All posts by traceybg@gmail.com

Market Watch

Ammonia, Ammonium Nitrate, Ammonium Sulfate, Asia, Bangladesh, Black Sea, California, Central Florida, China, Correction, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Nitrogen Solutions, Pacific N.W., Pakistan, Phosphate, Potash, Sulfur, Tampa, U.S. Exports, U.S. Gulf, Urea, Vancouver, Western Canada, Western Cornbelt

AMMONIA

U.S. Gulf/Tampa: Major players concluded August Tampa business last week at $380/mt, up $25/mt from July’s $355/mt.

While prices are generally up internationally, there has been at least one outage in Trinidad, where Potash Corp’s #3 plant has been in the midst of a one-month turnaround. The plant, which was expected to come back up July 23, came back up July 28 instead.

Eastern Cornbelt: The ammonia market was quoted at $480-$500/st FOB regional terminals last week.

Western Cornbelt: Ammonia pricing to the dealer was tagged in the $475-$500/st FOB range last week, with reference prices at the $500/st FOB level or higher at some Iowa locations.

California: Anhydrous ammonia pricing remained at $520-$525/st truck-DEL in California, with aqua ammonia steady as well at $142/st FOB.

Pacific Northwest: Anhydrous ammonia pricing in the Pacific Northwest had reportedly moved to $500-$550/st DEL to the dealer, reflecting a sizable jump from last report. One supplier was referenced at $450/st FOB in Alberta for truck-delivered tons to the U.S.

Western Canada: Fertilizer prices in the region were ramping up throughout the second half of July.

At mid-month, anhydrous ammonia to the dealer was pegged at $496-$540/mt DEL, with the low in Manitoba and the higher numbers in Alberta. By July 19, that range had firmed to $522-$567/mt DEL. On July 23, the market took another increase, with ammonia quoted at $567-$576/mt DEL in Manitoba, $576-$585/mt DEL in Saskatchewan, and $585-$612/mt DEL in Alberta. Producer reference prices for ammonia ranged from $577-$622/mt DEL in the region, depending on location.

Black Sea: Reports keep coming out that the tanks are nearly empty, and that limited material is making it to the port. And yet the price is not moving up as rapidly or as strongly as producers would like.

The new price in Tampa of $380/mt DEL calculates back to about $320/mt FOB. Even with the influence of more aggressive sellers now hawking $400/mt DEL to Tampa, the best price industry analysts can figure in Yuzhnyy is $340-$350/mt FOB.

As last week closed out, no one could point to any Yuzhnyy business above $330/mt FOB. Producers are asking $340/mt FOB, largely as a stepping-stone to higher sustained prices. And $340 is also now reported to be the new break-even price for ammonia production.

The Ukrainian producers are all down for repairs and upkeep. The maintenance work is being extended as long as possible in hopes that the market price will go above the production costs.

Sources say the producers are looking for a sustained price at or above $350/mt FOB so they can restart their facilities. The problem will be that once the plants are back online, the supply side of the market equation will get larger and could force down prices once again. Asian sources say the most likely scenario will be that when the plants do restart, they will do so gradually and in a limited manner.

For now, sources say the price remains in the $320s/mt FOB.

Middle East: Mitsubishi bought a cargo from Iran at $320/mt FOB. At the same time, Fertil is offering a cargo at $330/mt FOB. And other area producers are saying the new starting price for talks is $335/mt FOB.

Industry observers note that demand for ammonia has gone up only incrementally. They say the increase in the price for Middle East ammonia is equally the result of steady strong demand in India and East Asia and the psychology of the market that the price needs to go up.

The Mitsubishi purchase will reportedly go to an Asian buyer.

At the same time, the contracts between Indian buyers and their Arab suppliers continue. Sources say some of the buyers are once again asking for some additional tons to be included in each shipment.

Sources pegged the market solidly in the $320s/mt FOB last week. This week, however, the price might easily move into the $330s/mt FOB, and no one will blink.

The Iranian sale indicates that producers from that country are getting serious about being a regular supplier of ammonia. At the same time, they seem to be unwilling to accept discounts on their product.

Previous sales of Iranian ammonia have been at large discounts to the Arab producers’ prices. In some cases the FOB discount was because loadings took place at the top of the Gulf, thereby requiring longer steaming time. Other times, discounts were forced on the producers because of spotty deliveries. And lastly, buyers often demanded lower prices because they had to go through intermediaries to handle the transaction to ensure U.S. dollars were not paid to Iran for the product.

New facilities further down the Gulf Coast and improved production have eliminated some of the discount arguments. The currency transaction issue is still around, but is becoming more standardized as more Iranian ammonia and urea reach the open market.

To underscore Iran’s new role in the market, the latest phase of the Pardis Petrochemical plant started operations last week. The PPC facility is now set to produce 1.3 million mt of ammonia each year. Press reports indicate a large portion of that output will be for export.

UREA

U.S.Gulf: After weeks of huge price run-ups, prices finally stalled in San Antonio, according to most sources. Most were reporting barge trades within the $290-$295/st FOB range. Sources said that those who really needed product had bought, but for now, others were timid about these higher numbers. There were rumors of $300/st; however, some said those were probably forward trades.

PotashCorp’s Trinidad urea plant went down July 24 with a mechanical problem, but was expected to be back up within a week.

Eastern Cornbelt: Granular urea was pegged in a broad range at $300-$330/st FOB, with the low out of spot river locations and the upper numbers inland.

