White Springs, Fla.-A giant sinkhole opened at one of PotashCorp’s White Springs phosphate processing plants in North Florida on Dec. 10, and an estimated 84 million gallons of highly acidic water drained into the ground. The company said it immediately reported the incident at the Swift Creek Chemical complex to the Florida Department of Environmental Protection (FDEP). Although initial testing of nearby wells revealed no signs of contamination, monitoring was being conducted to determine whether the contaminated water reached the Floridan Aquifer, the primary source of drinking water to North and Central Florida. PotashCorp owns most of the land surrounding the stack, but wells of nearby residents were also being tested. The area around the 100-by-40-foot sinkhole was sealed off, although work at the complex was continuing. Testing of the ground water for signs of radioactivity, arsenic, and sulfates will take additional time, officials said. If contamination is found, the company will provide clean water to those affected. Sinkholes occur when acidic water dissolves limestone, which forms the underground structure of much of the state. “We are continuing to monitor water quality in the affected area, and are keeping area residents advised of our progress in managing this event,” the company said.
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Eastman axes gasification project
Kingsport, Tenn.-Eastman Chemical Co. has decided to discontinue plans for its $1.6 billion Beaumont, Texas, industrial gasification project. It said the decision was made due to a number of factors, including high capital costs, the current and foreseen reduced spread between natural gas and oil and petroleum coke prices, and continued uncertainty regarding U.S. energy and environmental public policy. As a result of this decision, the company will recognize a pre-tax non-cash asset impairment charge estimated to be between $150-$180 million in the fourth quarter 2009. “Even though it is no longer advantageous for Eastman to pursue this project, we will continue to explore global industrial gasification opportunities as a long-term growth option for the company,” said Jim Rogers, president and CEO. “Eastman is committed to being an outperforming chemical company. I am confident we will deliver profitable growth through the combination of our solid core businesses and strong financial profile.” The petroleum coke-based gasification plant would have helped the idled anhydrous ammonia (255,000 st/y) and methanol (255 million gallons per year) units, which Eastman earlier bought from Terra Industries Inc. (GM Oct. 8, 2007, p. 1). The Eastman project had been a finalist for a loan guarantee by the U.S. Department of Energy (GM March 2, 2009).
Terra signs on Ford for DEF
Sioux City-Terra Industries Inc. announces that its subsidiary, Terra Environmental Technologies Inc. (TET), has signed an agreement to supply diesel exhaust fluid (DEF) to Ford Motor Co. Ford will use TET’s DEF product for its initial fills as their SCR-equipped diesel vehicles come off the factory line. It will also offer the product to Ford dealerships in multiple packaging options under the Motorcraft® brand. “We’re pleased with the opportunity to do business with Ford, a company that values quality as much as we do,” said Terra President and CEO Michael Bennett. “In fact, quality is a key factor driving Terra Environmental Technologies’ emergence as the North American leader in DEF markets. TET is able to guarantee rigorous supply chain oversight, from our manufacturing facilities to the tank of the vehicle.” Terra said TET has the flexibility to ensure quality and supply by sourcing DEF from a number of Terra’s six North American nitrogen products manufacturing facilities. As the leading North American DEF producer, Terra says TET has developed a complete supply chain solution that includes manufacturing and distributing the product, recommending DEF compatible dispensing equipment, offering financing options, and providing field services and employee training. TET has exclusive supply agreements with Daimler and Hino, and preferred supply agreements with Volvo and Mack Trucks North America.
PotashCorp inks new credit agreement
Saskatoon-Potash Corp. of Saskatchewan Inc. on Dec. 11 entered into a $2.5 billion revolving term credit facility with several lenders, including The Bank of Nova Scotia, which also acted as agent. The facility, which will mature on Dec. 11, 2012, replaces PotashCorp’s amended and restated credit agreement dated as of Jan. 21, 2009. The prior credit facility was scheduled to mature on May 28, 2010, and provided for total borrowings of $1.85 billion. PotashCorp says that other than the amount of available borrowings and the maturity date, the credit facility contains terms and conditions that are substantially similar to the prior credit facility. PotashCorp plans to use the proceeds from the credit facility for working capital and other general corporate purposes.
GSLM donates truckload of holiday food
Ogden, Utah-Great Salt Lake Minerals Corp. (GSLM), which produces sulfate of potash from Great Salt Lake brines, has contributed a truckload of holiday foods valued at $11,000 to the Catholic Community Services Joyce Hansen Hall Food Bank in Ogden, the major food bank of northern Utah. According to GSLM, the delivery enables the food bank to fill all 1,200 bags it distributes to needy families for Christmas. GSLM also contributed $1,000 each to the Cache County Community Food Bank in Logan and the Family Connection Center Food Bank in Layton. “We are honored to help our neighbors in need,” said Corey Milne, GSLM site manager. “We worked directly with the Joyce Hansen Hall Food Bank to make sure no one goes hungry, especially at Christmas.” Last month, Milne noted, GSLM contributed $7,000 to the food banks for Thanksgiving.
