Cairo-Orascom Construction Industries’ (OCI) fertilizer group sold 308,000 mt of urea and 132,000 mt of ammonia during the first quarter ending March 31, 2010. Despite a softening of prices during the second quarter, OCI said it is optimistic that market conditions for nitrogen-based fertilizers will improve during the latter part of 2010. OCI reports that its plan to buy Royal DSM N.V.’s agro and melamine businesses was approved by the European Union May 25 and should close June 1. As a result, OCI says it will have a customer base in the European markets and will be able to sell a higher class of nitrogens, including calcium ammonium nitrate, UAN, and ammonium sulfate. OCI said the fertilizer group continues on-track with its announced US$200 million capital expenditure initiative, which includes the upgrade of Egyptian Fertilizers Co.’s annual urea production capacity from 1.3 million mt to 1.6 million mt, the construction of a new ammonium sulfate line with an annual production capacity of 300,000 mt, and a new UAN line with an annual production capacity of 325,000 mt. Construction on the Sorfert, Algeria, complex continues to progress on-track, with the plant 92.5 percent complete as of the end of April. Commissioning of the new plant is scheduled to begin later this year, with full production beginning early next year. Company-wide, OCI reported a 10.4 percent increase in net income, to US$116.6 million versus the year-ago $105.7 million. Sales were up 19.1 percent, to $985.5 million from the year-ago $827.8 million.
Tata to increase N capacity
Mumbai-India’s Tata Chemicals Ltd. plans to raise Rs 4bn through a preferential allotment of shares to Tata Sons to partially finance the capacity expansion of its fertilizer plant in Babrala in Uttar Pradesh. The company would issue 11.5 million preferential shares to Tata Sons, which will increase its holding in Tata Chemicals from 28.15 to 30.4 percent. Tata Chemicals said the capacity of the Babrala unit, which makes urea and ammonia, would increase to 2.2 million mt from its current 1.2 million mt. The total project cost is Rs 38bn.
ARA, others oppose DISCLOSE Act
Washington-The Agricultural Retailers Association (ARA) on May 20 joined more than 85 other trade associations and the U.S. Chamber of Commerce in opposition to H.R. 5175, the Democracy is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act. The organizations sent a letter to the House criticizing the campaign finance reform bill, which was drafted in response to the U.S. Supreme Court’s Citizens United v. Federal Election Commission ruling in January that lifted some restrictions on the corporate funding of elections. The DISCLOSE Act, according to ARA, would place new limits on contributions to political campaigns and make public the names of all donors and their contributions to campaigns. In a May 20 letter to the House, ARA and the other groups charged that the DISCLOSE Act “would create a thicket of new regulatory requirements for American businesses.” They faulted several of the bill’s provisions, including one that they said imposes “an outright ban on campaign-related activity by companies that have contracts with the federal government valued at $50,000 or more.” The letter also charges that the bill would place similar “unconstitutional” prohibitions on corporations with as little as 20 percent foreign ownership. “The bill imposes no comparable restrictions on labor unions that receive federal grants, negotiate collective bargaining agreements with the government, or have international affiliates, even though unions and their political action committees are the single largest contributor to political campaigns and claim to have spent nearly $450 million in the 2008 presidential race,” the letter charges. “Unions, businesses, and individuals all have a constitutionally protected right to free speech that has been upheld by the Supreme Court,” said U.S. Chamber of Commerce President and CEO Thomas J. Donohue. “The DISCLOSE Act would undermine that protection and would allow for only the voices of politically favored groups ?Çô such as big labor unions ?Çô to be heard in national debates. It’s unconstitutional. It’s un-American. And it must be stopped.” A spokesman for Rep. Chris Van Hollen (D-Md.), one of the bill’s main sponsors, along with Sen. Charles Schumer (D-N.Y.), countered those claims, saying the bill “treats labor unions and corporations the same, plain and simple. The ban on political expenditures by federal contractors, for example, includes any entity that has a contract with the federal government, whether it is a corporation or a labor union.” Sources said the bill may be slated for floor action as early as Friday, May 28, just before the congressional recess begins. Van Hollen and Schumer reportedly want to send the bill to the president’s desk by the July 4 recess in order for it to go into effect before the midterm elections. President Obama criticized the Supreme Court’s Citizens United ruling in his Jan. 27 State of the Union address, and has indicated support for the DISCLOSE Act.
PHI reports positive 1Q net income
Madison, Miss.-Phosphate Holdings Inc., the owner of Mississippi Phosphates Corp., reported net income of $2.6 million ($.31 per diluted share) for the first quarter ending March 31, 2010, compared to the year-ago loss of $11.6 million ($1.51 per share). First-quarter sales moved up to $60.1 million from the year-ago $54.2 million. PHI said U.S. farmers returned to the market and application rates increased. In addition offshore demand firmed, based largely on purchases from India. The company produced 145,564 st of DAP during the quarter, about 78 percent of planned levels. The shortfall resulted primarily from various unplanned outages in its sulfuric acid operations. “While phosphate prices have trended slightly lower in recent weeks as the U.S. spring season winds down, we are optimistic that the onset of Latin American demand in early summer will suppress any significant price erosion,” said Robert Jones, PHI CEO. “Looking further ahead, extremely low supply chain inventories and improving crop economics should provide a solid backdrop for strong domestic fill activity and healthy fall demand.”
