Overland Park, Kan.-While other fertilizer companies are reporting a drop in earnings, Compass Minerals last week reported a record second quarter for its specialty fertilizer business with a 15 percent increase in earnings for the unit. Operating earnings were $25 million versus the year-ago $21.7 million. However, sales were off 29 percent, to $38.4 million from $53.9 million, and volumes were off 63 percent, to 41,000 st from 111,000 st. The average sales price was up 95 percent, to $944/st from $485/st. “Though we expect sulfate of potash sales to remain below normal levels through 2009 as growers continue to conserve cash, we believe that demand will progressively strengthen through the second half of 2009 and approach historical norms in 2010,” said Dr. Angelo Brisimitzakis, Compass president and CEO. He also expects the unit to remain solidly profitable despite recent price fluctuations in the broader potash market due to the company’s cost structure, which includes solar evaporation production and a favorable supply agreement. Six-month operating earnings were $51.8 million on sales of $76.6 million (78,000 st), versus the year-ago $38.8 million and $101.6 million (234,000 st). The average sales price was $980/st, up from $434/st. Compass’s salt business also had a record quarter. Overall, company earnings were $14.1 million ($.42 per diluted share) on sales of $159.5 million, versus the year-ago $1.6 million ($.05 per share) and $162 million, respectively. Net earnings excluding special items were $17.1 million versus the year-ago $4.7 million. Six-month net earnings were $75.7 million ($2.27 per share) and $468.6 million, versus the year-ago $50.7 million ($1.53 per share) and $542 million, respectively. Net earnings excluding special items were $78.7 million versus the year-ago $53.8 million.
All posts by traceybg@gmail.com
Scotts reports improved results
Marysville, Ohio-The Scotts Miracle-Gro Co. reported net income of $147.8 million ($2.23 per diluted share) on sales of $1.28 billion for the third quarter ending June 27, 2009, compared to the year-ago $22.6 million ($.35 per share) on sales of $1.17 billion. Adjusted net income, which excludes the impact of product registration and recall costs, as well as impairment charges, was $153.7 million ($2.32 per share), versus the year-ago $130.7 million ($2.00 per share). While third-quarter sales were up 9 percent overall, they were up 16 percent in Scotts’ largest segment, global consumer, to $1.1 billion from $930.1 million. The other segments, all much smaller, saw declines ?Çô global professional – 24 percent, Scotts LawnService – 10 percent, and corporate/other – 12 percent. Year-to-date, Scotts said consumer purchases are higher in every state and the company has seen double-digit improvements in consumer purchases in 45 states. Nine-month net income was $168.2 million ($2.56 per share) on sales of $2.56 billion, versus the year-ago $23.8 million ($.36 per share) and $2.44 billion, respectively. Adjusted nine-month net income was $184.1 million ($2.80 per share) versus the year-ago $151.6 million ($2.31 per share).
ICL ordered to sell potash for $300/mt
Tel Aviv-A Tel Aviv District Court has ordered Israel Chemical Ltd.’s Dead Sea Works to sell potash to Haifa Chemicals for $300/mt until a final decision has been made by an arbitrator, according to the Israeli press. The two companies went into arbitration earlier this summer after a dispute over prices (GM May 18). ICL had agreed to supply potash during arbitration; however, reports are it again stopped when it discovered that Haifa was lobbying for government control over potash prices. The arbitration is expected to strike a deal for potash pricing between the two companies for the next ten years.
Mosaic enters into $500 M credit facility
Plymouth, Minn.-The Mosaic Co. said July 29 that it has entered into a new unsecured $500 million revolving credit facility with a syndicate of banks. This credit facility has a three-year term and replaces a secured credit agreement that included a $450 million revolving credit facility scheduled to mature in February 2010. Wells Fargo Bank, N.A. is the administrative agent, and Bank of Montreal is the syndication agent for the new facility. JPMorgan Chase Bank, N.A., BNP Paribas, and U.S. Bank, N.A. acted as joint documentation agents. “This unsecured facility completes our investment grade capital structure and, combined with our significant cash holdings, provides additional flexibility to Mosaic,” said Larry Stranghoener, Mosaic’s executive vice president and CFO.
DHS to issue Tier 3 to 400 facilities
Washington-The U.S. Department of Homeland Security’s (DHS) Infrastructure Security Compliance Division was scheduled to issue Final Tier 3 determination notifications, as part of the Chemical Facility Anti-Terrorism Standards (CFATS) implemented in 2007, to approximately 400 high-risk chemical facilities on July 31, according to the Agricultural Retailers Association (ARA). Site Security Plans for these facilities will be due to DHS on Nov. 30, 2009. ARA said DHS has indicated that these 400 facilities do not represent the anticipated full universe of final Tier 3 facilities, but rather only those for which DHS has already made final determinations. Over the next several months, said ARA, DHS will continue to issue final tiering determination notifications to facilities across all four tiers.
Management Briefs
Tessenderlo Kerley Inc., Phoenix, has announced that Kevin Boltz, general manager of supply chain and a senior member of Jupiter Sulphur, LLC’s management team, has been promoted to senior vice president for MPR Services, Inc. MPR is TKI’s business unit, serving gas treating systems in refineries, gas plants, ammonia plants, steel manufacturing, and LNG facilities throughout the world. Boltz will report to Bob Schmitter, MPR president, and will focus on geographical business growth. He will divide his time between MPR and Jupiter, maintaining his office in Phoenix. In addition to his responsibilities with TKI, Boltz has served the sulfur industry as past chairman of The Sulfur Institute (TSI).