PhosCan puts hold on Martison
Toronto-PhosCan Chemical Corp. said Dec. 10 that while the phosphate fertilizer market may be stabilizing, it believes it may be several years before the market, together with capital markets, returns to levels that will support the resumption of full-scale development of its Martison Phosphate Project. The project consists of a phosphate deposit and a planned mine, beneficiation plant, phosphoric acid plant, and solid fertilizer production facility. The deposit is 70 kilometers north of Heart, Ont. PhosCan said it is prudent to complete only the reduced development plan for the project and preserve its cash until it has reasonable confidence that it will be able to raise the additional US$1 billion of debt and equity capital required to take the project to construction and production. PhosCan said it has a significant amount of uncommitted cash on hand and has been actively sourcing and reviewing a broad range of corporate development opportunities that it believes would enhance shareholder value. These are primarily in the natural resources sector, and more recently have focused on oil and gas. PhosCan’s goal is to use the cash on opportunities with existing cash flows and long-term growth potential. As of Oct. 31, 2009, PhosCan said it held approximately US$9.6 million in cash and cash equivalents out of a total of $69.3 million of cash, cash equivalents, and short-term investments.
Phosphate vessel runs aground near Tampa
Tampa-A 371-foot phosphate vessel recently ran aground at the mouth of the Alafia River in Tampa Bay, according to various media sources. Coast Guard officials said the Mariano Lauro was outbound from Riverview, where Mosaic has a phosphate processing plant, when it ran aground and was freed by tugboats with the help of high tide after being stuck for several hours and blocking the shipping channel. Officials said there were no injuries and no damage to the vessel. None of the cargo was lost.
Cargill, Mosaic extend agreement
Plymouth, Minn.-Cargill Inc. and The Mosaic Co. on Dec. 9 extended the term of the Master Services Agreement between the parties dated Dec. 29, 2006, to Dec. 31, 2010. Under the agreement, Cargill, which owns 64.2 percent of Mosaic, has provided various services to Mosaic. These include accounting, accounts payable and receivable processing, certain financial reporting, human resources, information technology, risk management, licensing and tonnage reporting, office services, procurement, records, tax, travel services and expense reporting, treasury, and other administrative and functional related services. Mosaic paid Cargill approximately $11.3 million during the fiscal year ending May 31, 2009.
Management Briefs
Yara North America has confirmed the unexpected death of long-time industry veteran Del Braddock. When more information is available, Green Markets will update its website at www.greenmarkets.pf.com.
CVR Energy Inc. on Dec. 17 announced the appointment of vice presidents at two of its subsidiaries ?Çô Coffeyville Resources Nitrogen Fertilizers LLC, and Coffeyville Resources Crude Transportation LLC. Bill White will be vice president, marketing, at the nitrogen fertilizers subsidiary, responsible for the national marketing of the company’s production of ammonia and UAN. In 2008, the unit produced 112,500 st of ammonia available for sale, as well as 599,200 st of UAN. White, who was director of sales and marketing, reports to Kevan Vick, executive vice president, Coffeyville Resources Nitrogen Fertilizers.
Reed Copeland will be vice president, crude oil logistics, at the crude oil gathering and transportation subsidiary. He will be responsible for the company’s expanding crude oil gathering operations, which collect nearly 30,000 barrels per day from Central Kansas, Oklahoma, Eastern Colorado, Western Missouri, and Southwest Nebraska. He will also oversee bulk crude oil transportation to the refinery. Copeland, who was director of oil movements and transportation, reports to Robert Haugen, executive vice president, refining operations, at Coffeyville Resources Refining & Marketing LLC.
Stephen Wilson, 61, chairman, president, and CEO of CF Industries Holdings Inc., has been elected to the board of directors of Ameren Corp., St. Louis, Mo. With assets of $24 billion, Ameren serves 2.4 million electric customers and nearly one million natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
Wilson currently serves on the board of directors of the Chicago Foundation for Education, the International Plant Nutrition Institute, The Fertilizer Institute, and the Nutrients for Life Foundation. He is a member of the Illinois Business Roundtable and the Florida Council of 100, a non-profit business advisory group.
Market Watch
AMMONIA
U.S. Gulf/Tampa: Players last week said new business for Tampa for January was concluded at $300/mt DEL. Sources credited unexpected supplies from Trinidad as a major factor for the drop, as the AUM UAN plant is still not utilizing the ammonia being produced by the plant and marketed by Koch. Sources speculate that the UAN plant, which was supposed to be up in November, may not be in production until the February-March timeframe.