Management Briefs
Potash Corp. of Saskatchewan Inc. (PotashCorp) said May 25 that James Dietz, executive vice president and chief operating officer, has elected to retire at the end of June. Named to his current position in 2000, Dietz has over 41 years’ experience in the fertilizer and chemical industries.
“Jim has been a key member of our senior management team since coming to the company with the Arcadian acquisition in 1997,” said PotashCorp President and CEO Bill Doyle. “Jim has provided a steady hand for our operations, and his dedication to safety and excellence at our production sites is well known. A source of great support and wise counsel, he will be missed.”
A graduate of The Ohio State University, Dietz began his career with Standard Oil of Ohio, which was subsequently purchased by British Petroleum. After several British postings with BP, he returned to the U.S. in 1993 and joined Arcadian, where he achieved the position of vice president, manufacturing.
Taking over for Dietz as executive vice president and chief operating officer will be David Delaney, currently president of PCS Sales. Delaney also came to the company from Arcadian, and is responsible for PotashCorp’s global sales activities. In addition, he oversees all transportation and distribution activities and corporate relations. Named to his current position in 2000, Delaney serves on the boards of the Phosphate Chemicals Export Association (PhosChem), Canpotex Ltd., and the International Plant Nutrition Institute. A graduate of Southern Illinois University, Delaney has completed the Executive Management Program at the University of Pittsburgh.
Stephen Dowdle will be promoted to Delaney’s position as president of PCS Sales. Currently senior vice president of fertilizer sales, Dowdle joined the company in 1999 from Canpotex, where he gained extensive international experience during 10 years as vice president and managing director in Singapore. Prior to joining Canpotex, Dowdle was an agronomist, serving as director, China Programs, for the Potash & Phosphate Institute (now IPNI).
Dowdle serves on the boards of PhosChem and Sinofert Holdings Ltd. He earned a Ph.D. in Agronomy and Soil Science from the University of Hawaii, and a B.A. in Anthropology from Brown University.
Tom Fry will be joining The Mosaic Co. and assuming a new role as sales manager, premium products. He will be based in the Plymouth office and report to Tom Philbin, vice president, North American sales.
Fry comes to Mosaic from Monsanto, where he most recently served in a regional technical sales management role. In addition to his Monsanto background, Fry also worked for Pioneer Hi-Bred for 15 years. He has an agronomy degree from the University of Minnesota.
The Mosaic technical sales managers will report to Fry.
Consolidated Sourcing Solutions, the new fertilizer sourcing group (GM May 17, p. 1), has hired Gary Voichahoske as vice president. CSS says it has also hired a president, though the official announcement on that will be made in 7-14 days.
Voichahoske, who was raised on an east central Nebraska farm, has spent his 30-year career working in cooperative retail business. He will be located at Central Valley Ag’s Monroe, Nebraska, agronomy office, and can be reached at 402-495-3087.
CSS intends to be operational in June 2010 and will operate out of a yet-to-be announced location. CSS was formed by Central Valley Ag Cooperative of O’Neill, Neb., South Dakota Wheat Growers of Aberdeen, South Dakota, and Farmers Cooperative Co. of Ames, Iowa.
Waconia Manufacturing, Waconia, Minn., a global supplier of fertilizer blending and handling equipment, reports that it has established an Employee Stock Ownership Plan (ESOP). It says employees will have a significant ownership interest in the company.
Waconia also said that Gary Burau, formerly president, will provide consulting services for the company and serve as chairman of the board. Troy Williams has been named president and will handle day-to-day operations. He has been with the company for over 17 years and was formerly vice president.
Market Watch
AMMONIA
U.S. Gulf/Tampa: The Tampa market appears stable for now at $370/mt DEL, at least until players get serious about July cargoes toward the middle of June. Last week some were predicting that July might be a rollover; however, others said factors in the international market may be too unknown right now to make any predictions. Prospects of higher natural gas prices in Ukraine this summer could put even more pressure on those producers, thereby assuring shrinking supplies.
Going forward, the dynamics of the Tampa ammonia market could be stirred up quite a bit by CF’s acquisition of Terra and its import of ammonia from its Point Lisas plant to serve its own phosphate production (see page 1).
Eastern Cornbelt: Sources said sidedress applications and post-spraying were starting to take off in the region, thanks to what one Ohio source said was a 20-degree jump in daytime temperatures over the previous weekend. “It’s sunny and crops are starting to grow,” he said.
Ammonia and UAN were moving for the sidedress demand. Sources quoted the anhydrous ammonia market at $440-$465/st FOB in the region, with the low out of Illinois terminals and the upper end reported in the Ohio market.
Western Cornbelt: Last week’s improved weather allowed a surge in sidedress movement and post-emergence herbicide work in the region. One Iowa source said he’s not certain what to expect for sidedress demand in his location because of strong ammonia movement this spring and last fall. “Our guess right now is that we will see a normal-to-slightly-lower sidedress season,” he said.