Russell Sides, director of industrial projects for TKI, replaces Boltz as director of supply chain and will be reporting to Larry Tryon, TKI’s CFO. Sides will oversee TKI’s purchasing activities and the management of raw material consumables. In addition, he will continue overseeing Tessenderlo Group’s ongoing strategic initiative plan as it pertains to the TKI organization. Sides is in the process of relocating his family from San Antonio, Texas, to Phoenix.
Charles “Chuck” Nekvasil, director of public and investor relations with CF Industries Holdings Inc., retires effective July 31, 2009. CF expects to name a successor soon; however, it will be working with Fleishman-Hillard, investor relations consultants, during the transition.
CF also announced that its board has elected Stephen Furbacher to succeed David Harvey as the lead independent director. Furbacher joined the board in 2007. Harvey will remain a director.
James Fazzino, 43, has been named managing director and CEO of Australia’s Incitec Pivot Ltd. He has been CFO of the company since May 2003 and finance director since July 2005. He has some 20 years in the chemical industry and was instrumental in recent IPL initiatives, including delivery of synergy benefits from the merger that created IPL in 2003, the purchase of Southern Cross Fertilisers from BHP Billiton in 2006 and the acquisition of Dyno Nobel in 2008.
Former IPL CEO Julian Segal resigned in May for family reasons and to accept a position in Sydney (GM April 27). Fazzino had been acting CEO during the search.
Market Watch
AMMONIA
U.S. Gulf/Tampa: The recent uptick in Tampa numbers to $260-$270/mt DEL has players saying new NOLA numbers should be out as well. However, to date, new firm numbers have not been reported.
In the meantime, on the cash swaps market, as of July 30 Direct Hedge was showing $270-$290/mt between buyers and sellers for September and October.
Black Sea: Producers are getting excited about the way the market is moving. Sources say offers are now at $240/mt FOB. But no one has paid it yet.
Yara picked up a cargo at $235/mt FOB. Sources say this confirms a steady strengthening of the ammonia market.
Observers say the main influence on the pricing is stronger demand from Europe. Sources say the production cost for ammonia in Western Europe is still too high for many of the European plants to re-open. Yet at the same time, industrial demand for ammonia is growing.
As last week closed, sources were comfortable calling the market $230-$235/mt FOB, with a few being as bullish as calling the top of the market at $240/mt FOB ?Çô but with no deals to back up their bravado.
Direct Hedge paper indications for Yuzhnyy were $240-$250/mt for August and September on July 30. October-December was $235-$260/mt.
Eastern Cornbelt: Anhydrous ammonia remained at $320-$340/st FOB for spot tons, with forward contract ammonia for September through December referenced at $365/st FOB in Illinois and Indiana.
Western Cornbelt: Anhydrous ammonia was unchanged at $305-$320/st FOB regional terminals, with the low in Nebraska and the upper end in Iowa. Forward contract ammonia for September through December was referenced at $325/st FOB in Nebraska, $350/st FOB in Iowa, and $360/st FOB in Missouri. Koch reposted its Enid, Okla., ammonia price to $270/st FOB on July 30.
California: Anhydrous ammonia was steady at $300-$335/st DEL, with the low for truck tons and the upper end for rail. Aqua ammonia remained at $90/st FOB.
Pacific Northwest: Sources pegged the anhydrous ammonia cash market at $350/st FOB in Washington, and $360-$370/st DEL in the region. Forward contract ammonia for September through December was referenced from one supplier at $375/st FOB terminals in Washington.
Western Canada: The anhydrous ammonia market was steady at $595-$640/mt DEL in the region.
Middle East: The last bit of real business that set a price in the area was a FACT/India order at $253/mt CFR a couple of weeks ago. The demand since has remained strong and production steady.
The last known offer to a buyer was at $235/mt FOB. Sources report it was rejected.
At this point, said one Asian source, the market is easily in the low $230s/mt FOB.
What seems to be delaying a more rapid rise in prices right now, said one source, is a growing hesitancy on the part of buyers to book second-half August and first-half September tons.
For some in the industry the issue is not if the price will rise, but rather at what rate will it increase.
Producers are hesitant to offer a price for September cargoes on the fear the market rate will jump in the next couple of weeks. Likewise, buyers are nervous about booking a cargo because they are looking at softer prices going into the third quarter.
Sources report the August orders look fine for buyers and sellers. No one is under pressure at this time to buy or sell.
Asia: Mitsui dashed reports it might take a turnaround at its KPA facility in Indonesia late last week. Some in the industry were not even aware a turnaround was planned.
Demand in Asia remains robust. Sources say producers in Indonesia and Malaysia are working at full capacity and doing everything possible to fulfill every order.
One source noted that the supply-demand ratio is in good shape for the area. Some swap deals are reported, but no one has been forced to go to the spot market to make a delivery.
South Korea remains the only down market in the area. The reduced take by Namhae is helping make other deliveries in the area possible. Sources also report that SFC is taking more tons than expected.
UREA
U.S. Gulf: Despite all the reports of strong pricing going into the Southwestern Fertilizer Conference, finding actual new business last week was difficult. Most agreed that there was very little product available on the prompt market; however, most thought that demand for barges was also starting to wane. Most put the market within the $280-$285/st FOB range. Some players were reportedly quoting as high as $290-$300/st FOB, although no firm business was reported in that range.
