AMMONIA
U.S. Gulf/Tampa: No new business was reported to change the Tampa and NOLA markets last week.
As of Nov. 5, Direct Hedge (DH) has paper trade ammonia at $330-$350/mt FOB November-December and $300-$330/mt for January-March.
Eastern Cornbelt: Sources said ammonia movement was trickling in fall applications as the harvest progressed, and steady inquiries were coming in for spring prepay. The spot ammonia market was quoted at $350-$370/st FOB regional terminals, reflecting an increase from last report. Spring prepay ammonia had reportedly worked its way up from $390/st FOB in late October to $425-$435/st FOB in the region, with sales confirmed at the low end of that range.
One source observed that most of the fall ammonia can be applied in a 10-day span once the bulk of harvest is completed, so fingers remained crossed that the weather will be more cooperative in November than it was in October. Heavy rainfall in late October continued to delay fieldwork in parts of Illinois, but many areas saw brisk harvest activity last week. The previous week’s heavy rainfall caused flooding problems in some areas last week. Local reports talked of farmland under water in southern and western Illinois due to rising levels in the Illinois, Ohio, and Kaskaskia rivers.
Western Cornbelt: Harvesters were rolling in nearly every corner of the region last week, thanks to favorable weather conditions after one of the wettest Octobers on record. All of that moisture contributed to flooding concerns in early November. The Meramec River near St. Louis was 11 feet above flood stage on Nov. 2; the Mississippi River crested at more than 7 feet above flood stage in St. Louis on Nov. 3, and at 9 feet above flood stage in Cape Girardeau, Mo., on Nov. 4.
Sources reported some field applications of ammonia taking place as the harvest progresses. Anhydrous ammonia remained at $330-$350/st FOB in the region for spot tons, with spring prepay reportedly being offered in the $400-$425/st FOB range.
Southern Plains: Although the Halloween weekend brought heavy snow to parts of Colorado, much of the region saw favorable weather conditions during the first days of November that allowed growers to get back in the field and make up some lost harvest time.
Sources reported no changes to spot ammonia pricing last week. The anhydrous ammonia market remained at $290-$315/st FOB 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.
South Central: Most of the region enjoyed favorable weather and improving harvest conditions in early November, although the previous week’s torrential rainfall caused flooding concerns in some locations. The Mississippi River at Natchez, Miss., was some 30 feet above the average stage for this time of year, with a crest of 47.5 feet expected by Nov. 15. The river was expected to rise to 32.5 feet at Caruthersville, Mo., by Nov. 7, just a hair over flood stage.
The ammonia market was pegged at $340-$350/st FOB for spot market tons, with the upper end quoted at Henderson, Ky. Spring prepay was reportedly being offered at $380/st FOB Memphis and $420/st FOB Henderson.
California: Agrium’s standard grade anhydrous ammonia postings moved on Nov. 6 to $430/st truck-DEL in Central California and $435/st truck-DEL in Northern California.
Black Sea: Sources report that ammonia from the area is being diverted to urea production. The resulting decline in ammonia availability would normally have a serious impact on the market. However, in the current situation, demand from Yuzhnyy is soft enough that few are expecting to see a price spike from the diversion.
One trader noted that in the past, moving ammonia to urea would have caused the ammonia price to jump as supply declined, but at this time of year, demand is way down. There are few buyers willing to take large tons from the Black Sea.
Adding to the general malaise in the regional market is a price that is at or below the break-even level for most producers. By using ammonia for urea production, said one source, the producers will get a better netback.
Prices have not moved from the $295-$305/mt FOB range. Sources in Asia are waiting to see what happens with future purchases from the United States to get a better handle on the market.
As of Nov. 5, DH has paper trades from Yuzhnyy at $290-$300/mt FOB November and $280-$300/mt December. January-March is $270-$290/mt.
Middle East: The Safco IV plant is back online. Asian sources say that the additional tons that will come online are already spoken for and will have no impact on the market.
