All posts by mickeybarb@charter.net

Yara Celebrates 75 Years in North America

News, News Briefs

Yara North America, Tampa, is celebrating its 75th anniversary as a fertilizer provider in North America.

“Since 1946, Yara North America has been committed to being the crop nutrition company of the future, and we’re extremely proud of all of the significant strides that we’ve made within the industry,” said Magnus Ankarstrand, President of Yara North America. “In 1946 our export of fertilizer to the U.S. helped rebuild a war-torn Norway, as well as creating an offtake market for U.S. crops on the return. Being a core contributor to the food value chain has always been our DNA.

“We’ve continued to invest in research and development for different crop nutrition solutions, sought ideas for creating new digital tools to improve practices, and we look forward to continuing to build and share our knowledge for the betterment of our industry and world,” he added.

Oslo-based Yara was founded in 1905. It now has around 16,000 employees and operations in over 60 countries.

Nutrien Cuts Finance Staff

Canada, News, News Briefs

Nutrien Ltd., Saskatoon, is cutting employment levels in its finance department, with Potash CEO Ken Seitz telling the Regina Leader-Post the number would be less than 50. CFO Pedro Farah released a statement on March 4.

“As a global leader, Nutrien has a responsibility to ensure our operations are as efficient as possible and adaptive to meet the needs of the market, our stakeholders, and our global employees,” said Farah. “We are modernizing and automating areas of our finance department and will be making some structural changes. These changes will unfortunately impact some positions supporting transactional work in Alberta, Saskatchewan, and Colorado.”

Farah said the specifics are still being confirmed, including finding new roles for employees where possible. “We are committed to supporting individuals through the transition and can confirm this will not impact a significant percentage of our employee base. These regions remain an important part of our footprint and we will continue to be invested as an employer and as a corporate citizen.”

In the meantime, Bloomberg reported that Nutrien has more than 1,000 jobs posted in North America, with 300 of those in Alberta, Saskatchewan, and Colorado.

SO4 Reports $138 M Debt Facility

Australia, Earnings, News, Specialty, Sulfate of Potash

Junior sulfate of potash (SOP) developer Salt Lake Potash Ltd. (SO4), Perth, on March 3 announced the successful syndication of its US$138m Senior Debt Facility, with Sequoia Economic Infrastructure Income Fund (SEQI) and the Commonwealth Bank of Australia (CBA) joining the facility. SEQI and CBA will invest $39 million and $25 million, respectively, into the facility, complimenting existing investments led and arranged by Taurus Mining Finance Fund No. 2 LP (Taurus) and the Australian Government’s Clean Energy Finance Corporation (CEFC).

“I am extremely pleased to welcome SEQI, an experienced global debt investor, and leading Australian bank CBA, into our Senior Debt Facility,” said SO4 CEO Tony Swiericzuk. “The breadth and quality of investors that have been attracted to this facility is testament to the robust financial characteristics and positive environmental credentials of the project and its proficient execution by the SO4 team. We look forward to continuing our relationship with Sequoia and CBA as we pursue our vision of a multi-lake SOP province in Western Australia.”

SO4 is initially targeting 245,000 mt/y of production from its Lake Way SOP project in the northern Goldfields of Western Australia.

Following the syndication, the Taurus investment will be reduced to $35 million from $91 million, and CEFC to $39 million from $47 million. The final facility holding structure is as follows: CEFC $39 million, Sequoia $39 million, Taurus $35 million, and Commonwealth $25 million.

LSB Pushes Back Pryor Turnaround; Cherokee to Be Down 30 Days in 3Q

Ammonia, California, Canada, News, News Briefs, South Central, UAN

LSB Industries Inc., Oklahoma City, told analysts on Feb. 25 that the company has pushed back a planned turnaround for its Pryor, Okla., Nitrogen facility in 2021 to next year. As a result, the company now expects to have only one major turnaround per year, with its three major plants on three-year cycles.

