venture is an example, but there will be much more, especially around renewable energies,” Lohr told analysts. “We are the last meaningful active mining company in Germany, and we know what is required for some ideas around energy.”

However, he said it was too premature to elaborate as the company is still working on its new vision and mission.

The fourth aspect relates to K+S’ climate strategy. The company has set itself the target of reducing its CO2 emissions by a further 10 percent by 2030, using its own resources. The company over the past 30 years said it had reduced its CO2 emissions by around 80 percent by 2020.

“Technically, we are able to reduce CO2 emissions to zero, but this requires a competitive price for green energy,” said Lohr.

K+S at the end of 2021 will discontinue the injection of saline wastewater into the plate dolomite. As from the beginning of 2022, the underground storage of saline solutions in the Springen mine field will be used as a new local disposal route.

While the state parliaments of Hesse and Thuringia approved the amendment of the state treaty on the cross-border mining of potash salts at the end of 2020, the company has still to secure the required permits to use the new disposal route which is an important prerequisite for the future disposal concept at K+S’ Werra plant (GM May 7, p. 45).

Boeckers told analysts the company “is very optimistic” about securing the permits “soon,” and that the company will be able to start depositing waste saline water in the mine field from Spring 2022. He pointed out that K+S usually has not needed to use deep well injection in the first three months of the year, so if the company gets permission by May, it will still be fine.

K+S last week announced the public prosecutor’s office in Meiningen, Germany, had closed the investigation against representatives of the company as well as against certain German authorities and ministries relating to alleged irregularities in the past around securing saline wastewater permits. Lohr dismissed some media reports that legal proceedings could restart; “The investigation is closed,” he told analysts.

Ammonia

Ammonia, Brazil, Eastern Cornbelt, Market Watch, South Central, Southern Plains, Tampa, U.S. Exports, U.S. Gulf, U.S. Imports, Western Cornbelt

U.S. Gulf/Tampa:

Tampa ammonia prices for May continued to be called $545/mt CFR, with the last done NOLA barges at $545/st FOB. Incitec Pivot’s Waggaman, La., ammonia plant, which went into turnaround in January and has been up and down since, continues to be an issue (see related story).

U.S. Imports:

March ammonia imports totaled 248,826, according to the Department of Commerce (DOC), up 3.2 percent from 241,134 st in the prior year. July-March totals slipped 9.8 percent lower, however, to 1.85 million st from the year-ago 2.05 million st.

U.S. Exports:

Exports of ammonia firmed 5.6 percent in July-March, to 453,028 st from the year-ago 429,093 st. March exports rose 218.2 percent, to 34,755 st from the prior-year 10,923 st.

Eastern Cornbelt:

The ammonia market remained at $615-$665/st FOB in the Eastern Cornbelt, with the low confirmed at Kingston Mines, Ill., and Huntington, Ind., and the high at Lima, Ohio. Other spot offers ranged from $625-$650/st FOB in Illinois and Indiana.

Western Cornbelt:

Sources quoted the ammonia market at $600-$625/st FOB in the Western Cornbelt, depending on location, with continued reports of delivered offers for as low as $585-$590/st into Missouri for limited tons from Enid, Okla.

Southern Plains:

Some lower ammonia prices were coming out of the Southern Plains, with sources reporting new offers at Enid down to $510/st FOB. Prompt pricing FOB Verdigris and Pryor, Okla., continued to be quoted at the $575/st FOB level during the week, while the Beaumont, Texas, ammonia market was pegged at the $540/st FOB level.

South Central:

Ammonia truck pricing was reported at $575/st FOB Memphis, Tenn., and $600/st FOB El Dorado, Ark. No current offers were confirmed at Donaldsonville or Waggaman.

Brazil:

April 2021 ammonia imports in Brazil were up 251 percent, to 72,000 mt from 20,000 mt in April 2020. All but 2 mt came from Trinidad, according to Trade Data Monitor.

January-April imports were reported at 208,000 mt, representing a 98.5 percent jump from last year, with Trinidad dominating the imports. The only other significant imports were two shipments from Algeria in January and February that totaled 15,000 mt.

Urea

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

U.S. Gulf:

NOLA granular urea barges were reported at $355-$375/st FOB, up from the week-ago $350-$372/st FOB. The higher end of the range represent barges to ship within the next two weeks, with the lower end for first-half June.

Upriver barge trades were put at $380-$395/st FOB, with some saying they were seeing higher price ideas due to the Memphis bridge situation. By late in the week, $450/st FOB was reportedly being offered with no takers.