Reportedly, Sabic has been engaging in swaps and other deals to cover its contracts while the plant was down. Now with the facility back up and running, Sabic has to repay all those borrowed tons.
India remains a strong buyer of Middle East ammonia. Sources say contract tons are moving without problem from the area to Indian buyers. The Indian buying is keeping the ammonia order books full. Sources say the buying should continue well into the next year.
Prices remain in the low $300s/mt FOB. One trader noted that some contract deals might reflect a slightly softer price, but not by much.
Asia: Sources quickly dismiss any talk of turnarounds or shutdowns. Demand, especially in East Asia, remains brisk. Production from Indonesia and Malaysia – augmented by the Middle East – is easily meeting demand.
One source called the area market nicely balanced.
India: Under the 2 x 7,500 mt FACT ammonia tender held Oct. 21, the following offers were received for delivery Nov. 23-26 and Dec. 3-6: Qafco 1st lot at $340/mt CFR Cochin and 2nd lot at $347/mt CFR Chennai; PIC 2nd lot at $345/mt CFR Cochin; and Transammonia 1st lot at $342/mt CFR Cochin and 2nd lot at $348/mt CFR Cochin. Reports are that FACT awarded the first lot to Qafco and second lot to PIC at offered prices.
UREA
U.S. Gulf: Prices moved up last week. Granular barges were reported to have begun the week at $258/st FOB and most were calling them $265/st FOB on Thursday, with expectations that they would hit $270/st FOB by the end of the week. Sources cited several factors for the up tick, including a shortage of imports, fears of a light fall ammonia season, improved crop prices, and general expectations of more acreage and application rates next year.
Sources said the NOLA market is currently under the world market, which is called firm-to-strong with good demand from India, Pakistan, and Bangladesh. They said NOLA prices are going to have to move up if the industry is going to meet U.S. demand for next spring. On the other hand, international sources say that market, which has seen tender-after-tender in recent weeks, is now in a lull.
The paper market was playing into the higher price expectations. As of Nov. 5, DH has paper trade granular barges at $267-$270/st FOB for November and $275-$280/st FOB for December, with January-March at $276-$282/st FOB and April-June $270-$280/st FOB.
Eastern Cornbelt: Granular urea remained at $300-$305/st FOB in the region.
Western Cornbelt: The granular urea market continued to be quoted at $295-$305/st FOB terminals to the dealer.
Agrium’s urea postings in the Northern Plains market moved on Oct. 29 to $320/st FOB North Dakota warehouses at Alton, Carrington, Colfax, Scranton, and Grand Forks, and $325/st rail-DEL in Minnesota, Wisconsin, and the Dakotas.
Southern Plains: Granular urea was pegged at a firm $285-$290/st FOB Inola and Enid, Okla., with Kansas terminals reportedly referencing a $305/st FOB level to the dealer.
South Central: The granular urea market was reported at $290-$295/st FOB regional terminals to the dealer, up slightly from last report.
Southeast: Granular urea was quoted at $305-$310/st FOB port terminals, also up slightly from last report, with the low at Wilmington, N.C., and the upper end FOB Norfolk, Va.
Western U.S.: Agrium’s granular urea postings moved on Oct. 29 to $320-$335/st DEL in Montana and Wyoming, depending on location; $340/st FOB Idaho warehouses at Acequia and Pella, and Washington warehouses at Glade, Warden, and Wilson; $345/st DEL in Washington, Idaho, Oregon, and northern Nevada; $355/st DEL in northern and central Utah; and $360/st DEL in southern Utah.
India: The talk of India coming back soon with a major tender seems to be coming mostly from producers, who want to stop the market price from sliding.
Traders are quick to point out that so far there are no reports of Indian buying agents circulating among the producing countries, as is usually the case just prior to the calling of a tender. At the same time, Indian media are reporting that the Department of Fertilizer has yet to come to a decision as to how many tons will be needed for the next application season.