Western Cornbelt: Granular urea was quoted at $300-$325/st FOB regional terminals to the dealer, with the low out of spot river locations and the upper numbers inland. One Iowa source said dealer pricing in his location had firmed to a solid $320/st FOB last week.

Effective July 23, Agrium’s urea postings in the Northern Plains market moved to $345/st FOB North Dakota warehouses at Alton, Carrington, Colfax, Scranton, and Grand Forks, and $350/st rail-DEL in Minnesota, Wisconsin, and the Dakotas.

California: Rail-delivered urea remained at $360-$380/st in California. Effective Aug. 1, Simplot was slated to move its urea price to the $395/st FOB mark in the state.

Pacific Northwest: Effective July 23, Agrium’s urea postings firmed to $345-$355/st DEL in Montana and Wyoming, depending on location; $360/st FOB West Woodburn, Ore.; $365/st FOB Acequia and Pella, Idaho, and Washington terminals at Glade, Warden, and Wilson; $370/st DEL in Washington, Idaho, Oregon, and northern Nevada; $380/st DEL in northern and central Utah; and $385/st DEL in southern Utah. Those levels reflect a $30/st increase from the company’s July 1 urea postings in the region.

Simplot’s urea price FOB the Rivergate terminal in Oregon was slated to move on Aug. 1 to $340/st.

Western Canada: On July 13, urea pricing to the dealer was quoted in the $371-$396/mt DEL range in the region. On July 19, those numbers had firmed to $386-$411/mt DEL, and by July 23, urea was pegged at $411-$416/mt DEL in Manitoba, $416/mt DEL in Saskatchewan, and $421-$436/mt DEL in Alberta. Dealer reference levels from producers ranged from $420-$445/mt DEL in the region.

Pakistan: TCP closed its tender, and with it left the international market. The buying arm for the Pakistan government accepted the Transammonia offer of 50,000 mt firm and an optional 50,000 mt at $287.89/mt CFR. As last week closed, industry sources were convinced Transammonia would accept the optional bid from TCP.

With a purchase of 100,000 mt, Pakistan will not have to re-enter the international market, say sources. Domestic production is expected to be strong enough by the end of the year to allow Pakistan to be self-sufficient in urea.

Pakistan was forced into the international market when the government ordered natural gas away from industrial customers to residential needs – including power generation.

The denial of inputs for the urea plants meant the country would face a 400,000-mt shortage this application season. The series of tenders by TCP during the past month were designed to fill that gap.

The Pakistan industry has requested that the government not extend its gas curtailment plan, which is expiring July 31, in order to avoid a hike in urea prices and urea plants losses. Local sources say if it is extended for another two to three months, it could mean an additional need to import 150,000 mt of urea.

Middle East: Producers remain comfortable with plenty of contract sales on the books. The lack of the need to sell means producers can continue to call for higher prices.

One trader said that if a buyer were desperate enough to buy, he would likely be desperate enough to pay whatever price the producers are asking.

So far, say sources, no one has been that desperate.

India passed on the offers from the Arab Gulf producers in the latest round of tenders. The signal that prices should not go too high too fast was clear, said sources.

Reports of some deals, however, show that prices are edging upward.

One Asian trader noted that the going price for granular urea in the area is now in the low $270s/mt FOB. Prills – when available – are said to be going at a $5-$10 premium.

The apparent reversal in the granular-prill price differential is explained by the fact that ever-fewer plants in the area make prilled urea.

And yet people argue the price should really be in the mid-$260s/mt FOB. The main argument for the lower price is not what has been offered in past tenders or what the producers say should be paid, but rather industry analysts looking at the Black Sea price and then assuming a difference of $10-$15/mt.

New production in the area has focused exclusively on granular urea. Some companies have even phased out their prilled production in favor of granular in the past several years.

Adding to the growth of available material in the area, the Pardis Petrochemical plant in Iran inaugurated its second phase last week. The upgraded facility will now have a capacity of producing 2.1 million mt of granular urea each year. Press reports indicate a large portion of that output will be used for exports.

Black Sea: Sources say once all the costs are removed from
the deals signed and ready to be delivered to India, the netback
on Yuzhnyy material is in the upper $240s/mt FOB.

Product is flowing without any problem say Asian
sources.

The STC/India tender that closed last month could involve a lot of CIS material. Sources speculate that at least 100,000 mt of the Transammonia award, and all of the 110,000 mt from Dreymoor, will come from Yuzhnyy. Other offers may also include CIS material.

For now, say sources, the producers are comfortable.

Indonesia: Gresik called – and then cancelled – a selling tender for 15,000 mt. Sources say the tender was scrapped because Gresik had not completed some tax-related paperwork with the government. One source said the company called the tender before its export permit was approved.

Whatever the reason, the tender is on hold until the government gives the producer permission to sell its cargo offshore.

The Gresik managers are said to be hoping the paperwork moves quickly. Kaltim and PIM are expected to call tenders as early as next week.

The 15,000 mt offered by Gresik might get easily lost in the 120,000 mt the other two producers are expected to offer.

The Indonesian producers are looking forward to the tenders. The Asian price has firmed up a bit. Sources add that once the Chinese export duty goes back up to 110 percent in September, Indonesian material will look very good to regional buyers.

But the producers will only have 45 days to take advantage of the Chinese limits on exports. After October 15, the duty drops back to 7 percent.

China: The domestic price remains in the low $260s/mt FOB.

Sources report domestic and export demand is strong enough that there is little reason for producers to lower their prices.