U.S. ammonia imports in October were off 18 percent, according to the U.S. Department of Commerce, to 492,040 st from the year-ago 603,675 st. July-October imports were off 70 percent, to 2.22 million from 2.65 million st.
As of Dec. 17, Direct Hedge (DH) had the Tampa paper market at $320-$330/mt DEL for December and $300-$310/mt DEL for January-March.
Eastern Cornbelt: Anhydrous ammonia was steady at $360-$390/st FOB for spot tons and $425-$435/st FOB regional terminals for spring prepay. Spot demand was virtually nonexistent in the region. One supplier was offering forward contract ammonia for January through May as high as $445-$460/st FOB in the region last week.
Western Cornbelt: Spot ammonia pricing was steady at $340-$360/st FOB in the region, although there was little prompt business to test those numbers. Spring prepay ammonia offers continued to be quoted in the $390-$410/st FOB range in the region. One supplier was referencing forward contract ammonia at $410-$435/st FOB regional terminals for January through May, with the low in Nebraska.
Southern Plains: The anhydrous ammonia market remained at $290-$320/st FOB for prompt tons to the dealer, with the low quoted out of regional production points on a spot basis and the upper number reflecting dealer prices out of pipeline terminals in Kansas. Spring prepay ammonia pricing was reported in the $315-$345/st FOB range in the region, depending on time of delivery and location.
South Central: Anhydrous ammonia pricing was quoted at a nominal $350/st FOB regional terminals for spot tons, with spring prepay offers reported at $380/st FOB Blytheville, Ark., and Memphis, Tenn., and up to $425/st FOB Henderson, Ky.
Black Sea: Sources report the price has stabilized at $275/mt FOB. One Asian trader noted the price is not likely to fall any further. Supplies in the area are down, matching the lack of demand from the area.
One source noted that only one cargo from Yuzhnyy was slated for this month, and none for January. European demand is covered from domestic plants or Baltic facilities. Asian buyers are taking the tons they need from producers closer to home or the Arab Gulf.
Overall, demand for Yuzhnyy material is down. Production is down as well. Sources report the Ukrainian producers will keep their plants shuttered until the price again moves past $300/mt. For now, that means waiting until the spring rush for material.
The $300/mt level is pegged as the break-even cost for Ukrainian producers.
As of Dec. 17, DH had the Yuzhnyy FOB market as $280-$290/mt for December and $270-$280/mt for January-March.
Middle East: The tightness of the market is a combination of production problems and continued strong demand from India and East Asia.
Sources say Fertil, Sabic, and Qafco now have all their facilities up and running. However, the various shutdowns during the past six weeks or so mean the companies are still paying off swap deals they made in the past. No “excess” material is available at this time. Sources say it will be a while before any regional producers have tons to offer in spot sales.
The last bit of public business put the market at $300-$310/mt FOB. Observers note that the contract sales are moving at a few dollars less. One source said some of the Sabic formula-based deals are actually coming in around $295/mt FOB.
UREA
U.S. Gulf: Early in the week granular barges continued to weaken, with sources citing the perceived weakness in the international market. As the week progressed, however, buyers came back into the market. By week’s end, the range was called $307-$315/st FOB.
Sellers said the rebound was justified, citing the continued drop in overall imports into the U.S., while buyers countered that the recent run-up in prices has caused more imports to head toward the U.S. They argue that product will not be needed until after all these imports come in.
Urea imports were off 25 percent for July-October 2009, according to the DOC, to 1.4 million st from the year-ago 1.86 million st. October imports were off only 9 percent, to 489,066 st from 538,589 st.
As of Dec. 17, the DH paper market had barges at $310-$315/st FOB for December and $311-$315/st FOB for January. February was $315-$320/st FOB, and March-June $320-$330/st FOB.
Eastern Cornbelt: The granular urea market was quoted at $355-$360/st FOB in the region.
Western Cornbelt: Granular urea was pegged at $350-$360/st FOB in the region, with the $355/st level cited as a common dealer price at mid-month.
Southern Plains: Granular urea was quoted at $340-$345/st FOB in Oklahoma, with the low reported in Enid and the upper numbers to dealers out of the Tulsa market.
South Central: The granular urea market was quoted at $345-$355/st FOB regional terminals to the dealer, with reference levels reported as high as $360/st FOB at some Mid-South locations.
Sources reported little activity on the fertilizer front, although some said growers were kicking tires about year-end purchases for spring. At the wholesale level, sources said they were remaining very cautious about forward purchases. “If I can’t back-to-back it, I’m not interested in buying it,” said one source. “I’m just not going to buy it, not until I need it.”
Southeast: The granular urea market was quoted at $350-$360/st FOB port terminals to the dealer, with the upper end reflecting list prices from some suppliers.