One Asian trader noted that the industry would most likely not see an announcement until the industry meets in Malaysia at the regional IFA gathering Dec. 8.
In previous years, Indian buyers have either called a tender just as conference participants arrived at the event, or just after the conference closed.
In the latter scenario, say sources, the Indians use the event to take the temperature of the market before making their final recommendation to the government. In the former, all the research has been done and the Indians use the conference to arrange “face time” with potential sellers.
Pakistan: Local media are reporting TCP is once again petitioning to make additional urea purchases, leaving many in the industry puzzled.
The purchase of 600,000 mt last month, combined with the soft loan of $100 million from Saudi Arabia, should put Pakistan in good shape well into the second quarter of next year, say sources.
Domestic production will improve in the coming months as refurbished and new plants come online.
The government is claiming that the country will be self-sufficient in urea by the middle of next year. Sources outside the country say if demand does not dramatically spike, the government’s assertions could be right.
Middle East: Producers cling to their pricing ideas in the low $270s/mt FOB. Unfortunately for them, bidders keep coming back with prices in the mid-$260s/mt FOB.
Sources report that the producers seem to be seriously looking at gaps in their December and January orders. Reportedly, there are no spot tons available for November, thanks to Indian and Pakistani purchases. Come Dec. 1, however, few buyers seem lined up.
The producers face competition in December – not only from the Black Sea, but also from Chinese producers.
When one of the Indian buying houses calls a tender next month, sources say the Middle East producers may have to be aggressive on pricing to ensure an award.
Also on everyone’s watch list in the area is the demand from the United States.
While some producers have long-term contracts to supply the States with material, spot tons from China, combined with weak demand, could force the formula-based prices lower than producers would like.
For now, sources say the price remains in the low $270s/mt FOB – but the producers are not slamming the door on buyers looking for material in the $260s/mt FOB.
Black Sea: Sources report Romania is looking to sell in the $250s/mt FOB. One trader said producers must earn more than $245/mt FOB to cover their production costs.
Reportedly, European buyers are the mainstay of the Romania deals. Delivered Romanian material, even in the low $250s/mt FOB, is lower than what can come from Yuzhnyy at the current $240-$245/mt FOB rate.
Yuzhnyy producers see a stronger market in urea than ammonia. Sources report ammonia producers are diverting tons from export to urea production.
The strength in the urea market for the area remains the purchases from India and Pakistan.
By the end of this month, however, new buyers will be rare.
Producers are beginning to have the traditional battle with traders looking to take positions in anticipation of the Indian tender.
The problem, said one trader, is that the market is so fluid right now that few are willing to take a gamble on a late-December cargo. One trader said he was even nervous about looking at an early December bid.
As of Nov. 5, DH has paper trade Yuzhnyy prills at $241-$243/mt FOB for November and $240-$245/mt FOB for December, with January-March at $248-$253/mt FOB.
China: Domestic buyers are beginning to build winter stockpiles for the next application season. Sources report the demand is strong enough to move prices up.
Asian traders now peg the Chinese market at $265-$270/mt FOB for prills, with granular getting about $5/mt more.
Sources report the November order books are full. One trader noted, however, that for the right price, a producer may be “persuaded” to delay or scrap an existing deal for a spot shipment. Another trader chimed in that except for the existing orders for India and Pakistan, there is no reason to pay more for a November shipment. The buyers, he said, are just not there.
Indonesia: PIM closed a selling tender for 20,000 mt of prilled urea Nov. 6. Prices were stronger than the last tender from PUSRI.