Even at the current price level, however, producers are complaining that the price is too low. The cost of inputs for the plants has been rising. At the same time, the factories are under pressure from national and local government leaders to keep operating to ensure full employment. Sources report the plant managers are complying by reducing the output with no layoffs.

The reduced output keeps the urea supply limited, but not so limited that domestic buyers are worried about getting their allotments.

NITROGEN SOLUTIONS

U.S. Gulf: Most last week were calling the barge market $190-$200/st FOB ($5.94-$6.25/unit) and beyond. Reports circulated that domestic producers were out of product, and that if you really needed product you might have to get it from a reseller.

Eastern Cornbelt: The UAN market in the Eastern Cornbelt was reported in the $6.88-$7.34/unit FOB range to the dealer in late July, depending on location. Sources said there would be no UAN loading at Rentech’s E. Dubuque, Ill., facility from 7 p.m. July 30 through 7 a.m. Aug. 4.

Western Cornbelt: UAN-32 was pegged at $215-$230/st ($6.72-$7.19/unit) FOB to the dealer for prompt tons, with dealer reference prices from some suppliers in the $230-$245/st ($7.19-$7.66/unit) FOB range out of regional terminals.

California: UAN-32 was pegged at $245-$250/st ($7.66-$7.81/unit) FOB in the state, up slightly from last report. Delivered UAN-32 was quoted at $240-$260/st ($7.50-$8.13/unit), with the low for railed tons and the upper end for truck-delivered product. Simplot was scheduled to move its UAN-32 pricing FOB Stockton up to the $260/st ($8.13/unit) level on Aug. 1.

Pacific Northwest: UAN-32 pricing remained at $250-$260/st ($7.81-$8.13/unit) DEL in the Pacific Northwest region in late July.

Western Canada: UAN-28 pricing was on the rise in Western Canada. Dealer prices moved on July 19 from $221-$237/mt ($7.89-$8.46/unit) to $230-$246/mt ($8.21-$8.79/unit) DEL in the region. The market took another increase on July 23, to $246-$249/mt ($8.79-$8.89/unit) DEL in Manitoba, $249/mt ($8.89/unit) DEL in Saskatchewan, and $252-$261/mt ($9.00-$9.32/unit) DEL in Alberta. Dealer postings ranged from $256-$271/mt ($9.14-$9.68/unit) DEL in the region, depending on location.

AMMONIUM NITRATE

Western Cornbelt: Ammonium nitrate remained at $290-$300/st FOB in the region.

California: No market was reported for ammonium nitrate in California. CAN-17 remained at $242-$255/st FOB in the state.

Pacific Northwest: No current prices were reported for ammonium nitrate. CAN-17 was steady at $235-$245/st DEL in the region.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate remained at $170-$180/st FOB or rail-DEL in the region.

Western Cornbelt: Granular ammonium sulfate was tagged at $170-$185/st FOB in the Western Cornbelt, with the upper end of the range reported in Iowa.

California: Ammonium sulfate was unchanged at $220-$247/st FOB in California in late July, with the low for standard grade and the upper end for granular product in desert locations.

Pacific Northwest: Ammonium sulfate was steady at $220/st FOB and $225/st DEL in the Pacific Northwest.

Western Canada: Granular ammonium sulfate was pegged at $285-$290/mt DEL in Western Canada in late July, with dealer reference prices roughly $5/mt higher.

PHOSPHATES

Central Florida: The Central Florida phosphate business remained quiet last week, especially compared with the NOLA phosphate barge market. One of the primary reasons was a lack of inventory, although demand in the areas of the eastern part of the country is considerably less than on the river.

Phosphate producers were running as hard as possible, but earlier sales – mainly for export – have gulped down supplies, and inventories remain low. A trader said he was unable to obtain product from either CF or Mosaic.

Tropical Storm Bonnie rolled across Florida the previous weekend, but caused no serious damage before breaking apart in the Gulf of Mexico – and before it hit the spill areas from BP’s Deepwater Horizon disaster.

The Central Florida DAP price range was unchanged from the previous week’s $410-$415/st FOB. CF’s price increased another $10/st FOB to $425/st FOB, but the company was said to have nothing available. Mosaic had no posted price and was not making prompt sales last week. PCS was making sales at “competitive prices.” Agrifos also increased its asking price to $465/st FOB for MAP and $450/st FOB for DAP, and railcars were about $5/st FOB less.

Correction: The Central Florida Price Scan price for this product in last week’s issue (GM, July 26) should have matched the text at $410-$415/st FOB.

U.S. Gulf: The bulls were loose at the Southwest Conference at San Antonio last week, but whether they were running or just wandering around was hard to determine. Certainly, NOLA phosphate barges were traded and prices rose from the previous week.

At least one NOLA DAP barge was sold and at a high price – $448/st FOB – but sources called it forward and not prompt. Early during the meeting deals were few and far between, but trading activity picked up toward the end of the event.

Confidence in the phosphate market was probably the major result; almost everyone believed the price would remain strong through the fall season, and there were no signs of a reversal. The main reason was a lack of supply availability. Another was demand, which was projected to remain strong, because dealers have large gaps in what they have on hand and what they have coming to meet their customers needs. The number of barges available for delivery on a prompt basis was limited, and that helped push up prices.