China: Beijing confirmed it was lowering the export duty for urea and phosphates effective Jan. 1, 2010. The new rate will be 7 percent instead of the 10 percent that was charged in the 2009 off-season periods.
The off seasons for 2010 will be the month of January, July 1-Sept. 15, and Oct. 16-Dec. 31. During those periods, the export duty will be 7 percent. At all other times, the rate will be 100 percent of the FOB price.
Sources had speculated that the January period might be extended to Feb. 15. One Asian trader, however, noted that such an extension would not be worthwhile. The first two weeks of February will be taken up by preparations for Chinese New Year celebrations. A trader noted that even if a person had a contract, few ships – if any – would be loaded the first half of February.
Despite the reduction in the export duty, sources say Chinese urea is still not competitive in the current market. Domestic pricing pressure moved the price into the low $300s/mt FOB. At least one deal was done at $305/mt FOB. Reports of $310-$315/mt FOB began circulating as the week ended.
India: An interesting rumor circulated after the IFA meeting broke up in Malaysia. Sources say that representatives of the trading house Agora and Indian buyer IPL met regularly throughout the IFA gathering and well into last week. In the end, according to the rumor, Agora snagged an award of 200-300,000 mt at $300/mt CFR to be shipped by the end of next month.
Most Asian traders say the rumor is interesting, but not likely. They back up their skepticism with reports from their own Indian agents, who dismiss the report. One trader, however, swears the deal was confirmed from India and is possible.
Sources say India does need 200-300,000 mt for the upcoming application season. The existing stockpiles are enough for current estimates, say observers. If demand is stronger than usual, however, more tons will be needed. At the same time, say sources, pressure from local politicians could also require state buyers to import additional tons to avoid the appearance of a shortage.
Talks between IPL and a handful of traders broke down after the two sides could not come to an agreement on pricing. Sources said the $300-$305/mt CFR range bid by IPL was not high enough to match the international market price.
The rumored Agora deal would have meant a netback of $250-$260/mt FOB to Yuzhnyy. Sources say bids at $250-$255/mt FOB were common last week, but no one could point to any new deals in that range.
Sources also now report that the acceptable price of imported material is slipping. As the negotiations among IPL and traders broke down, sources said $300/mt CFR was the highest Indian buyers would accept. As of late last week, the new target is $290/mt CFR and lower.
Indonesia: The PIM tender closed last week with another bump in the export price. Universal Harvest bested its last price to Kaltim of $328/mt FOB by $1. No other trader followed suit.
| Company | Quantity (mt) | US$/mt FOB | Shipment Date |
| Universal Harvest | 5,000 | 329.00 | Dec. |
| Youngwoo | 10,000 | 310.20 | Jan. |
| Trada | 5,000 | 310.00 | Dec. – Jan. |
| Diva | 5,000 | 308.00 | Jan. |
| Liven | 6,000 | 303.00 | Dec. – Jan. |
| Profeta | 5,000 | 300.00 | Dec. – Jan. |
| Reliant Commodities | 20,000 | 295.00 | Jan. |
| Toepfer | 5,000 | 293.50 | Jan. |
| Swiss Singapore | 5,000 | 291.00 | Jan. |
| Ameropa | 10,000 | 288.48 | Jan. |
Helm, BBSC, and Parnaraya sent regrets.
Reportedly, PIM went to Youngwoo and Trada to see if they would match the Universal bid. The two companies demurred.
Universal has to load its 5,000 mt by the end of the year. Sources say loading such a small cargo in time should not be a problem.
Sources say this will be the last tender of the year out of Indonesia. A trader explained there is not enough time to call the tender and have the vessel loaded before the export licenses expire Dec. 31.
Reportedly, the Indonesian government is not as lenient as the Chinese government when it comes to exports. All cargoes must be shipped by the end of the year. Jakarta will not allow tons already purchased but sitting in a warehouse to be loaded and shipped after the expiration of the permits.
A decision about the 2010 export licenses is not expected to come until the second quarter of the year.
Besides looking at the actual domestic fertilizer needs of the country, sources say the government must also look at the political impact of allowing for exports. The producers were able to send tons off shore this year, said one source, because domestic demand was lower than expected.
Middle East: Sources report producers remain fully booked and happy.
An indicator of how well the producers are sitting was clear when they showed no sign of wanting to talk to IPL about lower prices in its tender.
Sales of granular urea to buyers in North America and Asia are the main driving force. Many of these sales are contracts or other long-term formula deals.
One source said that the prilled market from the area is virtually non-existent. One producer noted that if anyone asked for a price of a prill cargo, he says it is the same as granular.
The last public prill price was more than a month ago. The price at that time was in the mid-$260s/mt FOB.