Despite positive market conditions, LSB said it would continue with its planned 30-day turnaround at Cherokee, Ala., in the third quarter. LSB said the outage will cost it some 15,000 st of ammonia, as well as some downstream production of UAN and industrial products. Turnaround expenses are expected to be $10 million, and the company will have capital expenditures across the three plants of $30 million.

In addition to being upbeat about the ag market, the company also pointed to positives for its industrial and mining products. It expects to continue to focus on the upgrade of ammonia into higher-value downstream production in 2021, with the ramp-up of nitric acid as a result of a previously-reported seven-year offtake agreement (GM Oct. 9, 2020). Under the agreement, LSB will supply between 70,000 to 100,000 st of nitric acid per year. Sales were expected to begin in the first quarter 2021.

The company also expects new contract awards, coupled with further recovery from COVID-related impacts to result in higher volumes of industrial and mining sales volumes.

President and CEO Mark Behrman pointed to favorable indicators for the company’s low-density ammonium nitrate from the sizeable North American copper market, where prices for the metal have risen to the highest levels in almost 10 years.

In other news, LSB said its lawsuit against Leidos, the major contractor for its El Dorado, Ark., ammonia plant, has been pushed back to this fall (GM March 16, 2018). LSB has alleged damages of over $100 million. The company has allotted some $4 million this year for legal fees to cover the litigation.

OCI Inks Agreements to Advance Ammonia, Methanol as Vessel Fuels by 2023/24

Ammonia, Europe, Featured, Methanol, News, Specialty

OCI NV, Amsterdam, said on March 5 it has signed two agreements to commercialize ammonia and methanol as shipping fuels by 2023/24. A producer of both products, OCI has signed the agreement with two major shipping companies and an engine manufacturer.

“Ammonia and methanol are the fuels of the future, and we are excited to continue to play a part in the transition to zero carbon in a cost-effective way through these partnerships,” said OCI CEO Ahmed El-Hoshy. “Our products are perfectly positioned to fuel the transition, and we believe the push towards low carbon fuels in the coming years will be met with the adoption of both methanol and ammonia as industry standard.

“We see this as starting with the adoption of grey/blue methanol and ammonia, and then shifting to green as production costs come down, customer appetites move towards green, and regulations continue to develop,” he continued.

“We are confident that, in addition to the exciting developments on new-builds, existing vessels can economically convert their engines to use our low-carbon products and help the industry meet its goals,” he said. “We are therefore pleased that we have signed these agreements with two of the world’s leading ship owners and the leading engine manufacturer, bringing together a comprehensive representation of the maritime value chain.

One Memorandum of Understanding (MOU) is with Man Energy Solutions (MAN) and Hartmann Gas Carriers Germany GmbH & Co (Hartmann). Under this agreement, OCI intends to charter ammonia vessels built, owned, and operated by Hartmann and its commercial arm, GasChem Services, that are operated using ammonia engines designed by MAN. The partners aim to propel the commercialization of ammonia-fueled vessels and accelerate the energy transition and decarbonization of the shipping industry.

In a separate MOU with MAN and Eastern Pacific Shipping (EPS), the partners will target retrofitting existing vessels from EPS’ tanker fleet to methanol and ammonia, new-build methanol and ammonia-fueled vessels to drive the commercialization of these fuels, and provide a path for the current conventional fuel vessel fleet to decarbonize. OCI said the technology to retrofit a vessel to accept methanol as a fuel is available today and the intent is for OCI to charter the first retrofitted methanol fueled vessel operated by EPS using already in-service MAN engines and technology in the next two years.

OCI said it plans to discuss the marine fuel opportunities for OCI further at an upcoming ESG Investor Day scheduled for March 8.

El-Hoshy told analysts at a company FY2020 earnings call on Feb. 25 that the company was advancing ammonia as a shipping fuel. He reminded that OCI is one of the largest producers and traders of ammonia globally, with ammonia plants and storage tanks located directly on the major shipping routes, and located in regions with “abundant and very cost-competitive renewable resources.”

The CEO said the company has made it “a top priority” to make ammonia an established fuel for shipping, and is also working on accelerating the transition to producing blue and green ammonia at its plants.