Corn was yo-yoing last week, dropping early in the week and then rising back to around where it had been earlier. By mid-week, the futures board was around $3.90/bushel, a good price for farmers and for the phosphate industry. Meanwhile, the U.S. Department of Agriculture was expected to release another corn report soon, and speculation was mixed on whether it would show more or less being produced. Regardless, it will affect prices of both corn and phosphate.

Sources said warehouse prices were adjusting to reflect the higher price of phosphate barges.

Early last week at the conference, NOLA DAP barges were purchased as low as $440/st FOB, but toward the end of the conference barges were bringing as much as $442/st FOB. Based on confirmed sales last week, the NOLA DAP range was $440-$442/st FOB, compared to the previous week’s range of $431-$436/st FOB.

Eastern Cornbelt: DAP was tagged in the $465-$475/st FOB range, with the low in Illinois and the upper numbers reported in the Indiana and Ohio market. MAP was $10/st higher than DAP. One regional supplier moved its DAP postings up on July 30 to $470/st FOB Peoria, Ill., and $475/st FOB Cincinnati, Ohio.

10-34-0 pricing had reportedly firmed to $355-$365/st FOB in the region.

Western Cornbelt: Sources quoted the DAP market at $465-$475/st FOB in the region, with the upper half of the range reported in the Iowa market last week. MAP was $10/st higher than DAP. One regional supplier moved its DAP postings up on July 30 to $470/st FOB St. Louis, Mo., and $475/st FOB Inola, Okla., and Pine Bend, Minn., with MAP postings moving to $485/st FOB Inola and Pine Bend.

10-34-0 was pegged in the $345-$365/st FOB range in the region, with the upper end again in Iowa.

Simplot announced last week that phos acid pricing in the Midwest would firm on Aug. 1 to $8.15/unit DEL. That number is up from an earlier announcement from the company that prices would firm $0.10/unit on Aug. 1 to the $7.85/unit DEL in its Midwest sales region.

Agrium also issued a new price list for phos acid, with SPA and MGA moving on Aug. 1 to $795/st DEL in Colorado, Iowa, Kansas, Minnesota, Nebraska, New Mexico, the Dakotas, Oklahoma, Texas, and Wyoming.

California: On July 26, Agrium’s MAP postings firmed to $500/st FOB or rail-DEL in California and Arizona. Simplot also moved its MAP and DAP postings on July 30 to $500/st FOB or rail-DEL in California and Arizona, up from the $485/st level the company had referenced on July 15.

16-20-0 had reportedly firmed to $334-$364 FOB in California, depending on location, with the upper end FOB El Centro. Simplot’s reference price for 0-45-0 SSP was slated to move on July 30 to $442 FOB or rail-DEL.

Phosphoric acid pricing remained at July pricing levels of $8.45/unit DEL for both SPA and MGA. Simplot announced a $0.10/unit increase in its SPA and MGA postings, effective Aug. 1, bringing postings to the $8.55/unit DEL level in California, with MGA moving to $8.75/unit FOB in the state. Agrium also published an Aug. 1 price list for SPA and MGA at $855/st rail-DEL in Arizona and California.

10-34-0 was steady at $370-$390/st FOB in the state, but sources said a $3/st increase would take effect Aug. 1 with the firming phos acid prices.

Pacific Northwest: Effective July 26, Agrium’s MAP postings firmed $20/st to $485/st DEL in Montana and Wyoming; $490/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $490/st FOB and $495/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County.

On July 30, Simplot’s DAP and MAP postings moved to $485/st FOB or rail-DEL in Montana, $490/st FOB or railDEL in Idaho and Utah, and $490-$495/st FOB or rail-DEL in Nevada, Oregon, and Washington. Those levels were up $15/st from Simplot’s July 15 postings.

Simplot also moved its 11-37-0 postings up on July 21, to $405/st FOB Pocatello, Idaho, and $415/st FOB Ontario, Ore. The company’s 16-20-0 postings were slated to move up on July 30 to $321-$326/st DEL in the region, with 0-45-0 SSP postings from the company firming to $437/st FOB Pocatello.

Sources said 10-34-0 pricing in the region had firmed as well, to $375-$400/st FOB.

SPA and MGA remained at July pricing levels of $8.45/unit rail-DEL in the region. Simplot announced a $0.10/unit increase in its SPA and MGA postings effective Aug. 1, bringing postings to the $8.55/unit DEL level in the Pacific Northwest. Agrium also published an Aug. 1 price list for SPA and MGA at $855/st rail-DEL in Idaho, Montana, Nevada, Oregon, Utah, and Washington.

Western Canada: MAP pricing to the dealer firmed $20/mt on July 23, from $562-$597/mt to $582-$617/mt DEL in Western Canada, with the low in Manitoba and the higher numbers reported in Alberta. Dealer reference levels ranged from $590-$625/mt DEL in the region in late July.

10-34-0 was up some $10/mt, moving on July 23 from $470-$473/mt to $480-$483/mt DEL in the region.

U.S.Export: PhosChem made a sale into Central America of a mixed cargo of DAP and MAP at $475/mt FOB, but said it was not making offers late last week due to a lack of inventory. It and other export sellers were looking for a new price of $480/mt FOB for the next deal.

A source said Argentina was looking for supplies, but was offering a price that was about $10/mt FOB lower than what PhosChem did last week. In addition, India and Brazil were believed to be seeking additional product.

A lack of inventory was the strongest factor in the firm price of phosphates on both the export and domestic markets, and prices were likely to increase for the next sale.

Based on the last sale, the export DAP price range last week increased from the previous range of $455-$465/mt FOB to at flat $475/mt FOB.