Sources quoted the anhydrous ammonia market at $380-$410/st FOB regional terminals, down from last report. One Iowa contact pegged the market in his location at the $390/st FOB level last week. Sources said spot pricing out of production points in Oklahoma and Kansas had slipped to $340/st FOB on the low end.
California: Fertilizer was moving on rice and cotton in late May, and sources also reported starters and sidedress tons being applied to corn in some sections of the state.
Anhydrous ammonia pricing was unchanged at $520-$525/st truck-DEL in the state, depending on location. Aqua ammonia pricing was steady at $142/st FOB in California.
Pacific Northwest: The anhydrous ammonia market was unchanged at a nominal $410-$420/st truck-DEL in the Pacific Northwest region.
Western Canada: Cool, wet weather moved into the region in late May, slowing what had been a period of brisk fertilizer movement and heavy planting activity. Spot fertilizer pricing changed very little from last report. Anhydrous ammonia remained at $700-$755/mt DEL in the region, with the lower numbers in Manitoba and Saskatchewan and the upper end of the range reported in Alberta.
Middle East: Sources report the price is sliding as the price of formula-based tons falls, and has firmly dropped below $300/mt FOB. One producer said the most likely range is $290-$300/mt FOB. Asian sources back up this view.
The main issue for producers is a seasonal dwindling of demand. South Korea is no longer asking for extra tons. Buyers there are taking what is required under their contracts, but few are seeking more material.
Black Sea: Little is happening to make producers happy. The price of ammonia continues to be under pressure. At the same time, industry sources talk about potential increases in natural gas prices.
Sources are now reporting that some tons may have been traded in the $290s/mt FOB. Others say, however, that $300/mt FOB has yet to be broken.
For now, a safe bet on the price range is $300-$315/mt FOB.
UREA
U.S. Gulf: Rice season is here. Granular barge prices continued to erode last week. While trades in the $260-$263/st FOB range were heard early in the week for prompt, sources acknowledged that those were mainly for well placed barges ready to serve rice country, with the prices netting back to NOLA. Barges sitting at NOLA were being called $250-$255/st FOB, with reports of sub-$250/st FOB at press time. Sub-$240 was commonly tossed around for July-August.
Eastern Cornbelt: Granular urea was quoted at $320-$335/st FOB, with the upper end FOB E. Liverpool and the low reported out of river terminals in Illinois and Ohio on a spot basis.
Western Cornbelt: Granular urea continued to be quoted in a broad range at $300-$330/st FOB regional terminals, with the low out of spot river locations in southern Missouri and the upper end reflecting dealer pricing in the Iowa market.
California: Granular urea remained at $375-$395/st FOB, but sources said rail-delivered pricing had slipped to $380-$390/st DEL, with reports of limited supplies in the state.
Pacific Northwest: Granular urea pricing continued to slip, with sources quoting the regional market at $380-$385/st DEL.
Western Canada: Granular urea remained at $491-$516/mt DEL in the region, with dealer reference prices quoted in the $500-$525/mt DEL range, depending on location.
India: Last week opened with softer prices across the board thanks to the MMTC tender. By the end of the week the range tightened even more, as MMTC looked to book as many tons as possible at as low a price as possible.
Results of the tender follow on the next page.
Sources report that MMTC approached Transammonia to see if the trading house was willing to sell the firm 150,000 mt it offered at its lowest price of $259.87/mt CFR. Talks continued into the end of last week. One idea is that Trammo and MMTC might meet closer to the average of the three cargoes – about $261/mt CFR.
MMTC came back to the Middle East producers late Wednesday. The company bid $238/mt FOB to Qafco and Fertil, $236.50/mt FOB to Sabic, and $236/mt FOB to PIC.
MMTC Urea Tender Closed May 24 |
|||||||||
| Offering Company | Origin | QTY (’000 mt) | Load Port | US$/mt | Discharge Port | Remarks | |||
| Firm | Option | FOB | CFR | ||||||
| PIC | Kuwait – Bahrain | 125 | 25 | Shuaiba | 247.00 | ||||
| Sitra | 247.50 | in 4 or 5 lots | |||||||
| Qafco | Qatar | 25-30 | Mesaid | 248.00 | |||||
| Sabic | Saudi Arabia | 180 | Jubail | 247.50 | Prill or Granular S/O | ||||
| Fertil | UAE | 50-60 | Ruwais | 248.00 | in 2 or 3 lots | ||||
| Sinochem | China | 25 | North China | 265.00 | Prills | ||||
| Transammonia | 50 | Sohar | 249.00 | 259.87 | Kandla | ||||
| 50 | 260.62 | Mundra | |||||||
| 50 | 264.37 | Krishnapatnam | |||||||
| 100 | Sohar | 255.00 | 275.87 | Kandla | |||||
| 100 | 266.62 | Mundra | |||||||
| 100 | 270.37 | Krishnapatnam | |||||||
| Ameropa | Open | 50-60 | CIS – Russia – Ukraine | 235.33 | 274.33 | Kandla – Mundra S/O | 1 or 2 lots | ||