U.S. Imports:

March urea imports were up 63.4 percent, to 961,973 st from the prior-year 588,557 st. July-March volumes totaled 3.06 million st, 11.3 percent above the year-ago 2.75 million st.

Qatar topped July-March imports with 916,578 st, a 7.6 percent increase from the year-ago 851,742 st. Saudi Arabia boasted 530,682 st for the period, slipping 0.2 percent compared to the year-ago 531,945 st, while Russia’s 492,374 st represented a 23.5 percent improvement on last year’s 398,602 st. Imports from Canada totaled 381,549 st for the period.

U.S. Exports:

March urea exports rose 85.7 percent, to 47,284 st from the prior-year 25,461 st. Exports for the July-March period firmed 30.7 percent, to 652,958 st from 499,559 st.

Eastern Cornbelt:

Urea prices were reported in a wide range at $415-$440/st FOB in the Eastern Cornbelt, with the Cincinnati market pegged at $420-$435/st FOB at mid-month, depending on supplier.

Western Cornbelt:

Urea pricing was steady at $420-$440/st FOB in the Western Cornbelt, with the low reported at St. Louis and Caruthersville, Mo., and the high at Port Neal, Iowa.

Southern Plains:

Urea pricing was pegged at a solid $420/st FOB Catoosa/Inola, Okla., and Houston, Texas, in mid-May.

South Central:

Urea pricing was quoted at $410-$430/st FOB in the South Central region, down $5/st from last report, with the lower end of the range confirmed at Memphis and the high at Shreveport, La., and Little Rock, Ark. Sources pegged the Convent, La., market at $420/st FOB in early May.

Southeast:

The urea market was quoted at $435/st FOB Wilmington, N.C., with no tons reportedly available at Charleston, S.C., or Savannah, Ga.

India:

MMTC sent out letters of intent to buy 549,000 mt of urea from its May 4 tender. The low amount awarded indicates that India will most likely call another tender within the next two weeks.

The dominance of West Coast orders in the awards allowed for only one cargo from China. Sources said the refusal of the Chinese producers to lower their prices led to the public snubbing of their product by MMTC.

Final Awards in MMTC Urea Tender
West Coast (487,500 mt)
Offering Company Quantity (mt) Discharge Port Source
Ameropa 51,500 Mundra Oman
50,000 Mundra Black Sea
51,500 Pipavav Oman
Dreymoor 52,000 Pipavav Black Sea
Samsung 50,000 Rozi Abu Qir/Egypt
Continental 50,000 Mundra Egypt
Midgulf 47,500 Adani Hazira Oman
Swiss Singapore 45,000 Mundra Bahrain
Fertiglobe 45,000 Kandla UAE
Keytrade 45,000 Kandla Oman
East Coast (61,500 mt)
Offering Company Quantity (mt) Discharge Port Source
Ameropa 61,500 Kakinada China

Going into the tender, sources were expecting to see awards exceeding 1.2 million mt if Chinese product was accepted by the Indians. In the end, when Chinese producers refused to accept netbacks in the low-$330s/mt to upper-$320s/mt FOB, no large quantities were available for sale to India.

Sources said another urea tender could be called as early as next week. Indian buyers were in a similar situation last year when buyers could not get the large quantities they wanted in the tenders.

MMTC and RCF called a total of five tenders between April and July last year, compared to only three in 2019. Like last year, if a new tender is called as soon as expected, it will be within the shipping period of the previous tender. Sources said generally the Indian buyers try to avoid this situation, at least until all the awarded tons have vessels nominated. In the past, some producers and traders have used the changing market to their advantage against the buyer.

The next tender will most likely show higher prices. Egyptian prices were moving up all week, from $355/mt to $370/mt FOB. At the same time, a deal in the Arab Gulf moved the market into the mid-$340s/mt FOB. Chinese producers were also stepping up their demand for higher prices, putting granular around $355/mt FOB and prills in the upper-$340s/mt FOB.

Along with the higher urea prices, freight rates continue to be higher than normal. Sources said this is a formula for dramatically higher prices in any quickly called tender.

The less-than-expected awards in RCF’s March tender and MMTC’s May tender leaves Indian farmers concerned that there will be a urea shortage in the country. To ease these concerns, according to local media, the central and state governments have instituted fill programs to ensure a steady supply of urea to local distribution centers.