India: Government buyers have been calling for tenders for DAP – and then rejecting the offers because of high prices.

Sources report that private purchasers of DAP have been able to nail down better deals than the government-run or cooperative buyers.

The big issue is making sure the material comes in under the set price for subsidies. The government companies cannot agree to any deals that are higher than the level set by the government. Private operators, however, can bring in higher-priced material and mix it with earlier tons purchased at a lower price to get an average price still under the government limit.

Asia: Sources report that Chinese producers are making offers to Indian buyers at $460/mt FOB. The only problem is that the Indians do not want to pay more than $470/mt CFR.

The Chinese domestic demand is picking up. Regional and government buyers are beginning to buy tons for shipment to local warehouses for the upcoming application season.

The increase in domestic demand in China is helping shore up prices.

The big issue in the area is not the supply of DAP, but rather the availability of vessels.

With larger urea and NPK orders already on the books, sources say people trying to move DAP are facing a limited number of ships.

At the same time, many ship owners are nervous about having their vessels tied up in port waiting to either be loaded or unloaded. And as the number of fertilizer and grain orders increase, the possibility of delays at the ports also increases.

The big push seems to be trying to get Chinese DAP out before the export duty goes up at the end of the month.

Bangladesh: BCIC has issued a tender for 10,000 mt of phos acid for delivery to Chittagong. Bids are due Aug. 18 and will be valid for 30 days.

POTASH

Eastern Cornbelt: Potash remained at $380-$390/st FOB most regional warehouses, with summer fill postings from producers at the $390/st FOB and $400/st rail-DEL levels in the region.

Western Cornbelt: Potash was steady at $380-$390/st FOB regional warehouses to the dealer, with rail-delivered potash in the $385-$405/st range.

California: Potash was quoted at $415-$425/st in the state. Potassium nitrate remained at $929-$996/st FOB, with the low for bulk tons and the upper end for bagged product. Sulfate of potash (SOP) was quoted at $620-$650/st FOB for bulk tons.

Pacific Northwest: Potash remained at $405-$415/st FOB warehouses and $415-$425/st DEL in the region. Intrepid Potash’s prices for potash FOB Moab and Wendover, Utah, include $355/st for 60 percent white standard and $360/st for 60 percent white granular potash.

Western Canada: Potash was quoted at $397-$406/mt FOB Saskatchewan mines to Canadian customers, depending on grade, producer, and location. Out of Western Canada warehouses, the market was pegged in the $412-$437/mt FOB range, with the lower half reported in Manitoba for 60 percent red potash and the upper end for 62 percent white granular tons FOB Calgary, Alberta.

SULFUR

Tampa: Early last week, phosphate producers and their sulfur suppliers reached an agreement on new pricing for the third quarter, which was down $50/lt for molten delivered to Tampa by oceangoing vessels. The new price was $95/lt FOB.

The international market moved in both directions while the talks were ongoing – first down, then back up. China was the major player in that market, and last week prices in the Middle East were on their way up. China was paying around $110/mt DEL, which was an increase of as much as $30/mt from the low point during the Tampa talks.

Meanwhile, refinery rates remained very high, in excess of 90 percent, which meant there were no shortages in the supply chain. Demand was also strong from both phosphate producers and from industrials, which could mean the economy in general was improving.

Vancouver: Delivered prices of sulfur to China moved up again last week, which was good news for the industry at Vancouver. In addition, oceangoing freight rates were more favorable than in the recent past.

Pakistan: Oil & Gas Development Co. (OGDC) has issued a tender to sell 12,000 mt of sulfur in 15 lots, with bids due Aug. 10.

The Week in Fertilizer Stocks

Fertilizer Stocks
Producer Symbol Price Week Ago Year Ago
Agrium AGU 62.31 59.04 44.33
CF Industries CF 81.00 78.91 77.90
Intrepid Potash IPI 23.95 22.90 25.89
Mosaic MOS 47.59 44.95 49.23
PotashCorp POT 102.80 97.41 92.08
Terra Nitrogen TNH< 81.78 73.21 100.17
Distribution/Retail
Andersons Inc. ANDE 34.46 34.24 31.38
Deere & Co. DE 64.51 62.81 41.18
Scotts SMG 48.16 45.85 40.79

Sylvite and Abocol form jv in California; Lou Astbury to serve as president

Featured, News

Sylvite Sales (USA) and Colombian fertilizer producer Abonos Colombianos S.A. (Abocol) have formed a 50-50 joint venture called Sylvite Western Region LLC. Based in California, the new company will market Abocol’s newly developed calcium nitrate production to the Western U.S. and Western Canada markets.

The announcement was made on July 22 by Hugh Loomans, president and CEO of Sylvite Holdings Inc., Burlington, Ont., and Jorge Bernal, president of Abocol, headquartered in Cartagena, Colombia. Lou Astbury, a 30-year fertilizer industry veteran, will serve as president of Sylvite Western Region LLC.

“We are pleased to be partnering with Abocol as both companies are committed to providing quality product and service,” said Loomans. “In addition, we are committed to expanding our business activity in the Western U.S. and Canada, a very important agricultural region with many high value crops. It is a perfect fit for our companies and calcium nitrate-based products.”

Sylvite West’s initial focus will be the marketing of calcium nitrate from Abocol’s expanded production facilities in Cartagena de Indias. As a marketing and distribution company, Sylvite West will eventually add additional products to its portfolio and also develop distribution locations, the companies said.

