Sugar Land, Texas-CVR Energy Inc. has announced that its wholly-owned subsidiary, Coffeyville Resources, LLC, and J. Aron & Co., have agreed to reduce the notional amount of a funded letter of credit supporting the company’s obligations under an existing cash flow swap from $150 million to $60 million. In connection with an amendment to the cash flow swap agreement executed May 29, 2009, Coffeyville Resources has caused $90 million of the funded letter of credit facility under its credit agreement to be refunded back to the lenders, thereby reducing such facility to $60 million. “We are pleased that the funded letter of credit requirement has been reduced,” said CVR CEO Jack Lipinski. “Based on current rates, the reduction will save the company approximately $5 million in interest costs during the next 12 months.” Effective at the end of June this year, the cash flow swap ramps down from 5.9 million barrels per quarter to 1.5 million barrels per quarter, or about 15 percent of production at the company’s Coffeyville, Kan., petroleum refinery. The remaining obligations under the cash flow swap will be fully satisfied on June 30, 2010.
All posts by traceybg@gmail.com
Management Briefs
CF Industries Holdings Inc. said June 1 that Lynn White has been elected vice president, corporate development. He succeeds W. Anthony Will, who became vice president, manufacturing and distribution, earlier this year.
Prior to joining CF, White, 56, was the founder and managing director of Twemlow Group LLC, a consulting firm he established in 2008. Prior to founding Twemlow, he held a number of executive positions with Deere & Co, including a stint from 2005-2007 as president of John Deere Agri Services. Earlier, he was senior vice president, corporate development, for IMC Global Inc., which later merged with a unit of Cargill to become The Mosaic Co.
White earned his B.A. in History, with a minor in Economics, at California Polytechnic State University, San Luis Obispo. He also holds an MBA in Finance and Multinational Enterprise from the University of Pennsylvania’s Wharton Graduate School of Business.
Truth Chemical has announced the hiring of Mark McCostlin as director, specialty products, effective June 1. Previously, he held the position of North American sales and marketing manager for Haifa NutriTech in Florida. He will be relocating to the Truth corporate offices in The Woodlands, Texas. Mark can be reached by cell phone at 317-379-1480, or mmccostlin@truthind.com.
Phosphate Holdings Inc., which owns Mississippi Phosphates, announced May 29 that former Senator Trent Lott, Sr. and Thomas Jagodinski were elected as members of the company’s board of directors effective May 19, 2009. Both are elected for one-year terms.
Lott, 67, has served as a partner in Breaux Lott Leadership Group, a consulting and lobbying firm, since January 2008. He was a member of the U.S. Senate from 1989 to 2007, and held the position of Senate Majority Leader from 1996-2001. He was in the U.S. House of Representatives from 1973-1989.
Lott currently serves as a member of the board of EADS North America, which is the North American operations of EADS, the second largest aerospace and defense company in the world. Senator Lott holds a B.S. degree in public administration and a J.D. from the University of Mississippi.
Jagodinski, 52, has been a private investor since July 2007. He was employed by Delta and Pine Land Co., a cottonseed breeding, producing, and marketing company, from 1991 until July 2007, when Monsanto Co. acquired the company. While at Delta, he served as president, CEO, and a member of the board from 2002 until July 2007. Jagodinski currently serves as a member of the boards of Solutia, Inc. and Lindsay Corp. He has a B.S. degree in accounting from the University of Mississippi.
New officers were elected to the International Plant Nutrition Institute’s board of directors May 24. Mike Wilson, Agrium Inc. president and CEO, was elected IPNI board chairman for a two-year term. Joachim Felker, K+S Aktiengesellschaft board member is the new IPNI vice chairman. Stephen Wilson, CF Industries Holdings Inc. president and CEO, was re-elected chair of the finance committee.
Patricio Contesse, SQM president and CEO, concluded his term as IPNI board chairman and was recognized for his outstanding leadership and service in that role since 2006.