Imports from tenders for this year are recorded at 1.35 million mt, nearly on par with the 1.38 million mt from the first two tenders of 2020. Sources noted that while India does need to import more urea, it does not seem to be as desperate for tons as it was last year.

China:

Producers see India’s continued need for urea and the upcoming domestic season as the basis for raising prices. Sources said producers are now looking at $370/mt FOB for granular and $350/mt FOB for prills.

Sources reported deals closing in the upper-$350s/mt FOB for granular and upper-$340s/mt FOB for prills as the week opened. By the end of the week, sources reported a sale of bagged prills by container to South Korea in the low-$360s/mt FOB. This price fits with reports of deals closed in the upper-$350s/mt FOB for bulk prills.

Offers for granular at $360/mt FOB have been rejected, with producers starting in the low-$360s/mt at the beginning of the week and closing out the week at $370/mt FOB. The new prices reflect a major step up. When the Indian tender closed, the estimated netback was in the upper-$330s/mt FOB for prilled urea and the low-$340s/mt FOB for granular.

Sources said the next Indian tender will include shipping in June. This is the same period when the central government wants to make sure that local distribution sites have plenty of urea for the beginning of the next application season. Producers can argue for higher price for exports by pointing to pending strong domestic demand.

Middle East:

Egyptian material rose from the low-$350s/mt to $370/mt FOB in just one week. MOPCO started the week out with a 25,000 mt deal at $355/mt FOB to two traders for June shipping. Within hours, additional deals of 60,000-70,000 mt divided among different producers began moving into the upper-$350s/mt FOB.

As the week progressed, MOPCO closed additional deals at $359/mt FOB for May-June shipments. At the end of the week, MOPCO and Alexfert each did deals to multiple traders at $370/mt FOB, with only a slight stop for a small cargo at $365/mt FOB. Sources said the rise in price is a result of tighter material for Western buyers, notably Latin America.

Supporting the move in Egypt, Algerian producers are also claiming sales in the $370s/mt FOB. The Algerian tons are reportedly for a Latin American buyer. According to Trade Data Monitor, Algeria is the third highest supplier of urea to Brazil. So far this year, Brazil has purchased 304,000 mt of urea, with only Russia and Qatar surpassing it. Sources said it would not be a stretch to assume the most recent Algerian sales will be heading to the South American country.

Arab Gulf producers are moving up their prices. Following the Indian tender, the netback was pegged at $330-$340/mt FOB. A sale out of Oman this week moved that price higher. Sources reported that Sohar International Urea and Chemical Industries sold a July cargo of granular at $345/mt FOB. Other producers in the area are expected to follow suit, especially with the possibility of another India tender coming up quickly.

As the week ended, sources reported a deal by Fertiglobe for 40,000 mt at $361/mt FOB for early July shipment. The jump in price far surpasses the SIUCI deal of $345/mt FOB. More price increases are expected as the industry prepares for the next Indian urea tender.

Belarus:

Grodno Azot will halt its Ammonia-4 and Urea-4 units in mid-June for repairs and maintenance, according to an Interfax report, citing the company’s in-house journal. The repairs and maintenance work will start on June 18 and will last 25 days.

The two units have suffered a number of unscheduled stoppages in recent weeks and months, according to the report. Most recently, the Ammonia-4 unit had a shutdown on April 19, which also led to the shutdown of the Urea-4 unit. Prior to that, production at both units was suspended on March 6, reportedly due to the incorrect operation of the air compressor, and also in early November.

Indonesia:

Urea prices remain steady at $325/mt FOB, based on a sale earlier in the month to Swiss Singapore. At the time, sources speculated the tons would be offered into India. However, Swiss is fulfilling its tender award from Bahrain.

Persero, the holding company for the urea producers, has moved at least 350,000 mt to local distributors to ensure that plenty of material is on hand once the EID (May 13) holiday ends and demand for inputs begins.

Turkey:

The tender called by Toros to close on May 7 was scrapped. The company wanted 15,000 mt of granular and 12,000 mt of prilled urea. Reportedly, the netbacks on the offers came to $350/mt FOB Egypt. At the time, that level was at the upper end of the price range.

Nepal:

Sources reported that KSCL scrapped it May 7 tender for 25,000 mt of prilled or granular urea. Reportedly, the prices were much higher than the Nepalese buyer expected.

Sources said offers were around $453/mt CIP. The estimated package on product sold to Nepal is put at $100/mt FOB, for a netback to China in the low-$350s/mt FOB. At the time, this price was higher than the existing market, but is now at the low end of pricing ideas.