Loomans told Green Markets that there will soon be a Sylvite West office in California, but for now Astbury is working out of his home in Pleasanton, Calif. Loomans said the company anticipates hiring additional staff “once we get our feet on the ground and build some volumes.” At the present, Loomans said the new company’s billing and administration is being handled by Sylvite Terminal & Distribution LLC in Lakeland, Fla.

Asked about projected sales volumes for Sylvite West, Loomans said, “We do have some targets, but we plan to earn the business.”

Abocol completed an expansion and upgrade of its nitrogen fertilizer plants in Cartagena just last year, including a new 100,000 mt/y calcium nitrate granulation plant (GM Sept. 19, 2009). In addition to calcium nitrate, Abocol’s expansion included new facilities to produce nitric acid (83,000 mt/y) and ammonium nitrate solution (82,000 mt/y). Abocol said the US$46 million expansion was built in record time at only 17 months, and represents “a major investment – (that) complements Abocol’s already efficient crop nutrition and industrial products capacity.”

Abocol markets product both in the Americas and offshore, and to the agricultural and mining industries. Company total infrastructure annual capacity stands at ammonia (117,000 mt), nitric acid (266,000 mt), ammonium nitrate (240,000 mt), NPK compound fertilizers (300,000 mt), calcium nitrate (120,000 mt), liquid fertilizers (55,000 mt), blends (177,000 mt), hydrosolubles (15,000 mt), and foliar (500 mt). Abocol was founded in 1960.

The Sylvite Group of Companies is a strategic partner in providing supply chain value-added products and services to agricultural, industrial, and government customers in targeted geographic markets. Sylvite has established operations in Quebec and Eastern Canada, and for 18 years has been a partner in the U.S. business, with Sylvite Sales (USA)’s distribution focus in the Eastern U.S.

Sylvite says it has international access to a variety of products primarily related to nitrogen, potash, and phosphate, and three decades of experience bringing these items to agricultural and industrial customers. The company says it will continue to “systematically expand these core product and service competencies, increasing both the geographic reach and the market segments served by the business.”

Astbury served as vice president of the Western U.S. for Yara North America until June 2009, when he announced his retirement to pursue opportunities in consulting and independent market representation (GM June 22, 2009). Prior to Yara, Astbury worked for W.R. Grace Agricultural Chemicals and Borden Chemicals. He is a past co-chairman of the Western Plant Health Association, and has also served as president of the California Fertilizer Foundation.

In his new position with Sylvite West, Astbury can be reached at 925-216-0374, or by email at lou.astbury@sylvite.com.

Southwestern Conference poised for record attendance; bulls to be out in force

Featured, News

The Southwestern Fertilizer Conference is poised to set another attendance record July 24-27 in San Antonio. As of last week, some 1,315 were registered, with another 100 normally signing up onsite. This would take attendance beyond last year’s record 1,357. And the conference has already set a record for meeting rooms and suites, at 131.

Those meeting rooms may be well used, as everyone and their brother this year said that dealers planned to end the season with empty bins. And with those empty bins, what are they finding now? Higher prices. At a time when fertilizer prices tend to languish, after the spring season, prices are on the uptick – spurred, say sources, by healthy DAP, urea, and UAN exports that have effectively taken excess product out of the market. In addition, a strong international market, particularly for urea, has kept imports away. Industry consolidation doesn’t hurt either, noted some sources. As a result, for the weeks leading up to the Southwestern Conference the industry has seen quick-paced increases in urea, UAN, ammonia, and DAP in particular.

Other players say that not everyone needs to buy fertilizer right now. However, the general sentiment is that those that do may indeed have to pay up, as NOLA inventories have been depleted. Sources said there is a particular impetus for those needing product for wheat acres, and also for anyone needing product to go on the Arkansas River, as locks are expected to go down for repair toward the end of August.

On the urea front, some buyers predict that resistance may start to be met, or that higher prices will attract imports. Regardless, buyers are hopeful that regular contract shipments of urea will begin to come in later in the summer. And sources say any downturn in corn and other commodity prices could turn fertilizer market psychology downward; however, for now, higher corn prices have been pumping up the bull market.

Still others say they are used to the hype. “Pure greed and an unwillingness to say no seem to be driving the market today. Déjà vu to 2008,” said one with memories of a few years ago.

“Everyone is wondering if the bulls are polishing their horns for the meeting,” said another. “We plan on taking our cape, hollering ‘Toro!’, and getting the heck out of the way!!”

EPA proposes changes to GHG reporting rule in response to industry lawsuits

News

The U.S. Environmental Protection Agency (EPA) last week posted a notice in the Federal Register saying it had agreed to certain revisions to the Mandatory Reporting of Greenhouse Gases (GHGs) rule that went into effect Dec. 29, 2009. EPA said the changes were in response to lawsuits filed in the U.S. Court of Appeals for the District of Columbia by several trade groups, including The Fertilizer Institute (TFI) and the American Chemistry Council.

EPA said in the notice that under the terms of a proposed settlement agreement, the petitioners would dismiss their claims if EPA makes the specified rule changes. The rule was finalized on Sept. 22, 2009, and requires reporting of GHG emissions from large sources and suppliers in the U.S.

Under the rule, suppliers of fossil fuels or industrial GHGs, manufacturers of vehicles and engines, and facilities that emit 25,000 metric tons or more per year of GHG emissions are required to submit annual reports to EPA. The rule represents the first comprehensive reporting program for GHGs under the Clean Air Act, EPA said, and is intended to collect accurate and timely emissions data to inform future policy decisions.