PIM Selling Tender of Prilled Urea Nov. 5
|
| Company |
US$/mt FOB |
Quantity (mt) |
| Diva |
268.00 |
2 lots of 5,000 |
| Trada |
267.75 |
2 lots of 5,000 |
| BBSC |
267.50 |
5,000 |
| Universal |
265.78 |
2 lots of 7,000 |
| Youngwoo |
265.10 |
1 to 3 lots of 5,000 |
| Swiss Singapore |
264.15 |
5 lots of 5,000
|
| Parnaraya |
261.00 |
4 lots of 6,000 |
| Limardi |
260.25 |
2 lots of 5,000 |
| Daewoo |
260.00 |
4 lots of 6,000 |
| Liven |
258.50 |
6,000 |
| Toepfer |
257.00 |
8,000 |
| Ameropa |
256.25 |
2 lots of 5,000 |
| Profeta |
254.00 |
6,000 |
| Keytrade |
252.00 |
8,000 |
After some quick negotiations, Diva, Trada, and BBSC won awards at $268/mt FOB.
The fact that 25,000 mt was awarded backed up industry observations that the Indonesian producers have more tons to sell than what they have publicly admitted to.
Observers say the tons will most likely end up in the hands of regional end users rather than buyers in India or Pakistan.
The price paid also indicates that small market deals are becoming more expensive. The price agreed to in this tender is $14 higher than what PUSRI received just last month.
Bangladesh: Local sources say the country is likely to face a shortage of urea due to Chittagong Urea Fertilizer Ltd. (CUFL), which could not go into production on schedule due to a shortage of gas for the plant. The CUFL management informed the industry ministry in a letter on October 29 that the supply of gas to the plant was below the required level. Moreover, the pressure of the gas was also below the required level. The supply of gas to CUFL had been suspended since April 26 in order to feed gas-fired power generators.
NITROGEN SOLUTIONS
U.S. Gulf: Prices continued to strengthen last week, though how much was at issue. Several sources put new trades within the $147-$153/st FOB range for prompt tons, while others cited much higher price ideas of $160-$170/st FOB. Sources argued over whether these higher numbers were prompt or forward.
Like stronger urea prices, sources said speculation that there will be very little ammonia used in the fall season will cause more demand for urea and UAN come spring. Others downplayed the intensity, saying plenty of ammonia can still be applied between now and the coming of winter, and then again in early spring.
As of Nov. 5, DH had barges at $160-$165/st FOB for November and $175-$180/st FOB for December, with January-March at $182-$187/st FOB and April-June $180-$190/st FOB.
Eastern Cornbelt: The low end of the UAN market was quoted at the $5.50/unit level FOB Ohio River terminals for very limited spot business last week. Some regional suppliers were referencing as high as $6.50-$6.65/unit FOB, however, and claiming new sales at the low end of the range. Spring prepay was reportedly being offered in the $6.25-$6.50/unit FOB range in the region.
Western Cornbelt: The UAN market remained at $5.60-$6.09/unit FOB for immediate take, with the low confirmed in Nebraska on a spot basis. Several sources reported common dealer reference pricing at the $6.00/unit FOB last week and firming. Spring prepay sales were confirmed at the $6.25/unit FOB level.
Southern Plains: Sources reported firming prices for UAN. While some maintained that $165/st ($5.16/unit) FOB was still doable on a spot basis early in the week, others said the dealer market had firmed to $170-$190/st ($5.31-$5.94/unit) FOB, with manufacturers touting the higher numbers and resellers on the low end. Koch’s Oct. 30 UAN-32 postings included $190/st ($5.94/unit) FOB Enid, Okla., and $200/st ($6.25/unit) FOB Dodge City, Kan.
South Central: UAN-32 spot pricing was also up from last report. The dealer market was quoted at $175-$190/st ($5.47-$5.94/unit) FOB regional terminals to the dealer, depending on location.
Southeast: Dealers reported a little fertilizer movement on wheat ground last week. UAN pricing was up from last report. Sources pegged the market at $5.16/unit FOB port terminals on the low end, although sellers were reportedly trying to firm the dealer market for replacement UAN-30 tons to the $165-$170/st ($5.50-$5.67/unit) FOB level.
AMMONIUM NITRATE
U.S. Gulf: Players continued to call the market quiet at $200-$205/st FOB.