As of July 30, Direct Hedge had the buyer-seller range for granular at $290-$300/st for August, but this began to retreat for forward months – $280-$290/st for September, $262-$265/st FOB for October-December.
Eastern Cornbelt: Granular urea was pegged at $300-$315/st FOB regional terminals in late July.
Western Cornbelt: Granular urea pricing continued to creep up. Most sources put the dealer market at $310-$320/st FOB for prompt tons, with the upper end reported out of spot Missouri River locations. Forward contract tons for September through December were being referenced by one supplier at $330/st FOB Pine Bend, Minn., and $335/st FOB Inola, Okla.
California: Granular urea pricing remained at $330-$350/st rail-DEL and $360-$380/st FOB to the dealer.
Pacific Northwest: The granular urea market was steady at $310-$340/st DEL in the region for prompt cash tons, depending on location. Forward contract urea for September through December was referenced at $340-$345/st DEL in Montana and $365/st DEL in Washington, Oregon, and Idaho.
Western Canada: Granular urea remained at $425-$450/mt DEL in Western Canada.
India: MMTC closed its urea tender July 29 after seeing 775,000 mt in firm offers and an additional 130,000 mt in options. Within hours of the closing of the tender, MMTC worked out a deal with Helm for 135-145,000 mt at $281/mt CFR. Talks with other offering companies failed to nail down a similar price as the week ended, said sources.
The Helm offer surprised some in the industry. The next highest offering company – Dreymoor – came in at $289.87/mt CFR, with prices rapidly moving into the low $300s/mt CFR.
As Green Markets went to press, rumors started to circulate that MMTC might scrap the tender to force even lower prices. Results of the tender follow.
MMTC Urea Tender of July 29, 2009 |
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| Offering Company | Source | Quantity | US$/mt CFR | US$/mt FOB | Discharge Port |
| Helm | Iran | 60-75,000 | 281.00 | Mundra | |
| 282.00 | Kandla | ||||
| Open | 55-70,000 | 286.00 | Gangavaram-Vizag | ||
| 55-70,000 | 294.00 | Gangavaram-Vizag | |||
| Transammonia | Open | 40-60,000 | 289.00 | Mundra | |
| 25-50,000 | 291.50 | Vizag | |||
| Dreymoor | Open | 20-25,000 | 289.87 | West Coast | |
| 20-25,000 (S/O) | 294.87 | West Coast | |||
| 20-25,000 | 303.00 | East Coast | |||
| 20-25,000 (S/O) | 303.00 | East Coast | |||
| Gavilon | Open | 20-55,000 | 292.95 | Krishnapatnam | |
| 20-55,000 (S/O) | 292.95 | Gangavaram | |||
| Sinochem | China | 50,000 | 293.00 | 266.00 | Paradeep-Vizag |
| Rare Earth | Open | 25-30,000 | 294.88 | Vizag-Krishnapatnam-Tuticorin | |
| Swiss Singapore | Open | 25-30,000 | 304.40 | 293.40 | PipavavMundra-New Mangalore-Tuticorin |
| 25-30,000 | 299.10 | 288.10 | Paradeep-Vizag-Krishnapatnam | ||
| Agora | Open | 50,000 | 299.85 | Vizag | |
| 304.85 | Kandla-Mundra | ||||
| Qafco | Qatar | 25,000 | 282.50 | ||
| 25,000 | 282.50 | ||||
| PIC | Kuwait | 50,000 | 281.50 | ||
| 25,000 (S/O) | 282.50 | ||||
| Helwan | 25,000 | 295.00 | |||
| Keytrade | Open | 25-30,000 | 305.00 | Vizag | |
| Liven | Open | 25,000 | 305.00 | Vizag-Kakinada | |
The offers – high prices and low quantities – by Qafco and PIC showed the rest of the industry how aggressive the Middle East producers were going to be to raise prices.
Prior to the calling of the tender, sources opined that the Middle East producers might be aggressive with large quantities and low prices to secure full order books into September and October.
One trader said the message from the Middle East to India was clear – they are more than comfortable.
The lack of progress in getting the other offering companies to lower their prices could mean the scrapping of the tender, said one source.
By voiding the tender, sources say MMTC might force the price down because no other large-scale buyers are around.
One source noted that India is not as desperate to buy tons as Pakistan was last month.
The seasonal rains came late for most of India. Now that the rain is coming, there is a growing concern that while the actual rainfall might be made up, the influx of so much rain in a short period could cause flooding that would damage valuable agricultural areas.
Sources say not enough rain or too much in a short time could lead to reduced demand for imported urea.
At the same time, industry observers note that the domestic production of urea is up.
Bangladesh: BCIC closed two tenders for 150,000 mt each of prilled and granular urea in bags July 29. As expected, some offers came in from “non-traditional” firms, with prices far off the market norm. The other offers indicated a steadying of the two markets. Offers follow.