One trader said that until a new public tender secures a cargo of prilled urea from the area, no one is sure what the real market is. He added he is sure that prills and granular are not at parity.
Granular, however, has continued to edge upward. Sources say the market is comfortably in the low $300s/mt FOB. Just how much growth may still come is debatable. Traders are now thinking that the granular market has peaked.
Black Sea: Sources say the market has slipped at least another $10. Offers at $260/mt FOB are dismissed and countered with bids at $250/mt FOB.
While no one could point to a deal at $250/mt FOB, sources are quick to believe this marks the low end of last week’s market. The former low end of $265/mt FOB is long gone, say most traders.
Even at $250/mt FOB, sources say finding a home for urea is problematic. With India out, the only major buyers on the horizon are in Latin America. And at this time, few are stepping forward to make bids on cargoes.
The market from the area is now pegged at $255-$260/mt FOB.
As of Dec. 17, the DH paper market was $265-$270/mt FOB for December and $255-$260/mt FOB for January, with February-March at $255-$265/mt FOB.
Vietnam: The government of Vietnam is ready to let Phu My begin exporting urea next year. Sources say the total exports reportedly allowed could hit 200,000 mt. For now, the Ministry of Finance is preparing the paperwork to allow for a test export shipment of 30,000 mt. Just how many tons are sent offshore will depend on domestic demand.
So far this year, says the government, Vietnam imported 1.7 million mt and produced another 900,000 mt of urea.
The government plans for the country to be urea self-sufficient by the end of next year. New plants are expected to come online by the middle of the year that will take the national annual production to 2.2 million mt. Demand is estimated at 1.7-2 million mt.
NITROGEN SOLUTIONS
U.S. Gulf: The barge market remained fairly stable after a long stretch of price increases. The range was put between $179-$186/st FOB ($5.59-$5.81/unit).
UAN imports were off 50 percent in October, to 73,895 st from the year-ago 146,564 st. They were off 55 percent from July-October, to 311,454 st from the year-ago 688,730 st.
As of Dec. 17, the DH paper market had December at $185-$195/st FOB and January-March at $195-$205/st FOB, with April-June at $210-$220/st FOB.
Eastern Cornbelt: The UAN-32 market was commonly quoted at $230-$240/st ($7.19-$7.50/unit) FOB regional terminals for spot tons to the dealer, with rail-delivered UAN pegged in the $240-$243/st ($7.50-$7.60/unit) range in Ohio at mid-month. One supplier was referencing forward contract UAN for January through May at $244.80-$257.60/st ($7.65-$8.05/unit) FOB regional terminals, depending on location and month of delivery.
Western Cornbelt: The spot UAN-32 market was quoted at $225-$240/st ($7.03-$7.50/unit) FOB regional terminals to the dealer, with the upper end of the range also reported for spot prepay offers. One Missouri source put the common dealer market at the $230/st ($7.19/unit) FOB level for prompt tons in his location last week.
Southern Plains: The UAN-32 market remained at $205-$210/st ($6.41-$6.56/unit) FOB regional production points for prompt or prepay tons, with dealer postings reported in the $220-$230/st ($6.88-$7.19/unit) FOB range in the region.
South Central: UAN-32 out of regional terminals was quoted in the $190-$205/st ($5.94-$6.41/unit) FOB range last week, and moving up. Several sources mentioned reports of dealers who took early positions reselling tons for as low as $170-$185/st ($5.31-$5.78/unit) FOB on a spot basis earlier in the month, but as one source said last week, “I can’t say that’s still going on.” He said current replacement costs surely support the higher numbers.
Southeast: UAN-30 was pegged at the $190/st ($6.33/unit) mark FOB Norfolk, Va., and Wilmington, N.C., with Baltimore pricing reported at the $195/st ($6.50/unit) FOB level or higher. Georgia sources continued to quote the UAN-32 market in the $198-$200/st ($6.19-$6.25/unit) FOB range on a spot basis.
Sources said several UAN import vessels are slated to arrive this month that were booked earlier in the low-$170s/mt up to $195/mt CFR, but importers are reportedly now touting $205/mt CFR for the next round of sales.
AMMONIUM NITRATE
U.S. Gulf: While some say recent sales were in the $205-$210/st FOB range, others argue that new price ideas are more $220/st FOB.
October imports were off 60 percent, to 30,423 st from the year-ago 75,158 st. July-October imports are off 47 percent, to 123,556 st from 235,236 st.
Western Cornbelt: Ammonium nitrate was pegged at $265-$270/st FOB in the region.
Southern Plains: Ammonium nitrate pricing was tagged at a firm $260/st FOB Catoosa, Okla., reflecting a slight increase from last report.
South Central: Ammonium nitrate was quoted at $265-$280/st FOB regional terminals to the dealer, depending on location.