“Having potential end markets like ammonia as a shipping fuel is just one example, but you can see growth in terms of the future possibility using our locations for storage and infrastructure as very well located bunkering areas for shipping – an area that several years ago was not on the radar screen for OCI,” he said.

El-Hoshy told analysts the company was also going to be looking further and further downstream – for example, at the chemicals’ downstream markets – when it comes to products like ammonia and methanol.

OCI in February 2020 as part of its longstanding strategic review of its methanol business (GM Aug. 30, 2019; March 8, 2019), initiated a process with several interested parties that may result in a partial divestment or other structures for methanol, but had ruled out spin-off of the methanol business as a separate company (GM Feb. 28, 2020). The company in May opted to defer moving ahead with the process until the first half of 2021 to allow for an improved transaction environment for both OCI and interested parties (GM May 15, 2020)

At its earnings call last week, El-Hoshy told analysts the company continues to look at “any methanol value enhancing opportunities that make sense from a value perspective with regards to the company, taking into account our free cash flow profile and our leverage profile.

“The outlook for methanol is materially improved, so there’s an opportunity for us to continue to generate the free cash flow staying as is, as well as potentially some strategic alternatives,” said El-Hoshy.

However, he emphasized that the company would look “with a very discerning eye,” given the company’s methanol volume ramp-up – close to 50 percent in the fourth quarter of 2020 (GM Feb. 26, p. 31), and which is continuing to be a big volume driver here in 2021 for the group.

El-Hoshy said M&A also is always a possibility for the company to take advantage of.

“We are well-positioned with our global asset base. There’s still synergy potentials in the Middle East following the ADNOC-OCI joint venture that we have, as well as in very fragmented European nitrates, as well as the U.S. market,” he said.

“Some of that activity could happen with OCI on the nitrogen and methanol side or it could happen ‘outside of OCI,’” said the CEO. “We anticipate that happening because the ‘bid-ask’ tends to get smaller as the industry comes out of a trough and people have a bit more cash – and the market could continue to see consolidation, and should continue to see consolidation.”

Intrepid Posts 4Q, Full-Year Loss; 4Q MOP Volumes Up 34 Percent

Earnings, News, Potash, Season's Greetings

Intrepid Potash Inc. reported a 34 percent increase in potash volumes for the fourth quarter ending Dec. 31, 2020, though it posted a loss for both the quarter and year, citing COVID-19, particularly with respect to the company’s sales to the oil and gas industry.

“We are excited to move into 2021 and put the impacts of the COVID-19 pandemic gradually behind us as strong farmer economics will allow us to fully take advantage of higher potash and Trio® prices, which are currently $140 per ton and $60 per ton above summer-fill price levels, respectively,” said Bob Jornayvaz, Intrepid Executive Chairman, President, and CEO.

“The fourth quarter was highlighted by solid cash flow and a significant increase in EBITDA compared to the prior two quarters as fertilizer markets and oilfield activity both rebounded sharply from this past summer. Under-application of potash from recent seasons, favorable weather, and very strong commodity pricing will continue to support our fertilizer markets through the spring season,” Jornayvaz added.

While prices are moving up now, fourth quarter potash prices were lower than the year-ago average, while those for Trio were up on slightly lower volumes. In the year-ago period, Trio volumes represented a higher amount of lower-priced international tons.

Despite the large potash volumes in the fourth quarter, Intrepid still expects 2021 volumes to increase 5-10 percent. The company said it is seeing low potash inventories across the entire U.S., as demand is being spurred on by higher prices for all major crops. The company expects a strong spring well into April and May. Intrepid also said it is seeing fewer imports from European competitors.

Intrepid expects average realized potash prices to move from $248/st in the fourth quarter to $300-$310 in the second quarter, with the first quarter somewhere between the two. The company expects average realized Trio prices to go from $188/st FOB in the fourth-quarter to $220-$230/st in the first and $230-$240/st FOB in the second.