BCIC Urea tender for 150,000 mt bagged prilled urea |
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| Offering Company | Origin | Qty (mt) | US$/mt FOB | Freight (US$/mt) | US$/mt C&F |
| Globo Piu Import Export | Russia | 62,500 | 245.84 | 36.00 | 281.84 |
| Gulf Resources | China | 12,500 | 260.00 | 30.00 | 290.50 |
| East-West Development | Ukraine | 100,000 | 220.00 | 71.00 | 291.00 |
| Trade Matrix | Ukraine – Russia – China – UAE | 12,500 | 263.00 | 34.97 | 297.97 |
| CNMPGC | China | 25,000 | 263.00 | 36.00 | 299.50 |
| Wilson International | China – Iran – Russia – Ukraine – Egypt | 37,500 | 274.17 | 32.00 | 307.17 |
| Helm | Qatar – Egypt – China – Iran | 25,000 | 279.80 | 29.00 | 308.80 |
| Liven Agrichem | China – Indonesia – UAE – Qatar – Egypt | 37,500 | 276.00 | 32.00 | 309.00 |
| Agora International | China | 25,000 | 283.92 | 25.00 | 309.42 |
| Youncaihua United | China | 12,500 | 275.00 | 35.00 | 310.00 |
| PGP International | China – Iran – Russia – Ukraine – Egypt | 50,000 | 278.27 | 32.00 | 311.27 |
| Bulk Trade | China – Indonesia – Arab Gulf – CIS | 25,000 | 273.20 | 40.00 | 313.20 |
| Blue Deebaj | Uzbekistan – UAE | 12,500 | 281.50 | 35.00 | 317.00 |
| Desh Trading | China – Indonesia – Arab Gulf – CIS | 25,000 | 277.20 | 40.00 | 317.20 |
| Gavilon | China | 25,000 | 285.25 | 43.10 | 328.60 |
| Toepfer | Qatar – Egypt – China – Indonesia | 25,000 | 317.49 | 35.00 | 352.79 |
The granular tender got fewer companies offering tons. Results follow.
BCIC Urea tender for 150,000 mt bagged granular urea |
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| Offering Company | Origin | Qty (mt) | US$/mt FOB | Freight (US$/mt) | US$/mt C&F |
| Globo Piu Import Export | Russia | 62,500 | 249.44 | 36.00 | 285.44 | East-West Development | Ukraine | 37,500 | 220.00 | 76.50 | 296.50 |
| Wilson International | China – Egypt – Malaysia | 12,500 | 278.87 | 35.00 | 314.87 |
| Agora International | China | 25,000 | 289.92 | 25.00 | 315.42 |
| Liven Agrichem | China – Malaysia – Arab Gulf | 25,000 | 282.00 | 35.00 | 318.00 |
| Helm | China – Middle East | 25,000 | 289.00 | 30.00 | 319.00 |
| Youncaihua United | China | 12,500 | 285.00 | 35.00 | 320.50 |
| Bulk Trade | China – Malaysia – Indonesia – Middle East | 50,000 | 287.70 | 40.00 | 327.70 |
| Gavilon | Egypt – China – UAE | 25,000 | 305.25 | 52.10 | 357.60 |
The buyer started to look at the offers late last week.
In several cases in the past BCIC took the lowest offers, only to find out the companies with the awards could not perform. Industry observers say a similar situation may occur in these tenders. One trader pointed explicitly at the Russian material being offered at $245/mt and $249/mt FOB. The current market for Russian and Ukrainian material is closer to $260/mt FOB, he said.
Middle East: Producers say their order books are full enough that they are not willing to cut prices to make a sale.
The offers made in the MMTC tender by Qafco and PIC showed a strong desire by the producers to get prices into the $280s/mt FOB as quickly as possible.
Sources say the bullish attitude permeating the global urea market provided support to the producers’ way of thinking.
Even if Qafco and PIC do not get an award, sources say the market remains firmly in the $270s/mt FOB. No one could point to any definite business that takes the price beyond $275/mt FOB. Even the Helm offer of Iranian material at $281/mt CFR puts the price from the other Arab Gulf producers in the low $270s/mt FOB.
Helping the producers – oddly enough – is the situation in China.
Ordinarily, Chinese urea sits as a dampening influence on the regional market. This time, however, said one source, the lack of certainty about what Beijing will do with its export duty regime is keeping buyers on edge.
If China holds to its current schedule, the duty will go up Sept. 15 and come back down in November. It has already changed the schedule once this year – pushing the lowering of the rate back to Sept. 15 – and sources say there are rumors that it might change again.
If Beijing pushes back the date of lowering the rate, then the Chinese material will remain too expensive for the regular November purchases that should take place in India. Such a move would benefit the Middle East suppliers.
For now, people are watching prices closely and trying to avoid making any commitments beyond August.
Black Sea: Prices in the area have tightened. Producers are now asking $265/mt FOB, but no one has been able to point to an actual deal at that level. One trader said he is even leery of deals in the low $260s/mt FOB.
Sources report lots of activity in Yuzhnyy, but the reason is not fully clear. Some said the loadings are based on previous deals consummated with India and Pakistan. Others say many of the deals represent traders taking positions because of the recently closed MMTC tender and the possibility of another tender being called in the next 45 days.
For now, the general consensus is that all the material that was available in the low $250s/mt FOB earlier last week is now gone. Sources peg the market at $255-$260/mt FOB.
Direct Hedge gave August buyer-seller indications of $250-$260/mt Yuzhnyy. September numbers were $250-$255/mt, and October backed off further to $243-$248/st. November-December figures were $240-$245/mt.
China: Chinese urea dominated the BCIC tender and played a role in the MMTC tender. Prices in China have begun to move up as demand from Bangladesh and India intensifies. Prices were reported in the mid-$250s/mt FOB last month. Now, say sources, the price is in the upper $260s/mt FOB.