| Egypt | 246.33 | ||||||||
| 50-60 | China – Indonesia – Malaysia | 260.33 | |||||||
| Swiss Singapore | Open | 50 | 265.00 | 276.60 | Kandla | ||||
| Open | 50 | 264.00 | 273.90 | Mundra | |||||
| Emmsons Gulf | Iran | 50 | if 2 lots | 250.11 | 275.11 | West Coast | |||
| 277.11 | East Coast | ||||||||
| if one lot | 273.11 | West Coast | |||||||
| 275.11 | East Coast | ||||||||
| 50 | same as above | ||||||||
| Toepfer | Open | 20-50 | North China | 263.00 | 278.00 | Pradeep – Vizag – G’varam | |||
| Bangladesh | 265.00 | Krishnapatnam | |||||||
| Egypt | 255.00 | ||||||||
| 25-50 | CIS | 242.00 | 278.00 | Kandla – Mundra S/O | |||||
| Iran | 263.00 | ||||||||
| Egypt | 255.00 | ||||||||
| Gavilon | Open | 25-50 | Egypt – China – Malaysia – Arab Gulf – FSU | 265.00 | |||||
| 50-100 | 279.75 | Mundra | 1 or 2 lots | ||||||
| 50-100 | 282.75 | Kandla | |||||||
| 284.75 | Krishnapatnam | ||||||||
| Keytrade | Open | 80-100 | 40-50 | Yuzhnyy | 225.00 | 278.00 | Mundra | 2 – 4 vessels | |
| Adabiya | 240.00 | 280.00 | Kandla | ||||||
| Arabian Gulf | 255.00 | 286.50 | Vizag | ||||||
| South China | 255.00 | ||||||||
| North China | 250.00< | /td> | |||||||
| Helm | Open | 50 | Yuzhnyy | 229.00 | 278.50 | Mundra – Kandla | |||
| Iran – China | 253.00 | 287.00 | Vizag | ||||||
| Egypt | 244.00 | ||||||||
| Open | 100 | Same conditions as above | 2-5 lots | ||||||
| Quantum Fertilizer | Open | 30-50 | Open | 289.00 | Krishnapatnam | ||||
| Valency International | Open | 25 | 25 | 275.00 | 303.00 | Vizag | |||
As the business day closed in India, the producers had not responded.
One Asian trader noted with interest that MMTC went first to Trammo rather than the Middle East producers.
In the past, Indian buyers have generally gone to the Arab Gulf producers for lower prices. Sources explain the producers can be more flexible in pricing than can traders, who have to go back and forth between the buyer and the supplier.
This time, said one source, MMTC figured Transammonia needed to find a home for the tons coming out of Oman.
Trammo has a marketing agreement with Sohar. The Omani plant has an annual output of about 1.2 million mt of granular urea. Sources estimate that one-half to two-thirds of the output is covered under contracts. That leaves about 50,000 mt a month for Transammonia to sell on the spot market.
One scenario that is gaining some traction is that MMTC will take about 500,000 mt from this tender and then stop.
Coming into the tender, industry observers were estimating MMTC would take about 800,000 mt to 1 million mt, depending on the prices of the offers.
Now, say some, if MMTC takes just a half million mt, it could force the market even lower. Once that happens, MMTC would call another tender – perhaps in another week or so – for the remaining tons it needs.
The market has been on a steady decline ever since IPL concluded its tender in April.
At that time, IPL paid $305/mt CFR for its cargoes.
The government had set a maximum price of $310/mt CFR in its budget, and sources say IPL had to work hard to get the price it got.
Since April, however, the international urea market has been in a freefall as major buyers stayed out of the market while production remained steady.
Indonesia: Pusri closed a selling tender May 26 for 7,800 mt. The company was selling tons left over from its 2009 export allotment.
The price follows the general international market trend. The most likely winning price came in at $268/mt FOB, compared to the winning price of a month ago of $271/mt FOB.
The tally of the tender follows.
| Bidder | US$/mt FOB |
| Diva | 268.00 |
| Sakura/Universal | 267.00 |
| Trada | 263.00 |
| Profeta | 261.00 |
| BBSC | 260.00 |
| Liven | 258.00 |
| Youngwoo | 258.00 |
| Limardi | 257.00 |
| Indevco | 255.00 |
| Summit | 252.00 |
| Swiss Singapore | 246.40 |
Diva is an Indonesian trading company that often represents larger international trading houses.
The tons sold in this tender are reportedly ones that were not picked up by winners of previous tenders who failed to perform on their awards.
Chances are, said one trader, Diva will win the full 7,800 mt. The problem is that the material will still have to be loaded in two shipments.
The Pusri port draught limits loadings to about 5,000 mt.
Sources say the most likely destination for the material will be plantations in the Philippines.
Middle East: No matter how you look at it, May did not end well for the Middle East producers.
The month started with prices in the $270s/mt FOB. The Indian/MMTC tender has now pushed the offers into the $240s/mt FOB and the bids into the mid-$230s/mt FOB.
MMTC issued a counterbid to the Middle East producers late Wednesday. The company’s bids are $238/mt FOB to Qafco and Fertil, $236.50/mt FOB to Sabic, and $236/mt FOB to PIC. As the business day closed in India, the producers had not responded.
Producers offered cargoes at $247-$248/mt FOB. Transammonia offered its Omani tons at $249/mt FOB or $259-$264/mt CFR.