As of Nov. 5, DH had the November-December paper market at $180-$190/st FOB.
Western Cornbelt: Ammonium nitrate was steady at $255-$260/st FOB in the region.
Southern Plains: Ammonium nitrate pricing was unchanged at $255/st FOB Catoosa, Okla.
South Central: Ammonium nitrate remained at $260/st FOB regional terminals to the dealer.
Southeast: Ammonium nitrate remained at $270-$280/st FOB the Tampa market. One Carolina source reported a $260/st rail-DEL level from Mid-South shipping points.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $170-$180/st FOB.
Western Cornbelt: Granular ammonium sulfate remained at $170-$180/st FOB or rail-DEL.
Southern Plains: Granular ammonium sulfate pricing was steady at $175-$215/st FOB Texas shipping points, with the low FOB Freeport.
South Central: Granular ammonium sulfate was tagged at $175-$180/st FOB in the region.
Southeast: Granular ammonium sulfate was steady at $160-$165/st FOB, with the upper level reflecting the reference price FOB Augusta, Ga. Rail-delivered sulfate in Florida was quoted in the $160s/st for standard grade and $195/st for granular, with reference levels reported at $168/st for standard and $205/st for granular.
India: Zuari Industries and Tata Chemicals have taken 35-40,000 mt DAP each from OCP under a formula pricing mechanism.
RCF has issued a tender for 2 x 18-20,000 mt rock phosphate (quality – min. 29 percent P2O5 grade) for shipment during November-January 2010. The tender closes Nov. 9, and offers are to remain valid for the next 30 days.
PHOSPHATE
Central Florida: Phosphate producers reached a settlement for fourth-quarter sulfur pricing for molten up $20/lt Tampa to $30/lt Tampa. The new price will increase the cost of producing phosphate by about $8/st.
However, the two largest phosphate producers – Mosaic and PotashCorp – have made no moves toward increasing production. Instead, it appeared Mosaic was making efforts to hold or reduce production, because of low margins on new phosphate sales. On the other hand, CF Industries, which produces at a much lower volume, was apparently still running at maximum speed in order to meet export commitments. Although China has made purchases of about 450,000 mt of phosphate in the previous two weeks, the domestic fall season has been virtually nonexistent so far. However, drier weather last week provided some hope that farmers will soon complete their harvesting and will likely begin applying fertilizers soon after, in order to be ready for their spring planting.
No new prompt DAP or MAP sales by rail were found in Central Florida last week. The Central Florida DAP price range last week was unchanged at $270-$275/st FOB. Both Mosaic and PCS Sales were charging a $10/st FOB premium for MAP. Prices from Agrifos were still $300/st FOB for DAP and $305/st FOB for MAP.
U.S. Gulf: The weather finally cleared in most of the Midwest last week and harvesting was going full bore, and yields appear to be good and better than average in many areas.
Farmers have had a testy season. Crops were late going in the ground, and heavy rain throughout the summer created fears of too much of a good thing. Then, cooler-than-normal temperatures slowed the development of many crops, and rain again accounted for delays in getting crops out of the fields before the extremely cold weather hits. As several sources said last week, “The last thing farmers were thinking about was fertilizer. They just want to get their crops in.”
Meanwhile, prices for corn and soybeans were strong. Late last week, corn for December 2009 was around $3.85/bushel, so farmers will have money to spend.
Fear has turned to optimism. Because of delays in getting crops in the ground this season, farmers appeared more likely to buy phosphate in the fall – even if it will be late – and put it down to save time for the spring season. Then, nitrogen will be the next priority.
Although prompt NOLA DAP barge sales were virtually nonexistent last week, warehouses in some areas were strong and dealers were hitting terminals in search of replacement material. However, there were not a large number of barges on the river system, and while prices were relatively low last week, that situation may not continue if there is a late season rush and supplies vanish.