Sources report the price may have to come off to ensure the tons heading for the ports are sold before the export duty jumps back to 110 percent Sept. 15. Anything left in the warehouses by that date will either have to be sent back to the domestic market – something many discount – or stay put until the export duty drops again in November.
Indonesia: PIM closed a selling tender late July 31 for 30,000 mt of granular urea and 40,000 mt of prilled urea. As Green Markets went to press, PIM was still looking over the numbers.
The Indonesian government had put a hold on all urea exports until it could review the supply and demand situation. Sources say this tender was most likely being held under an export permit issued earlier this year.
Most likely, say sources, the tender will result in awards of 5-10,000 lots to a number of local traders. International buyers will be working with the local traders to secure cargoes of 20-30,000 mt.
Industrial buyers are expected to be the main end-users for these tenders because they are often willing to pay a premium for the Indonesian product.
The last tender brought in a price of $268/mt FOB. Sources expect to see higher prices in this tender.
NITROGEN SOLUTIONS
U.S. Gulf: The last done business was called $135-$137/st FOB ($4.22-$4.28/unit), with sellers now wanting $140-$145/st FOB.
July 30 indications on Direct Hedge have product still at $130-$135/st for August, dipping in September to $125-$130/st, and then heading back up to $130-$140/st for October-December.
Eastern Cornbelt: UAN was quoted at $5.25-$5.78/unit FOB regional terminals to the dealer, depending on location. Forward contract tons for September were referenced by one supplier at $180.80-$190.40/st ($5.65-$5.95/unit) FOB in the region. CF’s postings for the July 25-31 order and shipping period ranged from $5.60-$6.30/unit FOB in the region, with the low out of Illinois locations and the upper number FOB E. Liverpool, Ohio.
Western Cornbelt: The UAN-32 cash market remained at $168-$185/st ($5.25-$5.78/unit) FOB regional terminals, depending on location. Several sources put the common dealer market in the $176-$180/st ($5.50-$5.63/unit) FOB range last week. Koch’s July 30 postings FOB Enid firmed to $160/st ($5.00/unit).
California: UAN-32 was tagged at $200-$210/st ($6.25-$6.56/unit) FOB and $190-$200/st ($6.09-$6.25/unit) railDEL in the state.
Pacific Northwest: Delivered UAN-32 was pegged in a broad range at $187-$225/st ($5.84-$7.03/unit), with the low for railed tons on a spot basis and the upper end reflecting the truck market. Sources described solutions inventories as low, with some speculating that the low end of the range will be short-lived.
Western Canada: UAN-28 was unchanged at $271-$287/mt ($9.68-$10.25/unit) DEL in Western Canada.
AMMONIUM NITRATE
U.S. Gulf: Demand is starting to pick up, according to sources; however, finding an actual piece of new barge business is difficult. In the meantime, Direct Hedge is indicating buyer-seller price ideas for August and September at $200-$220/st FOB.
Western Cornbelt: Ammonium nitrate was steady at $265-$270/st FOB in the region.
California: No market was reported for ammonium nitrate in the state. CAN-17 was steady at $235-$245/st FOB.
Pacific Northwest: Ammonium nitrate was unchanged at $335-$350/st DEL in the region for the last done business. CAN-17 was steady as well at $245-$250/st FOB and $260/st DEL in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was pegged at $160-$190/st FOB.
Western Cornbelt: Granular ammonium sulfate remained in a broad range at $160-$225/st FOB, depending on supplier.
California: Ammonium sulfate was unchanged at $235-$272/st FOB in the state, with the low for standard grade and the upper end for granular product in desert locations.
Pacific Northwest: Granular ammonium sulfate remained at $225-$240/st DEL in the region, with low inventories reported.
Western Canada: Granular ammonium sulfate was steady at $300-$305/mt DEL to the dealer.
PHOSPHATES
Central Florida: Talk at the Southwestern Fertilizer Conference at San Antonio last week was that dealers and traders should buy phosphate now for fall, but put off buying for spring. In general, the outlook for phosphate was upbeat and prices were seen as stable, but could rise as much as $20/st in the short term.
Despite slow times in Central Florida, phosphate inventories there were down, but that was primarily due to a heavy loading schedule for exports. India, of course, was the main customer.
Mosaic was working to build its inventories due to its export commitment with PhosChem. PotashCorp was in the process of restarting its granulation operation at White Springs, but sources said it was experiencing some problems due to the long shutdown.
The domestic market has been sluggish but has been pulled along by the export business. That situation could change fairly rapidly, because the fall season is coming to a close. Those who need railcars and especially unit trains would be advised not to wait much longer, because transportation through CSX could become difficult to arrange.
A week earlier, Mosaic hiked its price from $250/st FOB to $265/st FOB for DAP. CF hiked its August price to $270/st FOB. Generally, resellers will need to charge smaller buyers at least $5/st FOB more than producers. With the cost of raw materials up, there will be some pressure on producers to hike prices a bit more in the next few weeks, especially if the export business continues at a brisk pace.
Agrifos suffered a problem at its sulfuric acid plant last week, but the phosphate operation remained in operation – despite rumors to the contrary.
The Central Florida DAP price range increased last week from $250-$260/st FOB the previous week to $260-$265/st FOB. Both Mosaic and PCS Sales had a $10/st FOB additional charge for MAP. Agrifos was no longer posting rail prices, but was selling truckloads at $280/st FOB for DAP and $285/st FOB for MAP.
As of July 30, Direct Hedge was calling its buyer-seller range for Central Florida $255-$270/st for August and September.