Intrepid posted a fourth-quarter net loss of $711,000 ($0.05 per diluted share) on sales of $48.4 million, down from the year-ago net income of $2.1 million ($0.16 per share) and $48.8 million, respectively. Adjusted EBITDA was $9.7 million, down from the year-ago $12.4 million.

The company reported a full-year loss of $27.2 million ($2.09 per share) on sales of $197 million, compared to 2019’s net income of $13.6 million ($1.04 per share) and $220.1 million, respectively. Adjusted EBITDA was $20.3 million, down from $52.8 million.

Potash 4Q-20 4Q-19 2020 2019
Sales ($000) 27,556 27,556 108,060 124,648
Gross Margin ($000) 3,847 5,746 11,551 27,787
Production (000 st) 106 110 308 328
Sales Volume (000 st) 78 58 317 319
Avg Realized Price ($/st) 248 278 250 284
Trio 4Q-20 4Q-19 2020 2019
Sales ($000) 15,565 15,669 70,287 69,551
Gross Margin ($000) (375) 23 (8,505) 1,100
Production (000 st) 58 45 213 228
Sales Volume (000 st) 50 53 230 225
Avg Realized Price ($/st) 188 170 195 195
Oilfield Services 4Q-20 4Q-19 2020 2019
Sales ($000) 5,390 8,323 18,929 27,894
Gross Margin ($000) 2,342 4,421 7,484 14,591

Fertilizers Europe Welcomes E.C. Communication on E.U. Fertilizers Products Labeling

Europe, News, News Briefs, Phosphate, Russia

The European Commission (E.C.) in February adopted a “Communication” concerning the visual appearance of the label on European Union (E.U.) fertilizing products as part of the implementation process of the Regulation 2019/1009 that comes into force in July 2022.

The European Union Council on May 24, 2019, adopted the new Fertilizer Regulation that harmonizes the requirements for fertilizers produced from phosphate minerals and from organic or secondary raw materials that can be sold on the E.U. market (GM May 24, 2019).

The guidelines are meant to serve as a guide for European fertilizer producers to develop a customized labeling. While not yet legally binding, they have been welcomed by Fertilizers Europe.

The Brussels-based fertilizer manufacturers’ organization said the guidelines provide “much needed clarity” for European fertilizer producers to adapt their products’ labeling to the requirements set in the Regulation, and on what information needs to be included.

Russian fertilizer group PhosAgro has also welcomed the E.C.’s labeling guidelines, and in particular the voluntary “green” labeling.

Under the new Fertilizer Regulation, which comes into force on July 16, 22, the sale of phosphate-based fertilizers containing more than 60 mg of cadmium per kg of P2O5 will be prohibited throughout the E.U. region. Under the new regulation, manufacturers of mineral fertilizers with cadmium content below the benchmark of 20 mg of Cd per kg of P2O5 may use a voluntary green label on their packaging.

In July 2026, the EC will consider in its next report further tightening of restrictions on cadmium.

“The voluntary green labeling is in line with both the European Green Deal and the new Farm to Fork Strategy goal of limiting the impact on arable land of fertilizers with high levels of harmful contaminants,” said PhosAgro. “The labels underscore the Commission’s commitment to transitioning to sustainable agriculture and to maintaining healthy soils that are not contaminated with heavy metals, which, in the long term, will protect the health of plants, animals, and humans, thanks to the production of higher-quality food.”

PhosAgro CEO Andrey Guryev said: “PhosAgro always welcomes measures to increase the transparency of fertilizer production and supply chains for end consumers. Farmers have the right to choose their crop nutrients based on all available information about their composition.”

Phosphate rock from Russia’s Murmansk region – the core of PhosAgro’s phosphate-based and NPK fertilizer production – is naturally low in cadmium (less than 20 mg of Cd per kg of P2O5).

FBN Acquires Canadian Specialty Producer

California, Canada, Featured, News, Specialty

Farmer’s Business Network Inc. (FBN®), San Carlos, Calif., the direct-to-farm ag tech platform and farmer network, has announced the acquisition of Professional Ag Distribution Inc. (Pro Ag), Langley Township, B.C., a specialty fertilizer manufacturer and retailer for the horticulture and specialty markets, as it moves to meet the needs of specialty crop farmers. Pro Ag provides a long list of liquid specialty fertilizers as well as crop protection products and industrial solutions, which include de-icers.