Southeast: The Tampa ammonium nitrate market remained at $270-$280/st FOB, but sources said that number needs to move up based on offshore levels. One source, noting that December is a low demand period for nitrate, said prices are likely to firm in the first quarter of 2010.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was quoted at $185-$210/st FOB in the Eastern Cornbelt region.
Western Cornbelt: The granular ammonium sulfate market was tagged in a broad range at $185-$210/st FOB, with the low in Missouri and the upper end in Iowa. One source said Honeywell was not offering any tons for sale in the region last week, and some warehouses were low on product.
Southern Plains: Granular ammonium sulfate remained at $175-$215/st FOB Texas shipping points, with the low FOB Freeport.
South Central: Granular ammonium sulfate was tagged in a broad range at $185-$205/st FOB in the region, with the low reported in Arkansas and the higher numbers further south.
Southeast: Granular ammonium sulfate was steady at $165/st FOB in the region, with delivered tons in Florida quoted at $165-$168/st for standard and $195-$205/st for granular. Postings from DSM Chemicals are slated to firm on Jan. 4, with granular moving up $25/st and standard grade firming $5/st. As a result, the company’s granular postings on that date will move to $190/st FOB Augusta, Ga., and $230/st rail-DEL in Florida, with standard moving to $173/st rail-DEL in Florida.
U.S. Imports: October imports were off 34 percent, to 22,014 st from the year-ago 33,403 st. July-October imports are off 11 percent, to 95,944 st from 108,391 st.
PHOSPHATES
Central Florida: It will be a Merry Christmas for the phosphate industry this season, and that jingle wasn’t coming from Santa, but from a surge in sales and prices last week. The demand for phosphate of any kind out of Central Florida was far higher than the ability of producers to fill orders. Sources said the biggest problem for the domestic rail end of the business was because vessels were being loaded for export.
CF hiked its asking price to $325/st FOB for DAP and $340/st FOB for MAP. They probably wouldn’t have a problem getting it, but they had nothing available – and that may not change for a few weeks.
Mosaic was also near the bottom of the barrel on inventory, but managed to sweep enough off the floor for a single railcar sale on a prompt basis last week. It will be sometime in January before more would be available, unless of course it is all sold on a prepay basis.
Prepay was more popular than normal last week, in large part because farmers had a good year. With the money rolling in, those in need were looking for a way to spend for what they will need for spring before the clock ticks down at the end of the year.
Agrifos had pretty much sold out through January, but was still able to meet some demand for truckloads. However, late last week the company pulled its asking prices, which had risen to $360/st FOB for DAP and $375/st FOB for MAP, and planned to negotiate on each succeeding sale.
Sources said PCS Sales had nothing available for prompt delivery last week.
Last week, the Central Florida DAP price range was a flat $320/st FOB, up from the previous week’s flat $310/st FOB. Mosaic’s price was $320/st FOB for DAP and an additional $10/st FOB for MAP.
U.S. Gulf: As the end of the year drew near, there were a lot of jolly people on the river system last week. Prices and sales clattered across desktops and spread joy to the phosphate industry.
The fears of a hapless season came to an abrupt halt as each passing hour kicked the price of NOLA DAP barges higher and higher. The biggest struggle faced was pushing the paperwork and ringing up the sales.
Farmers, fat with cash from a robust harvest and hardy prices for crops, were seeking fertilizers for spring planting, and dealers were moving quickly to scarf up what limited supplies of DAP and MAP were available. By the end of the week, more transactions were done than there were barges actually on the water, which meant many of those sold were resold for a profit.
Corn for this month was running around $4/bushel, and corn for December 2010 was about $0.50/bushel higher. Beans were about $10/bushel.
After cutting back on applications this year, farmers wanted to keep their good times rolling – and starving the land of nutrients was not a serious option.
Prepay was running well ahead of current and escalating prices, hitting $370/st FOB with the promise of more before the end of the year.
Meanwhile, terminal prices were moving up rapidly in an effort to keep up with the barge market. Near the end of last week, the warehouse DAP price was between $365/st FOB and $380/st FOB. MAP was selling at a $10-$15/st FOB premium, but most were moving toward the $15/st FOB difference. MAP was said to be extremely scarce, and much of the demand was coming from the Dakotas.
The Army Corps of Engineers will close Lock No. 25 on the Mississippi River at Mile Marker 241 a little north of the mouth of the Illinois River for a prolonged maintenance beginning Jan. 4 and continuing for three months until April 4. That will create a problem for barge shipments from St. Louis heading north, which normally start in March. The option would be barge to St. Louis and transloading onto railcars for the balance of the trip, which will increase the delivered price.
Early last week, NOLA DAP barges sold for as low as $334/st FOB, but began moving up rapidly shortly afterward, and by the end of the week had hit $355/st FOB. Buyers should expect prices to continue to escalate at least through the end of the year.