Ethiopia:

Urea imports in Ethiopia for the first four months of the year were down almost 40 percent, to 187,000 mt from 309,000 mt in 2020, according to Trade Data Monitor. April 2021 imports were almost nil at 312 mt, against April 2020 imports of 90,000 mt.

Brazil:

Urea prices are strengthening at the ports and inland. Sources said the upward movement is a result of the MMTC/India tender and subsequent strength in pricing from North Africa and the Arab Gulf.

The landed price at Paranagua is pegged at $385-$400/mt CFR, representing a $10-$15/mt jump in pricing. In addition to the rising prices from exporting countries, sources said reports of better weather for corn inland are driving local buyers to step up their purchases to top off their supplies in preparation for the next application season.

Rondonopolis prices have tightened to $485-$500/mt FOB ex-warehouse. Likewise, prices at Sorriso are now at $500-$535/mt FOB ex-warehouse. The barter rate for 1 mt of urea remains at 65 bags of corn in Rondonopolis.

Brazil Urea Prices
Terminal/City US$/mt FOB ex-warehouse
Week ending 05/07 Week Ending 05/14
Rondonopolis 450-535 485-500
Sorriso 500-510 500-535

Year-to-date imports of urea moved up 18 percent, to 2.4 million mt from last year’s 2 million mt total, according to Trade Data Monitor. April imports this year were down 1.5 percent, to 406,000 mt from 412,000 mt in April 2020. The main suppliers in April this year were Oman at 150,000 mt, Russia at 99,000 mt, and Qatar at 95,000 mt.

Brazil Urea Imports
Partner Country January-April
2020 2021 %Δ 2021/20
World 2,016,109 2,376,443 17.87
Qatar 538,784 677,179 25.69
Russia 288,805 626,872 117.06
Algeria 429,031 304,385 (29.05)
Oman – 265,141  
Nigeria 295,790 164,139 (44.51)
* Source: Trade Data Monitor

UAN

Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, U.S. Exports, U.S. Gulf, U.S. Imports, UAN, Western Cornbelt

U.S. Gulf:

The NOLA UAN barge market continued to be generally put at the $300/st ($9.38/unit) FOB mark. East Coast vessel business continued to be called $345-$350/mt CFR.

U.S. Imports:

March UAN imports were up 79.8 percent, to 350,848 st from the year-ago 195,140 st. July-March totals stood at 1.87 million st, down 15.2 percent from the year-ago 2.20 million st.

Material originating from Russia led July-March imports at 806,451 st, a 27.4 percent year-over-year decline from 1.11 million st. Trinidad and Tobago followed with 668,582 st, down 9.3 percent from 737,418 st last year, while Canada’s 305,404 st total softened 4.7 percent from the year-ago 320,335 st.

U.S. Exports:

March exports of UAN dropped 44.4 percent, to 16,164 st from the year-ago 29,065 st. Exports of 576,926 st were reported for July-March, a 16.9 percent decline from the year-ago 694,233 st.

Eastern Cornbelt:

UAN-32 was steady at $325-$345/st ($10.16-$10.78/unit) FOB in the Eastern Cornbelt, with the low at Mount Vernon and Seneca, Ill., and the high at Burns Harbor, Ind. Sources continued to quote the Cincinnati market at $332/st ($10.38/unit) for UAN-32 and $285-$290/st ($10.18-$10.36/unit) FOB for UAN-28.

Western Cornbelt:

UAN-32 was unchanged at $325-$345/st ($10.16-$10.78/unit) FOB in the Western Cornbelt, with the high out of spot Iowa terminals and the low reported at St. Louis. One Iowa contact reported the bulk of terminal pricing in the $330-$340/st ($10.31-$10.63/unit) FOB range at mid-month.

Southern Plains:

The UAN-32 market was pegged at a solid $350/st ($10.94/unit) FOB Oklahoma production points amid reports of tight inventories and supply allocations. Pricing out of Gulf Coast terminals in Texas had reportedly edged up to $330-$345/st ($10.31-$10.78/unit) FOB in mid-May.

South Central:

The UAN-32 market remained at $320-$330/st ($10.00-$10.31/unit) FOB South Central terminals, with the low reported at Memphis.

Southeast:

The UAN-32 market in the Southeast was quoted at $325/st ($10.16/unit) FOB Wilmington, with pricing out of inland tanks in Georgia pegged in the $310-$320/st ($9.69-$10.00/unit) FOB range.