“FBN has always been a champion of greater choice for farmers and with this acquisition we’ll expand our industry-leading solutions to specialty crops – from tree nuts to leaf vegetables to berries and everything in between,” said Tom Staples, President, FBN Direct®, Global. “Pro Ag’s unique curated nutrition model ensures growers gain the highest amount of ROI with minimal use of inputs, which is great for farm incomes and the environment.”

Pro Ag is available immediately to specialty growers in Canada, and is expected to be more widely available across North America by the 2021 growing season.

The acquisition comes as FBN continues to expand its offerings. FBN announced the acquisition of seed research company Haplotech Inc., Winnipeg, as well as the Canadian canola breeding program and pipeline from San Diego-based Cibus in October 2020 (GM Oct. 30, 2020). It also expanded into Australia through the acquisition of Farmsave Holdings Pty Ltd., an online ag input platform in July 2020 (GM July 24, 2020).

FBN may have reason to start buying up ag input production assets. Canada’s Competition Bureau last February announced that it was investigating allegations that a number of manufacturers and wholesalers of seeds and crop protection products have anti-competitively refused to supply or restricted supply to FBN (GM Feb. 14, 2020). It said it was also investigating whether some of these entities may have engaged in coordinated behavior against FBN.

And in January, an antitrust claim was lodged in federal court against crop input producers and wholesalers/retailers, alleging that these companies are violating state and federal antitrust laws through a coordinated boycott of e-commerce sales platforms like FBN (GM Jan. 15, p. 1). Attorneys for plaintiff Barbara Piper, a farmer’s widow who oversees her deceased husband’s estate, have asked the U.S. District Court for the Southern District of Illinois to certify the case as a class action. FBN is not a party to the litigation and had no comment on the case.

Ammonia

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

U.S. Gulf/Tampa:

Tampa ammonia was concluded at $445/mt CFR for March, up $115/mt, or 35 percent, from February’s $330/mt CFR. Sources had been predicting a significant increase, citing major international and domestic outages.

The mid-February freeze that temporarily idled much nitrogen capacity did not help. In addition, the Yara Freeport plant was down due to mechanical problems, and IPL’s Waggaman, La., plant remains offline until March 15.

All of these factors also weighed on the NOLA ammonia barge market, which moved up to $475/st FOB from $360/st FOB.

Asked about the Tampa increase at the March 3 Bank of America 2021 Global Agriculture and Materials Conference, CF Senior Vice President Bert Frost also noted an increase in industrial demand, citing the caprolactam and phosphate industries. “I would think that every phosphate plant today is running at full speed, soaking up additional ammonia,” Frost said.

Eastern Cornbelt:

CF on March 3 reposted March-June ammonia at $570/st FOB Kingston Mines, Ill.; $580/st FOB Huntington, Ind.; $590/st FOB Illinois terminals at Albany, Peru, and Seneca; $600/st FOB Cowden, Ill., and Terra Haute, Ind.; $620/st FOB Frankfort, Ind.; and $650/st FOB Mount Vernon, Ind., and Henderson, Ky.

Those prices reflect new levels since CF pulled offers in February due to weather-related plant outages and higher natural gas prices, and are up significantly from previous postings in the $470-$500/st FOB range for spring tons in the Eastern Cornbelt.

Western Cornbelt:

CF’s March 3 postings for March-June ammonia firmed to $570/st FOB Palmyra, Mo., $580/st FOB Nebraska terminals at Aurora, Blair, and Fremont, and $585/st FOB Iowa terminals at Garner, Port Neal, and Spencer. Those levels were up roughly $100/st from the last reference prices for spring tons in the region, which were in effect before the mid-February cold weather that caused a number of plant outages and tightened supplies. CF continues to offer no new ammonia pricing at Verdigris and Woodward, Okla.