Backing off the estimated freight from Oman to India from the Trammo offer, sources estimate the netback to be $234-$240/mt FOB.
In an unusual move, MMTC went to Transammonia before talking to the producers. Sources said the buying house was hoping Trammo would sell all of its firm offered tons of 150,000 mt at the lowest offered price. At least one trader said MMTC and Trammo might be able to reach an accord on a price closer to the average of $261/mt CFR.
Despite the best efforts of the producers to talk a strong game, the price in the region has fallen dramatically.
Prills and granular are once again reported at parity.
Taking into account the Egyptian prices, the estimated netbacks on the Transammonia offer, the prices offered by the producers, and the likely final price once talks with MMTC are concluded, sources say producers are trying to hold the line in the low $240s/mt FOB for both flavors of urea, while buyers are pushing into the mid $230s/mt FOB.
Sources say placing the market at $235-$245/mt FOB for prills and granular is not out of bounds at this time. If MMTC and the producers settle after Green Markets goes to press, the best bets are the price will be what the buyer wants.
Arab producers are facing a pincer movement against their pricing ideas. Transammonia has to move about 50,000 mt on the spot market under its contract with Oman.
At the same time, Iranian material is being offered at lower prices to attract buyers.
With two major producers in the area willing to accept lower prices and Chinese urea about to be offered on the international market again, sources say the rest of the Arab producers have little choice but to accept lower prices.
Black Sea: Yuzhnyy loadings listed in the India/MMTC tender show prices ranging from the upper $220s/mt FOB to the low $240s/mt FOB.
In the end, said one trader, the market has settled at the lower level at $225-$230/mt FOB.
Even in the $220s/mt FOB, the Yuzhnyy price is too high for the current market of delivered material into India.
With freight around $50/mt, sources say the Black Sea urea will be too expensive for the Indian buyers.
Discussions in India are focusing on delivered prices in the low $260s/mt. The Black Sea price would have to come off at least another $10/mt to be competitive.
Or, the freight rate could come down.
Sources say, however, the freight market is on its way up.
Without any sales into India, the suppliers could look to the Pakistan business that will be coming up June 8 and 12. Sources say, however, the price will still have to come off so the material could be competitive.
The main ray of hope for the producers is that reports of renewed buying interest from Brazil might help move tons out of the storage bins and onto ships.
The down side is that the softening market is making buyers much more aggressive in asking for discounts.
China: The Sinochem offer in the Indian/MMTC tender confirmed prices at $265/mt FOB. Others said the price is a bit lower, but agreed the Chinese market price is in the $260s/mt FOB.
Other trading houses, however see the price range in the low $250s/mt FOB.
Keytrade and Helm each offered Chinese material at $250-$255/mt FOB. The problem nailing down just where the Chinese export market price is at this time, said one source, largely depends on the size of the margin that traders are willing to take. Industry sources report that many of the tons still sitting in bonded warehouses were delivered there when the price was closer to $280/mt FOB.
The export duty on Chinese urea drops to 7 percent July 1.
Bangladesh: BCIC has extended from May 26 to June 22 the last date for receiving bids for the import of 100,000 mt each of prilled and granular urea in bags. The minimum offer quantity is 12,500 mt. Offers should be valid up to July 22.
Pakistan: The National Fertilizer Development Centre (NFDC) has estimated that urea availability during Kharif 2010 would be at 3.538 million mt, with 73,000 mt from the previous season left over and local production of 2.816 million mt. Balance requirements will have to be met through the import of 650,000 mt.
NITROGEN SOLUTIONS
U.S. Gulf: The barge market has been slow, but sources report that prices are moving downward. Last week the market was called $190-$200/st FOB ($5.94-$6.25/unit), with expectations that prices will continue to erode as the summer progresses.
Eastern Cornbelt: Illinois sources continued to quote the low end of the UAN-32 market at $240/st ($7.50/unit) FOB spot river locations last week, while Ohio sources reported UAN-28 at $212.80/st ($7.60/unit) FOB Cincinnati and $231/st ($8.25/unit) FOB E. Liverpool to the dealer.
Western Cornbelt: Although list prices remained as high as $260-$265/st ($8.13-$8.28/unit) FOB in the region, sources quoted UAN-32 more commonly in the $240-$250/st ($7.50-$7.81/unit) FOB range to the dealer. Sources said they don’t expect to see realistic fill numbers for UAN or ammonia until the sidedress demand slows down.
California: UAN-32 was pegged at $255-$262/st ($7.97-$8.19/unit) FOB in the region, with some terminals out of product last week. Delivered UAN-32 was quoted in the $270-$275/st ($8.44-$8.59/unit) range, with dealer reference pricing at higher levels.
Pacific Northwest: Sources tagged the UAN-32 market at $260-$265/st ($8.13-$8.28/unit) DEL in the region, down slightly from last report. IRM reposted UAN-32 on May 19 at $260/st ($8.13/unit) DEL in eastern Oregon and Washington.
Western Canada: UAN-28 was steady at $294-$310/mt ($10.50-$11.07/unit) DEL, with the low in Manitoba and the upper end reported in Alberta and British Columbia. Dealer postings were pegged in the $304-$320/mt ($10.86-$11.43/unit) DEL range in the region.