The NOLA DAP barge price last week was $334-$355/st FOB, which was up from the previous week’s range of $330-$334/st FOB, and prices for MAP were running $10-$15/st FOB higher. Still, sellers were increasingly moving toward the $15/st FOB differential, as MAP was said to be extremely scarce. The greatest MAP demand was coming from the Dakotas.
As of Dec. 17, the DH paper market had NOLA barges at $330-$335/st FOB for December and $345-$360/st for January-March.
Eastern Cornbelt: The DAP market had reportedly firmed to $365-$385/st FOB regional warehouses, with MAP reported at a $10-$15/st premium. The higher numbers were reported toward the end of the week as NOLA barge values moved up steadily. MAP was said to be particularly scarce, with much of the demand coming from the Dakotas.
One supplier was referencing forward contract DAP at $395-$405/st FOB Midwest terminals for January through May, depending on location.
10-34-0 pricing was also on the upswing, with sources quoting the regional market at $345-$365/st FOB, depending on time of delivery.
Western Cornbelt: The big story in fertilizer was the rapidly firming phosphate markets. Sources said dealer pricing for DAP started the week at the $355/st level FOB regional warehouses, but by Thursday the market had firmed to $375-$385/st FOB, with new sales confirmed at the upper end of that range. MAP was $15/st higher than DAP, with spot sales confirmed at the $400/st FOB level in the Iowa market as the week advanced. Sources described inventories as tight, with additional price increases likely based on rapidly firming replacement costs.
10-34-0 was quoted at $325-$345/st FOB, up slightly from last report.
Southern Plains: Phosphate prices out of regional warehouses were up considerably last week, and playing catch-up to firming barge values at the Gulf. Sources pegged the DAP market at $355-$360/st FOB Oklahoma warehouses to the dealer, with the upper end of the range the more common number as the week advanced. Sources said higher numbers were likely in the near term.
MAP was $15/st higher than DAP and in relatively tight supply in the region. The 10-34-0 market was reported at $305-$310/st FOB in the region for prompt tons, with spring prepay quoted at $320-$330/st FOB.
Agrium’s phosphoric acid postings are slated to firm $10/st on Jan. 1 to $680/st rail-DEL in Colorado, Kansas, New Mexico, Oklahoma, and Texas. Another $10/st takes effect on Feb. 1, bringing reference prices in those states to the $690/st rail-DEL for both MGA and SPA.
South Central: DAP out of regional warehouses was quoted at $350-$370/st FOB to the dealer, up significantly from last report, and those at the lower end of the range said they were likely to move the price up in the very near term. MAP was $10/st higher than DAP, and TSP was roughly 25/st lower than DAP.
Some sources talked of push-back by the farmer if retail phosphate prices move up too much. One said corn prices will have to be at $4.25/bushel or higher if DAP is more than $400/st to the growers, and it will be based on the higher replacement costs. That factor, plus an expected uptick in soybean acreage in the Mid-South next spring, could lead to phosphate usage cutbacks next spring, he said.
U.S. Export: Late last week PhosChem made a deal to sell about 7,000 mt into Mexico at $369/mt FOB, which kept the export market in firm condition and in step with the surging domestic market.
Through November, The Fertilizer Institute (TFI) reported a robust year for phosphate, with DAP up 23.6 percent and MAP increasing marginally by 1.4 percent.
In November, TFI said DAP exports were up a whopping 305.3 percent over the same period in 2008, at 376,024 mt. China, as expected, led for the month with 223,645 mt, followed by India at 55,297 mt, and Thailand the third largest importer at 41,886 mt. China had contracted for at least another 250,000 mt for delivery in December, but there was some speculation that it might not take all of the balance it had ordered due to concern from its domestic producers, who have warehouses full of DAP. Instead of raising its export tax on DAP, China will lower the duty on Jan. 1. However, considering its price was around $450/mt, it will not be competitive in the current world market.
For the calendar-year-to-date, India was the top importer of U.S. DAP through November with 3,453,580 mt. Because of the unexpected late sales to China, it moved into second place at 280,755 mt, followed by Pakistan at 157,185 mt. Three other countries – Vietnam, Brazil, and Japan – took more than 150,000 mt of DAP. The total through November for the calendar-year-to-date was 5,391,000 mt.
MAP exports were also up sharply in November, according to TFI – 108,924 mt, or 133.4 percent. Brazil topped the list at 37,300 mt, followed by Canada at 34,695 mt and Argentina at 22,921 mt. For the calendar-year-to-date, Brazil led with imports of 494,825 mt, with Canada second at 353,523 mt and Australia at 189,679 mt. The total for the calendar-year-to-date was 1,461,076 mt.