According to TFI, its concerns were not with the reporting of GHGs, but rather with how the rule was written. “Specifically, we strongly believe that any efforts by EPA to track such releases should track true emissions and eliminate any double counting of emissions, address CO2 that is generated but not emitted, and ensure that a level playing field exists for manufactured and imported products,” TFI told Green Markets.

With regard to the original rule, TFI faulted EPA for requiring the reporting of the nitrogen content of produced fertilizers, but not requiring the reporting of fertilizer imports, exports, or other significant sources of nutrients such as manure and biosolids; for not considering the blending of produced fertilizer that would cause double counting under the rule; for not considering how best management practices impact the release of GHGs in the application of fertilizer; and for requiring reporting of the uses of urea produced in ammonia manufacturing facilities, but not considering non-agricultural uses of fertilizer chemicals.

TFI also faulted EPA’s decision in the original rule to include the counting of GHGs that are not “emissions” in the classic sense ?Çô as in releases to ambient air – since they are not emitted directly from the nitrogen manufacturing facilities. TFI said EPA’s rule also required the reporting of the waste recycle stream associated with purge gas at ammonia plants, which TFI said resulted in the double counting of GHG emissions.

In addition, TFI said the rule required the installation of certain types of monitoring devices, which TFI said “may necessitate costly and risky plant shutdowns” that are not part of the facilities’ normal shutdown cycles. And finally, TFI faulted the rule for requiring reporting of the mass of carbon dioxide captured, extracted, imported, or exported based on calculations prior to any subsequent purification, processing, or compressing of that mass.

In response to those concerns, TFI said EPA agreed to delete the requirements to report the nitrogen content in fertilizers and to report urea uses; to include a statement to the effect that “CO2 process emission estimates may include CO2 that is later consumed onsite for urea production and, as such, are not released to the ambient air;” and to remove the requirements to monitor and report carbon dioxide in the waste recycle stream at ammonia manufacturing facilities.

TFI said EPA also agreed to remove the requirement to measure carbon dioxide prior to any subsequent purification, processing, or compressing, and to instead require the reporting after the point of segregation when only a portion of the carbon dioxide is captured for commercial application or for injection.

A 30-day public comment period on the proposed changes is now in effect. Comments must be received by Aug. 19, 2010, and can be submitted online at http://www.regulations.gov; by e-mail to oei.docket@epa.gov; or by mail to EPA Docket Center, Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania Ave., N.W., Washington, DC 20460-0001.

Mosaic 4Q exceeds expectations

News

The Mosaic Co. more than doubled net income for the fourth quarter ending May 31, 2010, and exceeded many analysts’ expectations. Net income attributable to Mosaic was $396.1 million ($.89 per diluted share) on sales of $1.86 billion, up from the year-ago $146.9 million ($.33 per share) on sales of $1.59 billion.

“We are pleased with our strong fourth-quarter results,” said Jim Prokopanko, Mosaic president and CEO. “Crop nutrient application rates and shipments have snapped back from last year’s levels, and a strong recovery in both the phosphate and potash markets is underway.” He said the phosphate market is robust, that North American inventories are likely to remain below average throughout this fiscal year, and that demand remains strong, particularly in India, Brazil, and North America. On the potash side, Mosaic said significantly improved sales volumes were partially offset by a decline in selling prices.

Fourth-quarter phosphate operating income was $221.1 million on sales of $1.19 billion, compared to a year-ago loss of $79.2 million on sales of $1.19 billion. The company sold 2.33 million mt of phosphate versus the year-ago 2.5 million mt. The average DAP price was up, at $438/mt from the year-ago $365/mt. Ammonia prices were higher, at $309/mt from the year-ago $296/mt, while sulfur was lower, at $131/lt from the year-ago $201/lt.

Fourth-quarter potash income was $346.9 million on sales of $696.5 million, up from the year-ago $198.6 million on sales of $386.8 million. The company sold 1.83 million mt versus the year-ago 647,000 mt. The average MOP price was $336/mt, down from the year-ago $540/mt.

Net earnings for the year ending May 31 were down from the stellar results posted in the prior year. Net earnings were $827.1 million ($1.85 per share) on sales of $6.76 billion, down from $2.35 billion ($5.27 per share) on sales of $10.3 billion.

Fiscal year phosphate income was $349.5 million on sales of $4.73 billion, down from the year-ago income of $961.7 million on sales of $7.41 billion. Phosphate tons sold moved up to 11 million mt from the year-ago 8.95 million mt. The average DAP price was $327/mt, down from $726/mt in the same period last year. The average ammonia price was $265/mt, down from last year’s $524/mt, while sulfur was $71/lt, down from $485/lt a year ago.

Fiscal year potash income was $922.8 million on sales of $2.17 billion, down from the year-ago $1.4 billion on sales of $2.82 billion. Potash tons sold moved up to 5.54 million mt from the year-ago 5.05 million mt. The average MOP price was $352/mt, down from the year-ago $521/mt.

For the first quarter of fiscal 2011, Mosaic is estimating an average DAP price of $410-$440/mt and sales volumes of 2.8-3.2 million mt. Phosphate operating rates are expected to be at 85-90 percent.

For potash, Mosaic sees prices of $300-$330/mt and volumes of 1.2-1.5 million mt. Potash operating rates are expected at 60-65 percent due to planned seasonal turnarounds.