MAP barges were still at a premium to DAP, but in the upper Midwest, rail-delivered MAP was being discounted to DAP. A source said the reason was because one player was attempting to clear space to make room for urea for the spring season.
The decline in NOLA DAP barge prices in the past few weeks has led to Mosaic pulling back on its efforts. The company set a NOLA DAP barge price of $275/st FOB, which was significantly above the market at that time. CF was also seeking the same price, sources said.
Some terminal operations, which had begun selling barges they were taking under contract, had stopped last week and were using the product to re-supply their own warehouse operations after an up tick in that business.
The NOLA DAP barge price range last week remained a flat $262/st FOB. Mosaic and CF were seeking $275/st FOB. Both were charging a $10/st FOB premium for MAP.
As of Nov. 5, DH had November barges at $255-$265/st FOB and December at $250-$260/st FOB. January-March barges were $265-$280/st FOB.
Eastern Cornbelt: The DAP market was steady at $305-$310/st FOB in the region, with MAP $10/st higher. 10-34-0 was unchanged at $310-$315/st FOB in the region.
Western Cornbelt: DAP remained at $300-$305/st FOB in the region, with MAP 10/st higher. 10-34-0 was steady at $305-$315/st FOB in the region.
Southern Plains: DAP was pegged at $295-$300/st FOB, down slightly from last report. MAP was $10/st higher than DAP, and 10-34-0 was steady at $300-$310/st FOB in the region.
South Central: DAP out of regional warehouses remained at the $300/st FOB level to the dealer last week, with MAP $10/st higher. The TSP market was pegged at $275-$280/st FOB warehouses to the dealer.
U.S. Export: China has emerged as a major buyer and the biggest influence in the export DAP market during the past two weeks, having placed orders for about 450,000 mt of DAP from various suppliers. All of the deliveries will be made to ports in the northern part of the country, where phosphate prices were higher for domestic product than imported material. China has also been active in purchasing sulfur and potash in recent weeks, according to sources.
In addition to buys from PhosChem, North Africa, and Gavilon the previous week, China made buys from Keytrade of CF material, and from Ameropa using Mexican phosphate. Other buys were believed to have been made from North Africa. All of the delivered prices were around $343/mt, which would provide an FOB price of between $285-$290/mt from the U.S., depending on freight costs.
Despite the new activity, PhosChem decided to pull back from the market until prices improve. Its own inventories were relatively low, and it had storage space available at its facilities in Brazil, India, and North America. Part of its motivation was higher input costs for sulfur and ammonia, as well as low phosphate prices in both domestic and export markets. PhosChem set its export price at $295/mt FOB. The spring season was expected to be robust, and India and Brazil will likely enter the market early next year.
The export DAP price range last week was unchanged at $282-$290/mt FOB.
As of Nov. 5, DH had Tampa export at $282-$286/mt FOB for November and $275-$280/mt FOB for December, with January-March at $275-$285/mt FOB.
POTASH
Eastern Cornbelt: Potash continued to be quoted at $450-$460/st FOB regional warehouses, with little new business to test the market.
Western Cornbelt: The dealer market for potash was quoted at $450-$465/st FOB in the region, with delivered granular tons reported at the $475/st level in Nebraska on a spot basis.
Southern Plains: Sources put the potash market at $460-$475/st FOB regional warehouses, depending on grade. Postings FOB Carlsbad, N.M., remained at a nominal $477/st for standard 60 percent, $482/st for granular 60 percent, $493/st for standard 62 percent, $496/st for fine standard 62 percent, and $498/st for granular 62 percent.
South Central: Potash out of regional terminals was pegged at a flat $450/st FOB last week, with minimal new sales to test that number.
Southeast: Delivered potash pricing continued to slide, with sources tagging the market at $475-$495/st in the region, depending on grade, location, and supplier. “The buying freeze is still going on,” reported one source, but he noted that demand may be picking up for wheat applications.