AMMONIUM NITRATE
U.S. Gulf: The last barge business was called $255/st FOB. While imports are on the way, at least one of them has reportedly been sold.
Western Cornbelt: Ammonium nitrate was steady at the $305-$325/st FOB range in the region, with limited availability.
California: No market was reported for ammonium nitrate in California. CAN-17 remained at $255-$275/st FOB in the state.
Pacific Northwest: Ammonium nitrate was unchanged at $348-$365/st rail-DEL in the region, and CAN-17 was steady at $245-$250/st FOB and $260/st DEL.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was pegged
at $240-$250/st FOB in the region, down slightly from last
report. Reference levels remained as high as $260/st FOB
or rail-DEL.
Western Cornbelt: Granular ammonium sulfate remained at $240-$250/st FOB and in tight supply in the Western Cornbelt.
California: Ammonium sulfate pricing was unchanged at $220-$247/st FOB in California, with the low for standard grade and the upper end for granular product in desert locations.
Pacific Northwest: Granular ammonium sulfate pricing continued to be quoted at $240-$245/st DEL in the Pacific Northwest.
Western Canada: Granular ammonium sulfate pricing was steady at $325-$330/mt DEL in Western Canada, with dealer postings in the $335-$340/mt DEL range in the region.
PHOSPHATES
Central Florida: The rapid approach of summer was warming the air, and the market for Central Florida phosphate was cooling just as fast. No new spot, prompt orders for railcars were found, although some was being sold and delivered under existing contracts.
Only a few trucks were sold into Florida and the Southeast last week, and even that will begin to dry up in the next couple of weeks. Canada, which was getting ready to plant, was too distant to provide a market for Central Florida DAP last week because of the amount of time it would take.
Hurricane season begins June 1, and Florida was hoping for the best, despite a forecast for one of the most active seasons ever. Between 16 and 18 tropical storms are expected to form, and five or six could hit the U.S. between June and the end of November.
The Central Florida DAP price range last week was unchanged at $405-$415/st FOB. CF’s price was $405/st FOB and Mosaic was offering to sell at the same price, although its list price was $5/st FOB higher at $410/st FOB. Agrifos’ prices were $440/st FOB for DAP and $450/st FOB for MAP, and railcars were about $5/st FOB less.
U.S. Gulf: The best that could be said of the phosphate business on the Gulf river system last week was that it was “hit or miss,” but that would apply to business from warehouses – not NOLA DAP barges.
No new prompt business was found last week in the barge market, and anything that occurs between now and the middle of June, at the earliest, would be like winning the lottery – although the odds may not be as good. There were also few barges floating on the river.
The spring season has essentially come to a close and no summer fill programs are likely to be announced, because producers have their hands full filling export orders to India. In addition, other export business was likely to kick into gear before the Gulf river market thinks about getting started.
Buyers were looking for a fill price of around $380/st FOB, but it appeared nothing that low was going to occur.
Warehouse prices were basically unchanged in most areas, in the $445-$460/st FOB range, but some lower river areas were down around $435/st FOB, and the extreme north was in the range of $465-$470/st FOB.
The price of corn for December was hovering around $3.85/bushel on the futures board, and farmers, who would actually get around $3.50-$3.60/bushel, would make a small profit – but a much lower price would create problems.
Based on offers last week, the NOLA DAP barge price moved from a relatively wide range of $395-$410/st FOB to $395-$405/st FOB. Prices may drift south this week, although how far was unclear.
Eastern Cornbelt: DAP was tagged at $445-$460/st FOB regional warehouses, with the upper end again quoted by Ohio sources out of E. Liverpool. MAP was $10/st higher that DAP; sources quoted the Cincinnati market last week at $455/st FOB.
10-34-0 remained at $340-$360/st FOB in the region.
Western Cornbelt: DAP remained at the $445-$450/st range FOB most regional warehouses, with MAP $10/st higher. One western Iowa source quoted the MAP market firmly at the $460/st FOB mark in his location last week.
10-34-0 remained at $335-$355/st FOB in the region.
Agrium announced on May 26 that its phosphoric acid postings will move on June 1 to $745/st rail-DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA) in Iowa, Nebraska, Minnesota, the Dakotas, Wyoming, Colorado, Kansas, Oklahoma, New Mexico, and Texas. Simplot reported that its Midwest phos acid prices will move to $7.75/unit DEL for June and July, and $7.95/unit DEL for August.
California: Phosphoric acid was tagged at $8.45/unit DEL for both SPA and MGA. Simplot was also referencing MGA at $8.65/unit FOB in the state. Simplot sources said those prices would remain in place for June and July as well. Agrium, however, reported on May 26 that its SPA and MGA price would drop on June 1 to $805/st rail-DEL in California, Arizona, and Nevada.
DAP and MAP remained at $490-$495/st FOB or DEL in California. 16-20-0 was pegged at 324-$331/st FOB, and 10-34-0 was quoted at $375-$390/st FOB in the state.
Pacific Northwest: SPA and MGA pricing remained at $8.45/st DEL in the region. Simplot reported that it will keep its phosphoric acid pricing at that level through June and July as well. Agrium, however, reported on May 26 that its SPA and MGA price will drop on June 1 to $805/st rail-DEL in Idaho, Montana, Oregon, Utah, and Washington.