U.S. Gulf: Not a lot of buying went on at the Southwest Conference last week, according to sources, but people were seeking advice on what they should do and when they should do it.
Phosphate was seen as strong and the price not likely to deteriorate during the next couple of months. If anything, the price will probably increase, possibly as much as $20/st FOB, said sources. One of the reasons more buying didn’t happen was a lack of product. Few, if any, loaded NOLA DAP barges remained on the river, and the few that were available for prompt delivery were sold at $272/st FOB.
However, dealers were in no rush to refill their bins. Many said their customers had not begun to come in to place orders, and they would rather wait than take a chance – especially after the major hit most took when prices collapsed last year. One source said people who normally make buys now had to report back to their superiors and to committees before committing on new deals.
Mosaic, which hiked its price to $285/st FOB after PhosChem agreed to sell India another 500,000 mt, had nothing available and was said to be unable to load any new orders until Aug. 15. The Donaldsonville processing plant was down for a month-long turnaround and was running at reduced capacity, and Mosaic’s inventories were down.
Doubts about the USDA’s estimate of the number of acres of corn planted continued last week, with many believing a revised estimate from the government will be lower, but probably not as low as it should be. The last USDA guess was 87 million acres.
Commodity prices increased last week after China agreed to buy 1.9 million bushels of soybeans. The bean price increased about $0.70, and wheat and corn went along for the ride. Because of the late planting corn yields were likely to be down, regardless of the number of acres planted, due to the probability of early frost and the reduced use of fertilizers. That could push the price up late in the season.
Warehouse prices in some areas were on the increase and hit $300/st FOB at Inola last week, when the range for the Midwest was $290-$300/st FOB.
The NOLA DAP barge price range narrowed from the $260-$270/st FOB the previous week to $270-$272/st FOB last week. Both Mosaic and CF were charging a $10/st FOB premium for MAP.
As of July 30, Direct Hedge swap indications for buyer-seller were $270-$275/st for August and September and $274-$278/st for October.
Eastern Cornbelt: DAP remained at $295-$310/st FOB regional warehouses, with the low in Illinois. CF’s DAP reference for the July 25-31 order and shipping period included $305/st FOB Peoria, Ill., and $310/st FOB Cincinnati.
MAP was $10/st higher than DAP. 10-34-0 was steady at $350/st FOB in Indiana and Ohio, with the low end of the range at $315-$325/st FOB in Illinois.
Western Cornbelt: DAP was unchanged at $295-$310/st FOB warehouses to the dealer, with MAP $10/st higher. List prices for DAP from CF for the July 25-31 order and shipping period included $305/st FOB St. Louis and $310/st FOB Pine Bend. 10-34-0 was steady at $310-$350/st FOB in the region.
Effective Aug. 1, Agrium’s phosphoric acid postings will move to $660/st rail-DEL for both SPA and MGA in Iowa, Nebraska, Minnesota, Wyoming, North and South Dakota, Colorado, Kansas, New Mexico, Oklahoma, and Texas.
California: DAP and MAP remained at $355-$360/st FOB or DEL in California, with TSP referenced at the $388/st level FOB or rail-DEL. 16-20-0 remained at $265-$272/st FOB and $265/st rail-DEL in California.
Super phosphoric acid (SPA) and merchant grade acid (MGA) were steady at $7.05/unit DEL in California, but an increase to $7.30/unit DEL was slated for Aug. 1. Also effective Aug. 1, Agrium’s phos acid postings will move to $730/st rail-DEL for both SPA and MGA in California and Arizona.
10-34-0 pricing remained at $310-$330/st FOB, with the low in the Central Valley and the upper end at desert locations. Sources said 10-34-0 prices will increase $9/st on Aug. 1 in conjunction with the phos acid increase.
Pacific Northwest: The DAP and MAP markets were unchanged at $345-$360/st FOB or DEL in the region, although some sources said they expect an increase in August. 16-20-0 was steady at $255-$260/st DEL. 10-34-0 was quoted at $350-$375/st FOB in the region, with sources saying the market will move to the upper end in August when phosphoric acid price increases take effect.
Phosphoric acid was steady at $7.05/unit DEL for both SPA and MGA in the region, but will move to $7.30/unit DEL in August. Effective Aug. 1, Agrium’s phosphoric acid postings will move to $730/st rail-DEL for both SPA and MGA in Idaho, Montana, Nevada, Oregon, Utah, and Washington.
Western Canada: MAP was quoted at $420-$455/mt DEL in the region.
U.S. Export: No new export sales were found last week, but several were in the works at press time. Although the domestic market has been dragging its feet this season, the export market has pulled the major North American markets along and taken up the slack.
Phosphate inventories were already low when PhosChem announced an extension of its contract with India to provide another 500,000 mt. Both Mosaic and PotashCorp were increasing their production, but the new amounts were not released.
Agrifos shipped one vessel of MAP in July and plans a second MAP loading for a Latin American country in August. The exact amounts and the price were not released.
The export DAP/MAP price range last week was unchanged at $296-$300/mt FOB, but PhosChem had upped its asking price to $315/mt FOB. For the export market, DAP and MAP prices are generally equal.
As of July 30, Direct Hedge buyer-seller indications were $295-$310/mt for August and September.
POTASH
U.S. Gulf: The new lower inland and international prices have sources now quoting $480/st FOB for potash on the NOLA barge market. BPC is expected to resume its shipping schedule in September. In the meantime, CF says it has committed nearly all of its potash and has no plans to buy any more (see page 1).
