The Tampa anhydrous ammonia price for September has moved up $20/mt from August to close at $330/mt CFR. Sources had been predicting an uptick sighting tight international supplies.
All posts by Steve Seay
Drought Interrupts K+S Production
K+S Group, Kassel, Germany, reports that persistent severe drought in recent months has led to production being temporarily interrupted at some Werra plants. Their main disposal method is currently restricted due to the exceptionally low water level in the Werra River.
The Wintershall site was shut down the morning of Aug. 27 and will not be able to start production again until further notice. Production at the Hattorf site is still secured, but if the water level continues to remain low, the operations will also have to be shut down. Based on current forecasts, the Unterbreizbach site can continue to produce.
K+S said it is making every effort to increase production at the Werra plant as soon as possible. Additional measures for wastewater disposal are currently being examined.
BPC, IPL Sign New Potash Supply Contract at $50/mt Increase
Belarus Potash Co. (BPC) and Indian Potash Ltd. (IPL), India’s largest potash importer, have signed a new supply contract for the period Sept. 2018 until June 2019 at $290/mt CFR with 180 days’ credit. The news came Aug. 25. The price represents a $50/mt increase on last year’s contract agreed at $240/mt CFR. The Belarus supplier said the volumes agreed are comparable to those for the previous contract year, but did not disclose the volume.
BPC described the negotiations as “challenging and lengthy.”
“As both parties understand the importance of this contract not only for the Indian market but for the whole world potash market, BPC and IPL were able to reach a compromise,” the Belarus supplier said.
“The upward adjustment in the amount of $50 is fair and reflects the current market conditions and actual perspectives. The conclusion of this agreement will undoubtedly become a new positive driver for the mineral fertilizers industry,” said BPC.
Last year, Uralkali Trading was the first supplier to reach a contract deal with IPL. That came in late July, and came after the settlement of the annual seaborne supply contract price with China’s buying consortium.
Recent market talk on potential settlements in India – as well as on the China seaborne contract – had speculated a price increase of anywhere between a $40 and $70/mt on last year. Some sources had also speculated that perhaps only a $30/mt increase might be on the cards.
Earthquake Hits Caribbean
A 6.8 magnitude earthquake hit Trinidad and Tobago around 5:30 p.m. Aug. 21, with a 5.9 magnitude aftershock reported Aug. 22 at 9:27 a.m. So far no deaths have been reported.
BP reports no significant damage to its local LNG facility. There was no immediate word from nitrogen producers.
In the meantime, the same quake registered a 7.3 magnitude in nearby Venezuela, which was the reportedly the largest earthquake in the country since 1900.
EU Opens UAN Dumping Inquiry
The European Union has opened an inquiry into whether the U.S., Russia and Trinidad are dumping UAN, according to a Bloomberg report on Aug. 13. As reported in Green Markets, U.S. producer CF Industries Holdings Inc., Deerfield, Ill., had indicated rumors of a possible investigation, however, last week the European Commission, said at that time one had not begun.
The inquiry will determine whether shipments from Russia, the U.S. and Trinidad and Tobago to the E.U. are “being dumped and whether the dumped imports have caused injury to the union industry,” the European Commission, the bloc’s trade authority in Brussels, says in the Official Journal. According to the report, the investigation was prompted by a June 29 complaint filed by Fertilizers Europe on behalf of producers that account for more than 50 percent the E.U.’s output of UAN.
Under new E.U. rules that speed up dumping probes, the commission has eight months to decide whether to impose provisional antidumping duties against the three countries and 14 months to decide whether to apply “definitive” levies, which usually last for five years.
CF has already alerted analysts that UAN exports to the E.U. account for about only 1 percent of EBITDA and that it can readily market its product elsewhere.
K+S 2Q Earnings Off on Increased Volumes, Prices
K+S Group, Kassel, reported a 53 percent drop in second-quarter operating earnings to €13.4.5 million on revenues of €811 million, down from the year-ago €28.5 million and €742 million, respectively. While the company noted higher prices and volumes in the Potash & Magnesium segment, earnings were negatively impacted by production limitations.
K+S confirmed a significant EBITDA increase for the 2018 financial year, however, the range of €660-€740 million is below the capital market’s expectations.
BPC, Sinochem Ink Five-Year Granular K Supply Deal
Belarusian Potash Co (BPC) and China’s Sinochem Group have signed a five-year exclusive memorandum on the supply of granular potash fertilizers.
The deal was inked on August 12 for the supply of a new type of potash fertilizer, granular white muriate of potash with the addition of zinc and sulfur, BPC said in an August 13 statement. According to the terms of the memorandum, the product will be supplied to the Chinese market for a five-year period starting from 2019 through to 2023, with “the right to sign annual contracts based on the current market situation,” said the Belarusian supplier.
According to the terms of the memorandum, the total supply volume for the five years will be 700,000 mt. The statement made no reference to pricing. But global suppliers have yet to settle the new annual seaborne potash supply contract price with China’s Buying Consortium, of which Sinochem Corp. is a member.
BPC said the memorandum follows and develops the mainstream line of cooperation between the companies, contained in the existing memorandum on other types of Belarusian potash, signed on May 10, 2015.
MMTC Awards 712,000 mt in Urea Tender; All Iranian Product
Five companies, all offering Iranian urea, were issued awards by MMTC Aug. 8. The buying house took 420,000 mt for West Coast delivery at $274.80/mt CFR and 292,000 mt for East Coast delivery at $278.95/mt CFR.
One 50,000 mt cargo, from Midgulf is Iranian urea that was shipped to China in July for re-export to Southeast Asian markets.
Industry sources were unclear how India would handle payment for the material awarded considering the U.S. sanctions against Iran. Iranian urea was specifically mentioned as being affected by the sanctions.
See the Aug. 10 issue of Green Markets for more information and analysis of the tender.
The Andersons Back in Black
The Andersons Inc., Maumee, Ohio, reported second-quarter net income of $21.5 million ($0.76 per diluted share), up from the year-ago net loss of $26.7 million ($0.94 per share). The company reported significantly better results in the Grain and Ethanol units, however, Plant Nutrient and Rail results were lower than year-ago levels. Sales volumes of primary and specialty nutrients were reported to be strong, but margins were pressured. Lawn and contract manufacturing, however, were bright spots for the segment.
Compass Reports 2Q Loss
Compass Minerals, Overland Park, Kan. reported a second-quarter net loss of $7.6 million ($0.23 per diluted share) on sales of $246.7 million, compared to a year-ago net loss of $6.4 million ($0.19 per diluted share) and $228 million, respectively.
Operating earnings were down in both of its Plant Nutrition segments, both North America and South America. They were up for Salt.
“Our second quarter is typically our lowest earnings period, however I am pleased that we delivered top-line growth across all our businesses. This provides a strong indicator that the fundamental market conditions for our businesses globally have continued to improve in 2018,” said Fran Malecha, president and CEO. “I believe we are now better positioned to deliver on our efficiency investments in our salt business, drive growth in our specialty plant nutrition business and capitalize on strong grower economics in South America.”