DAP and MAP were steady at $485-$490/st FOB or DEL in the region, with 16-20-0 quoted at $319-$325/st DEL. 10-34-0 was tagged at $365-$385/st FOB in the region, unchanged from last report.
Western Canada: MAP was unchanged at $582-$617/mt DEL to the dealer, with the low reported in Manitoba and Saskatchewan and the upper end in Alberta and British Columbia. Dealer reference levels remained in the $590-$625/mt DEL range, depending on location.
10-34-0 was steady at $470-$483/mt DEL in Western Canada, with reference levels reported in the $485-$488/mt DEL range.
U.S.Export: With the exception of filling orders – mainly for India – no new business was found in the export phosphate market last week. However, within the next few weeks, Latin America should start coming into the picture.
Although no new transactions were conducted last week, offers for export have been down and were around $450-$460/mt FOB, which determined the export DAP price range.
Pakistan: According to a report from the National Fertilizer Development Centre (NFDC), Pakistan would need to import 400,000 mt of DAP to meet requirements during the Kharif season (April-September). It estimated that Kharif started with a DAP balance of 93,000 mt. Domestic production is expected at 325,000 mt. Imports of 100,000 mt are confirmed.
POTASH
Eastern Cornbelt: Potash continued to be quoted in the $395-$405/st range FOB regional warehouses, depending on grade and location. One source quoted granular potash at the $405/st level FOB Cincinnati in late May.
Western Cornbelt: Potash was steady at $395-$405/st FOB regional warehouses, depending on location.
California: Potash continued to be quoted at $440-$460/st DEL in California, depending on grade. Potassium nitrate was unchanged at $929-$996/st FOB, with the low for bulk tons and the upper end for bagged product. Sulfate of potash (SOP) pricing was steady as well at $635-$650/st FOB for bulk tons.
Pacific Northwest: Potash was steady at $440-$450/st FOB regional warehouses, with delivered tons quoted in the $448-$455/st range, depending on grade and location. One Washington source quoted granular potash in his trade area at the $445/st FOB mark in late May.
Western Canada: Potash to Canadian customers FOB Saskatchewan mines was steady at $423-$431/mt FOB, depending on grade and supplier. Out of warehouse locations in the region, the market was tagged in the $438-$446/mt FOB range, depending on grade and location.
India: Reports from India are that IFFCO has secured contracts for 4.7 million mt of MOP at $370/mt CFR for FY11, with an option to buy more. This would be some 20 percent lower than the year-ago $460/mt (GM July 20, 2009).
SULFUR
Tampa: BP was continuing to supply the Gulf of Mexico with all the oil it never wanted or needed, and the company was working last week to stem the flow a mile below the surface. Mud was being pumped into the spewing well, but it will take several more days to determine whether it would work. Although the oil was wreaking an environmental nightmare on coastal Louisiana, it was not affecting transportation routes to sulfur terminals at Tampa, which was about the best news.
Refineries were running at about 86 percent of capacity last week in preparation for the summer driving season, and that was pumping more sulfur into the supply chain. Demand was said to be strong from both the phosphate industry – the major consumer – and from industrial customers.
On the world market, China was still the big unknown. Sources said the country was setting a price of $140/mt on a delivered basis, rather than paying as much as $200/mt FOB, as it had in the recent past. China was believed to have relatively low inventories of sulfur, and if negotiations take a long period, it may be forced to buy at higher prices.
If world prices continue to deteriorate, it would most likely have an impact on third-quarter prices for the phosphate industry at Tampa.
MARKET NOTES
Bangladesh: Facing a power crisis and suspended production of five urea plants due to gas curtailments, the country is looking at building three new urea plants to reduce its urea deficit. Aided by China, Bangladesh is reportedly looking to set up new plants in Sylhet, Sirajgang, and Bhola with around 600,000 mt/y of capacity each, according to Industry Minister Dilip Barua. “The government plans to increase the country’s fertilizer production to ensure food security. And for that we are going to set up the factories,” he told the local media. “Of the three projects, construction work of Shahjalal Fertiliser Factory will start by the year-end.” Bangladesh and China signed an agreement for constructing the Shahjalal Fertiliser Factory during Prime Minister Sheikh Hasina’s visit to China in March. Under the Memorandum of Understanding (MOU), China has agreed to provide financial assistance to the tune of US$230 million. The first fertilizer factory is expected to be completed by June 2013. The ministry plans to set up another fertilizer factory at Sirajgang between July 2010 and June 2013. The time schedule for the Bhola factory is yet to be fixed.
Bangladesh has six urea plants, with production capacity of 1.6 million mt against demand of about 2.9 million mt.
The government plans to reopen five urea factories, which were shut down in the face of acute gas crisis, in phases, Barua said. In a bid to ease urea distribution system and enhance storage capacity, the minister said that the government has also taken steps to set up 13 new warehouses in different districts.