Iowa sources reported limited ammonia offers from other producers ranging from $585-$600/st FOB in early March.

Northern Plains:

Sources reported firming prices for anhydrous ammonia in early March. Sources said Koch moved its ammonia price up to $595/st FOB Murdock, Minn., on March 2. CF followed on March 3, reposting March-June ammonia prices at $570/st FOB Glenwood, Minn., $585/st FOB Pine Bend, Minn., $600/st FOB Grand Forks, N.D., and $675/st FOB Velva, N.D.

Those prices reflect new levels since producers pulled offers in February due to weather-related plant outages, and are up significantly from previous postings in the $530-$550/st FOB range for spring tons in the Northern Plains regions.

Great Lakes:

Sources reported higher prices for ammonia in the Great Lakes region in early March. Reference prices from CF for March-June tons firmed on March 3 to $540/st FOB Courtright, Ont., and $580/st FOB Huntington, Ind., with Koch referenced at the $585/st level FOB Huntington. Those levels were up $50/st from February and a full $100-$150/st above January prices. Sources also quoted new spring offers at $550/st FOB Lima, Ohio.

California:

Sources reported that Calamco on March 1 reposted anhydrous ammonia at $572/st DEL in California, up from the last reference price of $379/st DEL. The company’s aqua ammonia posting in California firmed on March 1 to $157/st FOB, up from $109/st FOB. Industry sources had been expecting a significant price jump from Calamco ahead of the spring season, as the last postings had been in effect since June 2020.

Pacific Northwest:

Ammonia prices were also firming in the Pacific Northwest, with reports of new offers in the $600-$620/st DEL range, up significantly from the last reported range of $475-$488/st DEL.

Black Sea:

The lack of excess material from Yuzhnyy for the spot ammonia market leaves public pricing stable in the $360s/mt FOB. Once tons are available for export, however, sources said buyers should expect to pay up to $400/mt FOB.

The expected strength in pricing from the area comes from prices in other parts of the world and an offer from Turkey. Sources said Gemlik is offering 23,000 mt at $500/mt FOB. Traders said the seller may not get that price, but the fact that the company is starting negotiations at that level indicates how tight the ammonia market is, sources said.

Middle East:

After a long break of any spot ammonia deals, SABIC reported that it closed a sale with a Taiwan buyer at $340/mt FOB.

The price is lower than what many expected to see, leaving some to wonder if the sale is part of a formula-based deal. Earlier predictions of a spot deal suggested buyers might be faced with offers closer to $400/mt FOB.

India:

The country reportedly needs ammonia, but buyers are reluctant to step up in an ever-rising market. The DAP producers are especially hesitant, because the price of each of the inputs needed for their production is rising. The increases are making it difficult to provide DAP and other phosphate-based fertilizers at prices favorable to the farmers.

Northwest Europe:

Higher ammonia prices from Trinidad and the Middle East, combined with the expected price from Yuzhnyy, have combined to set pricing expectations at $450-$460/mt C&F in Northwest Europe. Sources added that sales in the low-$380s/mt FOB from Baltic suppliers underscored the new level.

Urea

Australia, Brazil, China, Eastern Cornbelt, Great Lakes, India, Market Watch, Middle East, Nigeria, Northeast, Northern Plains, Southeast Asia, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf:

NOLA granular urea barges continued to move up, starting the week in the $357-$363/st FOB range. However, sources said news on March 4 that CF was raising UAN postings by as much as $90/st quickly impacted urea barge price ideas. As a result, $370/st FOB for granular urea barges was reported by late Thursday, leaving the range for the week at $357-$370/st FOB, up from the week-ago $346-$359/st FOB.

Eastern Cornbelt:

Urea prices in the Eastern Cornbelt were inching up on firming NOLA barge values in early March. Sources pegged the regional market at $395-$415/st FOB terminals, up $5-$10/st from last report, with the low reported at Cincinnati, Ohio, and Ottawa, Ill., at midweek.