Eastern Cornbelt: Lower potash postings continued to be the main topic of conversation among regional sources last week. Mosaic reportedly released potash postings in late July at $510/st FOB river warehouses and $520/st rail-DEL in the Midwest for granular, with soluble potash posted $7/st higher. PCS Sales on July 24 posted granular potash at $530/st rail-DEL in the region, with warehouse postings at $515/st FOB in Illinois, Indiana, and Ohio. Agrium’s July 16 red premium potash postings included $560/st FOB and $575/st rail-DEL in the region.
Several sources said they are looking for still lower potash numbers, however. One regional contact who attended the Southwestern Fertilizer Conference in San Antonio said that perhaps the biggest story was the lack of enthusiasm for the new potash numbers. Potash producers, he said, were “somewhat shocked” that buyers weren’t lining up to place orders.
Western Cornbelt: Sources said potash producers were trotting out lower postings in late July. Whether or not domestic buyers will come back to the table at these levels is unclear. “It’s hard to get a true picture of demand unless you can truly predict what crop prices will do,” said one source. He added, however, that some dealers have enough potash carryover to get them through the entire fall season at normal rates. “If fall sales drop to below normal, there will be carryover into spring,” he said.
Mosaic was reportedly listed at $510/st FOB river warehouses and $520/st rail-DEL in the Midwest for granular potash, with soluble potash posted $7/st higher. PCS Sales on July 24 posted granular potash at $530/st rail-DEL in the region, with warehouse postings at $515/st FOB Ft. Dodge and Waterloo, Iowa, and St. Louis, Mo. Agrium’s July 16 postings included 60 percent red premium potash at $560/st FOB and $575/st rail-DEL.
One Missouri source put the dealer market for new potash tons in his trade area last week at $515/st FOB for red and $523/st FOB for white granular potash.
California: All eyes were on potash as domestic producers lowered postings in late July. Sources put the California market at $550-$580/st FOB last week, down dramatically from last report, with delivered tons at roughly $560-$595/st.
Potassium nitrate was also down, with sources pegging the market at $1,080/st FOB for bulk tons and $1,150/st FOB for bags. While no official pricing adjustments had reportedly been made for sulfate of potash, sources reported offers in the $850-$955/st FOB range for bulk tons, depending on grade and supplier.
Pacific Northwest: Potash was the topic of choice last week following downward pricing adjustment from domestic producers. “We’re just watching potash fall,” said one source, describing it as a “race to the bottom” as producers released new postings.
Sources put the rail-delivered potash market at $535-$595/st in the region, depending on producer, with the lower numbers reflecting new list prices from Mosaic and PCS. Agrium’s July 16 postings marked the upper end of the range; the company’s list prices for 0-0-60 red premium potash moved on that date to $575/st FOB warehouse and $590/st rail-delivered in southern Idaho, Utah, and Oregon’s Malheur County; $580/st FOB and $595/st rail-delivered in Washington, the Idaho Panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $585/st FOB and $600/st rail-delivered in Oregon’s Willamette Valley.
Just how low potash will have to go to spark interest at the grower level remains unclear. “Growers feel like they’ve been taken advantage of big time,” said one source in reference to last year’s rapid run-up in price. “Most everyone is waiting for a number with a four in front of it.”
Western Canada: Effective July 24, PCS Sales moved its Saskatchewan mines potash postings for Canadian customers to $560/mt FOB Rocanville for 60 percent granular, $569/mt FOB Cory for 62 percent white granular, and $569/mt FOB Cory for 62 percent soluble.
In the Eastern Canada market, PCS’s July 24 60 percent potash postings included $610/mt FOB Sussex, N.B., and $630/mt FOB Ontario and Quebec warehouse locations at Belton, Oxford Station, and Cote Ste Catherine. On a rail-delivered basis in Ontario and Quebec, PCS’s July 24 postings included 60 percent granular at $647/mt and 62 percent white granular at $656/mt.
India: RCF has issued a tender for 410,000 mt of standard potash that closes on Aug. 10. Of this, 285,000 mt is to be shipped from August-November 2009 to New Mangalore, Tuticorin, Kandla, and Vizag as follows: 40,000 mt Aug.; 70,000 mt Sept.; 60,000 mt Oct.; and 115,000 mt Nov. The other 125,000 mt is to be shipped evenly to Mumbai over August 2009 to March 2010.
MMTC initially announced a tender to close July 31 but has since deferred it to Aug. 6, with bids valid to Sept. 7. It calls for an unspecified quantity to be delivered in parcel sizes of 15,000-30,000 mt, plus or minus 10 percent at MMTC’s option, with ETA discharge ports from August 2009 to November 2009. Quantity and discharge ports on the West/East Coast of India are at the discretion of MMTC, excluding Kolkata and Haldia.
Local sources say MMTC, a trader, is likely seeking tons to tender into RCF’s tender.
In the meantime, since IPL broke the price logjam other buyers have stepped up as well, and now an estimated 4 million mt has been committed to Indian buyers, with another 560,000 mt under option.
SULFUR
Tampa: Although Mosaic finished negotiating contracts for new pricing for the third quarter with its major suppliers late last week – at an increase of $5/lt to a new price of $10/lt – PotashCorp was still negotiating. In most cases, prices will be retroactive to July 1. Because not all major contracts for molten sulfur to Tampa were settled last week, Green Markets will not post a change in its index. CF also acknowledged last week that Tampa sulfur prices were going up.