Egypt: El-Delta Co. for Fertilizers and Chemical Industries will award a $300 million contract to build a new ammonia plant, according to the local press. The location is El-Delta’s Dakahliya fertilizer complex, and reportedly the capacity will be 1,200 mt/d.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 53.39 | 52.61 | 51.33 |
| CF Industries | CF | 66.43 | 66.54 | 83.06 |
| Intrepid Potash | IPI | 23.77 | 24.16 | 33.41 |
| Mosaic | MOS | 44.00 | 44.97 | 56.37 |
| PotashCorp | POT | 94.37 | 96.97 | 117.45 |
| Terra Nitrogen | TNH | 72.80 | 70.00 | 117.09 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 31.77 | 31.86 | 24.95 |
| Deere & Co. | DE | 56.14 | 56.67 | 42.79 |
| Scotts | SMG | 44.40 | 42.90 | 35.26 |
SPOT BARGE PRICES
Sunrise Cooperative, CHS partner on $15 M fertilizer hub
Sunrise Cooperative, Fremont, Ohio, is partnering with agriculture giant CHS Inc. to construct a $15 million fertilizer hub at Crestline, Ohio. According to Sunrise officials, this continues the expansion of CHS unit train capabilities in the eastern Cornbelt. The project, they report, has impressive benefits for both sides.
“This is part of our ongoing effort to expand our ability to serve Eastern Corn Belt customers by establishing facilities where we can bring crop nutrients in via unit train,” said a CHS spokesperson. “This is an excellent distribution point for reaching many of our customers and offers opportunities for efficiencies and good economics. We’ll have 50,000-ton capacity for dry and liquid, with a full range of N, P, and K.”
The facility’s ability to be serviced by unit trains further improves CHS’s ability to position and efficiently distribute large volumes in narrow timeframes.
“Our partner in this, Sunrise Cooperative, will also be positioned to better serve its customers from the Crestline facility with not only crop nutrients, but bulk seed treatment, bulk herbicides and liquid storage, a custom application operations base and office,” said CHS.
There will be a new bulk herbicide facility with liquid storage, office, and shop. A high-demand bulk seed treatment facility is included for 60,000 units.
The new facility will allow consolidation of three Sunrise retail locations, at North Robinson, Gardner, and Ridgeton.
Jerry Miller, Sunrise vice president of agronomy, told Green Markets the project was made possible with the acquisition of 60 acres adjacent to Sunrise property from CSX Railway. He said this will make possible an increase in the existing 90-car track. “CHS had a smaller fertilizer facility down the road and needed the additional train capacity,” Miller explained. “Now they will be able to operate out of a 40,000 st (Marcus dry) building that will include a high-speed Waconia blending system that can blend all types of fertilizer.”
CHS said its nearby smaller fertilizer location will close.
Miller said the facility will also include 15,000 st of UAN storage being built by Skinner Tank Co. In addition, it will have 240 st of anhydrous ammonia storage.
He said pouring of floors and footers has been completed, and Miller expects to open the center Oct. 1. Construction is also underway on the chemical and seed warehouse building, and the new office building along with installation of anhydrous ammonia tanks is ongoing. “We could potentially serve customers in a 50-mile radius on the rail side and operate quite a bit further than that on the wholesale side,” said Miller.
Testing begins on Magellan ammonia pipeline; first segment down until August
Magellan Midstream Partners L.P. confirmed last week that it has begun hydrotests on its anhydrous ammonia pipeline from Borger, Texas, to Partridge, Kan. The tests began on May 17, and will keep that stretch of the 1,100-mile ammonia pipeline system out of operation until August.
Magellan reported earlier this year (GM Feb. 22, p. 9) that it would be conducting hydrotests of certain segments of its ammonia pipeline system beginning this spring and concluding next fall to “complement federal regulatory requirements.” Hydrotesting involves emptying the pipeline in sections and filling those segments with pressurized water to locate leaks or defects.
Magellan’s ammonia pipeline delivers ammonia from production facilities in Borger, Texas, and Enid and Verdigris, Okla., to terminals throughout the Midwest before ending in Mankato, Minn. Bruce Heine, Magellan’s media relations contact, told Green Markets that all other segments of the system are currently operational, but the company will be conducting additional integrity testing throughout the summer and early fall.
Magellan notified ammonia shippers earlier this year of its plans and schedule for the tests. Agrium Inc., which owns the Borger ammonia production facility, alerted customers in March that it anticipated no “negative impact to product availability” at the company’s terminals in Borger, Homestead, Neb., Early, Iowa, and Garner, Iowa.
“As the testing process can and will be very dynamic, we will give advance notice as to when and which terminals will be affected,” Agrium said in the notice. “Agrium’s commitment will be to work with all of our customers to ensure that product will be available to them when terminal points are out-of-service.” Agrium said at that time that the pipeline hydrotests would tentatively be completed by the middle of October.
Industry sources told Green Markets that the testing schedule was determined so ammonia supplies would not be impacted for the heavy application period during spring planting. One source speculated that supply issues may still crop up as the pipeline segments go down in the summer and fall, however. “It’ll be longer hauls, and trucks will be tougher to find in mid-July and August for the wheat run,” he said.
Magellan recently reported that anhydrous ammonia volumes on the pipeline were up 35 percent during the first quarter ending March 31, 2010, to 167,000 st, compared to the year-ago 124,000 st (GM May 10, p. 9).