Western Cornbelt:

Urea was pegged at $390-$415/st FOB in the Western Cornbelt, up $5-$10/st from last report, with the low confirmed at St. Louis, Mo., and the high out of spot Iowa locations. The market FOB Port Neal, Iowa, remained firmly in the $390-$410/st FOB range in early March, while pricing at Inola/Catoosa, Okla., firmed from a low of $385-$390/st FOB early in the week to a high of $410-$415/st FOB as the week progressed.

Northern Plains:

The urea market was reported at $385-$395/st FOB St. Paul, Minn., for river-open tons and higher for spring offers. Delivered urea in the Dakotas ranged from $430-$460/st in early March, depending on source and time of shipment, with the upper end quoted for some prompt domestic offers to points in northern South Dakota.

Great Lakes:

Urea prices were quoted at $410-$450/st FOB in the Great Lakes region, up another $10/st from last report, with the low reported in Wisconsin. Michigan sources pegged the market at $425-$450/st FOB in early March, with the lower end at Maumee/Toledo, Ohio, and the higher numbers out of terminals in Webberville and Saginaw, Mich.

Northeast:

The urea market in the Northeast was quoted at a firm $400/st FOB Fairless Hills, Pa., for March tons and $405/st FOB for Q2 shipments.

China:

Sources said the domestic urea market softened and quickly rebounded as Chinese traders began taking positions in anticipation of India calling a urea tender.

Sources said prills hovered in the low-$350s/mt FOB, while granular product remained in the $360s/mt FOB. These prices were confirmed by reports that a sale for the end of March was done with an Australian buyer. Likewise, the lowest offer in the Sri Lanka tender showed a netback to China in the low-$360s/mt FOB.

While producers want to see higher prices when the Indian tender comes around, sources said they have been forced to moderate their views because of higher freight prices. Traders argued that the recent jump in freight to about $20/mt to India, combined with ever-higher product prices, could limit how many tons are sold in upcoming tenders.

The domestic season demand is beginning to wind down even as production remains at a robust level. Output is expected to remain high. Green Markets Research Director Alexis Maxwell reported that more natural gas is being made available for industrial use as the weather warms. She said the production rate in urea plants for March is at a five-year high of 75.7 percent.

The resulting increase in output means supplies of product for export are increasing. At the same time, the government seems to have successfully attacked COVID-19 hotspots. As a result, the transportation infrastructure to move urea from the plant to ports is working at better levels than in the past few weeks.

The increased output, along with improvements in transportation, has resulted in reports of higher stockpiles at portside warehouses. According to Maxwell, inventory at the ports for March is expected to reach 300,000 mt, allowing for first-quarter exports to hit 900,000 mt.

Middle East:

Urea prices remain in the low-$370s/mt FOB even as producers clamor for higher prices. Sources said some producers are claiming prices should be in the $380s/mt FOB, but no one can point to any business done at that level.

As Chinese pricing expectations moderate with a possible Indian tender on the horizon, sources said Arab Gulf suppliers also need to practice restraint in their pricing if they want to be competitive in the tender.

The strength in pricing comes from reports that producers are sold out for March and have limited tons for April. Even with those limitations, Arab Gulf urea is expected to play a role in the Indian tender once it is called.

While Arab Gulf producers are being restrained by demands from potential Indian buyers, sources noted that there are few constraints on the Egyptian sellers.

Producers in Egypt watched prices move from $390/mt to $400/mt FOB. By midweek, Abu Qir had settled at $396/mt FOB for 25,000 mt to several buyers. As the week closed, Helwan sold two top-off granular lots of 3,000 mt each at $400/mt FOB. Each of the deals were for mid- to late-April loadings.

Sources said the material in each case was heading for European buyers looking to ensure plentiful supplies for the spring season. One trader said buyers are looking to secure their tons before the Indian tender soaks up the excess urea in the market and pushes prices higher.

While each week shows a steady increase in the price out of Egypt, the paper market continues to be bearish in its predictions. The projected price into April, according to sources, is being quoted at $375/mt FOB, with May prices dropping to $357/mt FOB. The price for material being shipped in March is pegged at $380-$390/mt FOB.