European Commission fines feed phosphate producers €175.6 M for price-fixing and market sharing

News

The European Commission on July 20 announced that it has fined producers of animal feed phosphates a total of €175.64 million (US$224 million) for operating a cartel that lasted over three decades and covered a large part of the European Economic Area (EEA) territory.

“… I am again surprised that the main producers of a vital compound for animal feed abused a substantial part of the European animal feed market for nearly 35 years,” said Joaquín Almunia, Commission vice president in charge of competition policy. “While companies that cooperate with the Commission, including under the settlement procedure, can count on immunity or a reduction of the fine, there should be no doubt about our determination to unearth and punish cartel members.”

The Commission was first informed about the cartel in 2003 by Kemira, one of the participants that applied for leniency. The decision establishes that the cartel existed from as early as March 1969 until February 2004, although not all producers were involved for the entire period. The cartel members operated a market-sharing and price-fixing cartel covering most of the European Union (EU) and subsequently also a great part of the EEA territory. To this end, they allocated market shares, feed phosphates sales quotas, and customers among themselves, and coordinated prices and sales conditions when necessary.

After the Commission had informed the parties of the fine ranges, one company, Timab Industries S.A./Compagnie Financière et de Participation Roullier, decided to discontinue the settlement proceedings. All those in the settlement proceedings received a 10 percent fine reduction. Kemira was not fined, as companies that are first to reveal cartels to the Commission enjoy immunity from fines. Yara was not fined because it bought Kemira’s assets.

Groups Reduction under the Leniency Notice Reduction under the Settlement Notice Final amount of the fine (Euro)
Yara Phosphates Oy (FI) Yara Suomi Oy (FI) Kemira Oyj (FI) 100 percent 0
Tessenderlo Chemie N.V. (B) 50 percent 10 percent 83,752,000
Ercros S.A. and Ercros Industrial S.A. (ES) 10 percent 14,850,000
Quimitécnica.com – Comércio e Indústria Química S.A (PT) José de Mello SGPS S.A. (PT) 25 percent 10 percent 2,795,000
FMC Foret S.A. (ES) FMC Chemicals Netherlands B.V. (NL) FMC Corp. (USA) 10 percent 14,400,000
Timab Industries S.A. (FR) Compagnie Financière et de Participation Roullier (‘CFPR’) (FR) 5 percent 59,850,000

CF making organizational changes, job cuts as it moves to achieve $135 M in synergies

News

CF Industries Holdings Inc. (CF) is moving ahead with plans toward achieving the $135 million in synergies that it promised shareholders from its recent acquisition of Terra Industries Inc.

CF told employees July 15 that it is implementing decisions about the organizational design for some functions of the combined company. As a result, CF said it is extending employment offers to some employees currently working out of Terra’s former headquarters at Sioux City, Iowa, and is notifying others in Sioux City and at CF’s Deerfield, Ill., headquarters that their positions will be eliminated.

CF did not reveal how many employees would be impacted by these moves. In the meantime, Sioux City locals are concerned about the number to be unemployed, as well as the fate of the headquarters building itself.

CF said it appreciated the fact that all employees of both companies helped to create successful businesses, and is grateful for the contribution of each individual to that success. CF will provide support to employees who leave the company as a result of the integration, including continuing pay for a period of time based on years of company service, extended access to medical benefits, career transition services, and use of the Employee Assistance Program.

CF operations at the Port Neal, Iowa, nitrogen manufacturing facility will not be affected by the July 15 announcement.

In May, CF Chairman, President, and CEO Stephen Wilson detailed synergy savings, including $55-$65 million in Selling, General, and Administrative Expenses (SG&A), headquarters consolidation, and estimated combined SG&A; $25-$30 million in logistics and railcars; $10-$15 million in purchases and procurement; $10-$15 million in Donaldsonville optimization, turnarounds, and capital expenditures, as well as reduction in inventory, resulting in lower carrying costs; and $5-$10 million in distribution facility optimization (GM May 31, p. 1).

Agrifos, Shrieve announce sulfuric acid agreement

News

Agrifos Fertilizer LLC and Shrieve Group said July 21 that they have made a multi-year agreement for Shrieve to market up to 400,000 short tons of sulfuric acid produced by Agrifos at its Pasadena plant. Agrifos will start supplying sulfuric acid to the North American market through Shrieve starting in 2011.

“This is a significant step in redefining the business model of Agrifos as we transition from strictly a phosphoric acid producer to a multi-product producer and terminal facility,” said Dave Gutacker, Agrifos CEO. “Agrifos is excited to team with a quality company like Shrieve, which has expert knowledge and contacts in the sulfuric acid market.”

In 2008, Agrifos agreed with the U.S. Environmental Protection Agency to close its phosphogypsum stack (GM April 7, 2008) over a two-year period. As a result, Agrifos, which has the capacity to produce 400,000 st/y of phosphoric acid, is expected to wind down production of that product – along with super phos acid, DAP, and MAP – in the first or second quarter of 2011.

“This opportunity to extend Shrieve’s longstanding relationship with Agrifos significantly expands our position as a preferred multi-sourced sulfuric acid supplier,” said Jerry Jackson, Shrieve Chemical Co. president. “Shrieve is excited to be part of Agrifos’ long-term commitment to provide consistent and reliable sulfuric acid via production and terminaling.”

Sources last week were speculating about which fertilizer products might be terminaled at the Agrifos site, with some betting on urea.