SULFUR
Tampa: After beginning to settle with their sulfur suppliers the previous week, both Mosaic and PotashCorp finished fourth-quarter contracts with all of their major suppliers last week, so the new sulfur price of $30/lt for molten to Tampa became effective this week. While that price represents an increase of $20/lt up from the previous quarter, indications were that the price would increase again for the first quarter of next year.
The increase in prilling on the Gulf Coast was said to have been a major factor in helping push sulfur prices at Tampa up. The price of prill on the Gulf was running around $30-$35/mt, which was significantly higher than the Tampa price, which provides a negative netback to producers in most cases.
Meanwhile, the supply situation was said to be somewhat better last week, as a bit more sulfur was flowing into the system. However, prill operations were still taking a large chunk of the material, and that was not likely to change with the current price structure.
West Coast: Refinery-to-prill prices on the West Coast were running between $0/mt and $15/mt, while prill prices were about $30-$35/mt.
India: The rapidly increasing sulfur prices are putting off Indian buyers from making purchases. Both recently held tenders by FACT and Coromandel were scrapped. Earlier offers by Midgulf and Swiss Singapore to FACT had been $74-$75/mt CFR.
MARKET NOTES
Nepal: To avoid a lengthy procurement process through overseas companies, the government has decided to buy 50,000 tons of chemical fertilizer from India. Officials said the government will procure 30,000 tons of Urea, 15,000 tons of DAP, and 5,000 tons of Potash from India and distribute the fertilizers to farmers under the government subsidy that was revised after a decade-long gap. The government has already imported 32,500 tons of urea, DAP, and potash from Brahmaputra Valley Fertilizer Corp. Ltd., an undertaking of the Indian government. A total of 10,000 tons urea – the last batch of the Indian fertilizer consignment – is in the process of entering Nepal soon.
India: RCF has decided to back out of bidding for the 1.15 million mt ammonia and 880,000 mt urea plant (Odessa Port Plant) in Ukraine, claiming that the asking price was too high. The company also said that its finances were tied up in the revamping of its own plants and it would not be able to put up the high upfront payment that Ukraine had demanded from bidders.
India: Major investments in six new fertilizer plants that would have raised India’s urea making capacity by 30 percent are stuck for want of natural gas, a senior government official has said. Six companies – IFFCO, Kribhco, Chambal Fertilisers and Chemicals, Tata Chemicals, Indo Gulf Fertilizers, and public sector RCF – have submitted proposals for setting up new urea plants, with 1 million mt/y capacity each, the official said. “Since there is no commitment for assured supply of (feedstock) gas, these companies have not started the projects even after their boards’ approval,” he said.
Reliance Industries’ eastern offshore KG-D6 gas field is reportedly capable of meeting the entire feedstock requirement of 13.2 million standard cubic meters per day (mmscmd) of these plants, but allocations have not been made. KG-D6 has the capacity to produce about 65 mmscmd of gas, but is generating below 40 mmscmd gas for want of government-nominated buyers. The official said the government had previously given existing urea plants the top priority for receiving KG-D6 gas when the first 40 mmscmd output was allotted. Fertilizer firms want the new plants to also enjoy the same priority. They want a commitment from the government that they would receive the required quantity of gas after they complete their projects.
India: The impact of deficient monsoons over more than 50 percent of the country has started showing its impact on agriculture output. The Prime Minister’s Economic Advisory Council (PMEAC) estimates that farm sector growth in 2009-10 (agriculture and allied sectors) will turn negative for the first time in the last seven years, at -2 percent, as against a growth of 1.6 percent in the last financial year. The last time the agriculture sector showed a negative growth was in 2002-03, when it went down by 7.2 percent, also because of widespread drought in several parts of the country. Had it not been for the drought, India’s farm sector would have grown at a healthy rate of 4 percent, as has been the trend in the last couple of years, the PMEAC noted. The PMEAC also estimated that food grains output in 2009-10 will drop for the first time since 2004-05, by 11 million mt to 223 million mt. Last year, India produced a record 234 million mt of food grains.