Meanwhile, refineries were producing less sulfur than normal. One reason was the use of more sweet crude, because of the small difference in price compared to the sour stuff. Another was that oil companies had sufficient reserves for the summer driving season, and were taking their time for plants shut down for turnarounds. A source said that some oil companies were using their own employees to do the work rather than relying on contractors, which they do when business is booming.
Prill operations on the Gulf were humming along last week, and exports from those facilities were taking business away from suppliers in Vancouver. Most of the Gulf prill exports were going to Brazil and Africa.
West Coast: Typically, sulfur prices for the West Coast are not set until about a month after the Tampa price is completed. However, contracts based on quarterly prices were no longer the rule, and some change much more often.
Vancouver: In part because of pressure from buyers from Brazil, fewer vessels were being loaded under quarterly or semester contracts, a source said. Instead, most deals were done on a spot basis, which was currently around the same as contract prices.
Bangladesh: BCIC has issued a tender to import 15,000 mt of rock sulfur on a C&F Chittagong basis. Offers shall be received up to Sept. 7, and be valid up to 30 days from the date of closing bids.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 45.77 | 43.13 | 91.66 |
| CF Industries | CF | 79.07 | 76.79 | 166.61 |
| Intrepid Potash | IPI | 26.11 | 26.02 | 58.48 |
| Mosaic | MOS | 51.71 | 51.45 | 131.92 |
| PotashCorp | POT | 94.87 | 95.78 | 213.38 |
| Terra Industries | TRA | 29.06 | 28.20 | 55.72 |
| Terra Nitrogen | TNH | 107.96 | 106.73 | 112.08 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 32.32 | 31.01 | 42.16 |
| Deere & Co. | DE | 42.87 | 42.10 | 73.47 |
| Scotts | SMG | 39.82 | 39.97 | 19.42 |
SPOT BARGE PRICES
CF shareholders withdraw support for Agrium; Agrium does not give up, extends offer again
CF Industries Holdings Inc. shareholders have been withdrawing their support for Agrium Inc.’s tender. The percentage tendering has gone from 62 percent (GM June 29, p. 1) to 21 percent. Still, Agrium has not given up, saying July 20 that it will extend its offer for CF from July 22 to Aug. 19.
“Agrium remains fully committed to acquiring CF, and as we have previously stated, we strongly believe that combining Agrium and CF will create a terrific company and significant value for stockholders,” said Agrium President and CEO Mike Wilson on July 20. “Despite the fact that CF continues to ignore a clear mandate to conclude a transaction, we will continue to press CF to execute a mutually beneficial merger agreement. Our offer remains far superior to any alternative articulated by CF, including remaining independent or paying a premium for Terra.”
“Agrium has shown by extending its clearly inadequate offer that it is more interested in trying to create a distraction than in making a compelling bid,” a CF spokesman told Green Markets. “The fact remains that Agrium’s offer substantially undervalues the company and is not in the best interest of shareholders. We note that as of last Friday, only about 21 percent of CF Industries shares had been tendered.”
An Agrium spokesman said the company was unable to actually take up the shares, as CF has a poison pill under Delaware law. He said as a result, institutional shareholders can always pull back their shares. He said if there is another tender, the shareholders would submit again.
The 21 percent is down from an earlier 62 percent which gave Agrium the confidence to extend its offer once before from June 22 to July 22. Thereafter, Agrium argued that the 62 percent tender was evidence that CF shareholders were ready to sign on to the deal. CF, however, argued that the shareholders instead were wanting to keep the deal open for another offer, which was never forthcoming.
CF also pointed to significant regulatory concerns about an Agrium/CF deal (GM June 22, p. 1). CF says that Agrium and CF are the only two significant nitrogen manufacturers in Alberta, Canada. It says Agrium is by far the largest producer and distributor of anhydrous ammonia and urea in Alberta, with CF as its only significant rival.
CF also believes that it and Agrium are two of very few producers and distributors of ammonia and urea in Saskatchewan and Manitoba.
CF said Agrium is a significant competitor with CF in the sale and distribution of direct-application ammonia in the Corn Belt and Northern Plains. CF estimates that Agrium has the third-largest distribution network in the Corn Belt, with many terminals located in proximity to CF terminals. In addition, CF says Agrium and CF are the only two operators of ammonia terminals in North Dakota and an isolated area of the Pacific Northwest.
CF believes these concerns will likely gain intensive scrutiny and could require divestitures of significant manufacturing and distribution assets or antitrust litigation to block the offer.
Agrium continues to say it believes there are no material impediments to closing an Agrium/CF transaction, nor are there expected to be any material delays in closing as a result of regulatory review.
The Agrium offer for now remains $40.00 in cash plus one Agrium share per CF share. Agrium shares have been hovering around $40 per share for the past month, making the approximate value of the offer $80 per CF share. While CF has been trading between $70-$75 during the last few weeks, CF shareholder price ideas are believed to be $90-$100 or more. One source close to CF said last week that with the new lower potash prices, the value of Agrium might be slated to fall, making it an even worse deal for CF shareholders. He asked, while Agrium says it can walk away and buy something else, what would they buy that could add more value than CF? In the end, he said Agrium is going to have to pay up or walk away.
In other news last week, CF’s board declared a $0.10 per share dividend on its common stock for the third quarter. The dividend will be payable on Aug. 31, 2009 to stockholders of record as of Aug. 14, 2009.