Based on PhosChem’s most recent sale, the export DAP price range last week moved to a flat $369/mt, and PhosChem will increase its asking price for the next deal.
China: Beijing lowered the export duty on phosphates effective Jan. 1, 2010. The move is seen by traders in the area more as a move to placate DAP producers than one that will actually have any impact on Chinese DAP exports.
Sources peg the domestic price of DAP at $450/mt FOB, which is far more expensive than the international market. The price is so high that Chinese buyers even bought up to 600,000 mt from the United States and other DAP suppliers.
The move to import DAP upset the local producers. They are now sitting with warehouses full of very expensive DAP that they are finding difficult to move.
Asian sources say the reduction of the export duty on DAP – even though nothing is expected to move – was a political gesture to the producers to let them know they were not forgotten among all the talk of what effect the change in duty will have on urea.
International traders in the area are watching closely to see if China will honor all the import contracts its agents signed. One Asian trader said he heard rumblings that the DAP producers were working to find ways to block some of the imports.
India: Under its rock phosphate tender, RCF has awarded two rock phosphate cargoes: 20,000 mt ex Egypt at US$95.65/mt CFR India, and 40,000/mt ex Togo at US$129.75/mt pmt CFR India.
OCP has reportedly agreed to roll over phos acid prices of US$525/mt CFR India, with 30 days for December shipments.
Pakistan: Sources report that Engro Chemical Pakistan Ltd. is scheduled to import around 120,000 mt of DAP in the first quarter, with the contract cost settled at $360/mt. This coincides with the scheduled closure of the Fauji Fertilizer Bin Qasim Ltd. (FFBL) plant for about three weeks in January.
POTASH
Eastern Cornbelt: Potash was steady at $440-$450/st FOB in the region, depending on grade and location.
Western Cornbelt: Potash was quoted at $440-$447/st FOB in the region, with the low for red granular tons and the upper end quoted in Missouri for white granular potash. There were reports of lower numbers based on netbacks; one source said he was priced some potash recently that worked back to $430/st FOB river points, while another said Russian potash barges were being offered on a spot basis at $420/st dockside with price protection.
Southern Plains: Sources put the granular potash market at $440-$450/st FOB regional warehouses, reflecting another drop from last report. The market FOB Carlsbad, N.M., was tagged at a nominal $450-$455/st FOB, depending on grade.
South Central: Potash out of regional terminals remained at $445-$450/st FOB last week.
Southeast: Delivered potash pricing continued to slide, with sources tagging the market at $440-$450/st DEL in the region, depending on grade, location and supplier.
U.S. Imports: October imports were off 32 percent for MOP, to 560,255 st from the year-ago 823,468 st. JulyOctober imports are off 50 percent, to 1.65 million st from 3.26 million st.
SULFUR
Tampa: Unless there is some major shift in economics during the next couple of weeks, phosphate producers may be facing higher prices for molten sulfur delivered to Tampa during the next quarter, according to sources.
Prices on the world market continued to move upward, and China was said to be paying $100/mt or more for delivered sulfur. That was good news for the industry, because freight rates across the Pacific were going down, somewhere around $40/mt last week. Rates to China from the Gulf of Mexico were about $65/mt.
Supplies continued to be suppressed by reduced refinery activity, which was running about 80 percent last week. With winter already on the scene, fuel oil production was replacing gasoline, which reduced sulfur production. At the same time, sweet crude was also the rule, and that meant even less sulfur. A source said many producers were sending more sulfur to prill facilities on the Gulf Coast, and that, too, was having a negative impact on sulfur supplies. Meanwhile, several turnarounds at refineries – Marathon and Valero – were scheduled to begin during the next 30 days.
Sometimes it makes good business sense to wait it out, but that will not be the case for the first quarter, as supplies appear to be on a continuous downhill slide. Some sources said phosphate producers would be wise to move quickly to settle prices, even if it means paying twice as much or more than the current $30/lt.
If the economy does improve, the supply side could become even more precarious than it has been, because industrial users will be increasing their demand at the same time as the phosphate industry ramps up production.
Although the hurricane season ended with a murmur, rough weather continued to be the rule for the Gulf, and that was likely to continue during the winter months. Heavier-than-normal rain in Florida in December and the previous month slowed truck deliveries to some phosphate processing plants.
West Coast: Lower freight rates and higher prices were boosting the market on the West Coast, and that situation appeared likely to continue in the near future.
Vancouver: With China paying $100/mt or higher, FOB prices out of Vancouver were running as high as $70/mt FOB last week. A source pointed out that very, very cold weather was hitting Canada, which was hardly unusual, and that could cut into supplies and push prices higher.
U.S. Imports: October imports were off 60 percent to 104,185 st from the year-ago 259,184 st. July-October imports were off 52 percent, to 453,428 st from 936,569 st.