A sale from Algeria at $387/mt FOB for the end of April confirmed the stronger prices for the Mediterranean market.

India:

Pessimists said India will not call a tender until the beginning of the new fiscal year on April 1. Optimists said the call could come soon. Most sources, however, speculate that the tender will be called near the end of the month so the awards can be made after April 1, thus initiating the tender before the end of the fiscal year, but pushing costs to the next.

When the Indian buyer comes in, it will face higher prices than last year. Freight rates have jumped at least $5/mt from traditional supply locations such as the Arab Gulf and China. Even if producers are willing to ease off on their pricing ideas, the final landed price will be just under $400/mt CFR. Last year, the higher prices paid were $289-$290/mt CFR, and in 2019 the highest price was $292-$295/mt CFR.

Sources said the Indian tender will have an impact on the general market. Buyers in Australia and Southeast Asia are now looking for urea. Some are hesitant to buy now in the hope that the longer India waits, the more pressure there will be to lower prices. However, once the tender is called, traders are expecting to see prices rebound with a vengeance.

Southeast Asia:

Sources said predictions of good rains for the spring season indicate demand for urea will be stronger than usual. The increased demand is hitting just as India is preparing to call its first tender of the year. Sources said the Indian buyer will quickly absorb the extra tons being produced in China, leaving smaller buyers to face ever-higher prices.

Reportedly, the Thai government has put a cap on what local distributors can charge farmers for urea. While the cap does not affect the few tons already on hand in the country, sources said the current price levels from the Arab Gulf and China would put the landed price well above the limits set by the government.

According to one trader, the reserves on hand in Thailand are only good for about one month. With better-than-expected rains coming, sources said more urea will be needed – and soon.

Sri Lanka closed a tender for 17,500 of prilled urea on March 3. Sources said the award will most likely go to Aries because of its low offer with 180 days credit.

Offering Company US$/mt CFR Bagged Sight US$/mt CFR Bagged with 180 Days Source
Aries 410.00 410.00 China-Indonesia-Qatar-Vietnam
Valency 405.19 418.74 China-Indonesia-Egypt-Arab Gulf
Ameropa 400.19 431.04 Vietnam-China
Agrifert Liven 438.00 440.00 China-Indonesia-Vietnam

The last Sri Lanka tender in February came in at $397/mt CFR, also awarded to Aries. Sources said the current Aries offer shows am estimated netback to China of about $360/mt FOB.

Australia:

Urea imports for 2020 were reported at 2.4 million mt, up from 1.9 million mt in 2019.

The main suppliers to the country in 2020 were the Saudis at 607,000 mt, the UAE at 556,000 mt, Malaysia at 442,000 mt, and Qatar at 438,000 mt. The bulk of the orders came in the first half of the year at 1.6 million mt, compared with 775,000 mt during the July-December period.

Brazil:

The lower end of the price range in Brazil tightened as demand for urea steps up. Sources said the price at the ports is now at $395-$400/mt CFR. The demand is also being seen inland. Rondonopolis has edged upward to $545-$550/mt FOB ex-warehouse.

Brazil Urea Prices
Terminal/City US$/mt FOB ex-warehouse
Week ending 02/26 Week Ending 03/05
Rondonopolis 540-545 545-550
Sorriso 520 NA

Even though the price of urea is going up, higher returns for crops are keeping the barter rate steady. Sources said 60 bags of corn still gets 1 mt of urea.

Nigeria:

The first shipment of urea will begin this month from Dangote Industries’ ammonia and granular urea complex in the Lekki Free Trade Zone, about 50 km east of Central Lagos, according to Nigeria’s Political Economist Ng, citing Central Bank of Nigeria Governor Godwin Emefiele.

The shipment is presumed to be going to the domestic market, with Emefiele saying it would help boost agriculture in the country. After meeting local demand, urea from the plant is expected to be targeted for export to Latin America.

Dangote Industries did not respond to requests for comment. Reports have been circulating in recent weeks of a first-quarter start-up at the new complex (GM Feb. 5, p. 34).