The Nutrients for Life Foundation has announced the selection of Joan Kyle as its first regional representative. Kyle, a veteran of the agribusiness community and avid education volunteer, will provide educational, grassroots, and public awareness services in the state of Florida. Her primary emphasis will be working with educators in the school system in the promotion of the Foundation’s plant and soil science curriculum, Nourishing the Planet in the 21st Century; working with industry members in sharing the Foundation’s core programs; and enhancing community relations. Kyle began her duties June 1. The regional representative position in Florida is the first of its kind, made possible with support from Agrium Inc. The Foundation said the industry recognized a need for more “on-the-ground” educational resources and created the regional representative program. If the Florida position proves effective, the Foundation may consider hiring a second regional representative next year.
Ajay Shriram, chairman and senior managing director of DCM Shriram Consolidated Ltd. (DSCL), was elected president of the International Fertilizer Industry Association (IFA) on May 27, 2009, during IFA’s Annual Conference in Shanghai. He takes over from Thorleif Enger, formerly from Yara International ASA, who remains a member of IFA’s executive management group as immediate past president. Shriram is also a director of the Fertiliser Association of India (FAI).
Shriram is also chairman of DSCL’s subsidiary companies, DSCL Energy Services Co. Ltd. and Shriram Bioseed Genetics India Ltd. He is also a member of the Rabobank International Asian Food & Agribusiness Advisory Board.
Market Watch
AMMONIA
U.S. Gulf/Tampa: Now that Tampa is down again, this time to $210/mt DEL, sources are looking for NOLA ammonia to drop. However, as the upriver season wanes and industrial demand remains slow, sources say actually finding a new barge trade may be difficult.
Eastern Cornbelt: More storms hit the region last week, dropping heavy rains and hail in some locations and delaying the completion of corn and soybean planting. The moisture added to the frustrations of corn and soybean growers, who were struggling to finish planting and replanting in early June.
Illinois sources reported a little bit of sidedress activity on corn last week, but the pace was still slow. Sources pegged the spot market for ammonia at $325-$355/st FOB in the region last week, with the low reported by Illinois sources on a spot basis. CF’s anhydrous ammonia postings for the May 29 through June 5 order and shipping period included $365/st FOB Mt. Vernon, Ind., and $370/st FOB Frankfort, Ind., Huntington, Ind., Terra Haute, Ind., and Illinois terminals at Albany, Cowden, Kingston Mines, Peru, and Seneca.
Western Cornbelt: The ammonia market was pegged at $315-$340/st FOB regional terminals for spot tons, reflecting another slight drop from last report. CF’s anhydrous ammonia postings for the May 29 through June 5 order and shipping period included $320/st FOB Aurora and Fremont, Neb., $340/st FOB Garner and Spencer, Iowa, and $365/st FOB Palmyra, Mo.
Northern Plains: The anhydrous ammonia market was pegged at $345-$375/st FOB regional terminals to the dealer, depending on location, with delivered ammonia pegged at $400-$410/st in North Dakota. CF’s anhydrous ammonia postings for the May 29 through June 5 order and shipping period included $345/st FOB Glenwood and Pine Bend, Minn., and $375/st FOB Grand Forks and Velva, N.D.
Great Lakes: The anhydrous ammonia market was pegged at $355-$375/st FOB in the region, down from last report, with the low reported by Wisconsin sources and the high by Michigan dealers FOB Courtright, Ont.
UREA
U.S. Gulf: Granular urea barges were generally put between $235-$240/st FOB last week; however, some said prices may have topped out as high as $250/st FOB before the market headed south. Several barges were reportedly sold at $245/st FOB late in the prior week and were headed in that direction. However, by Monday, June 1, sources said most of the buying had been done, and that last minute barges for upriver and demand from rice country had subsided. Despite the price erosion, some players were saying the market has just about found its floor, as there will be more rice demand and higher international prices will keep significant import tonnage away.
Eastern Cornbelt: Illinois sources pegged the urea market at $275-$280/st FOB terminals for prompt tons. The upper end of the range was quoted at the $290/st FOB level in Ohio on a spot basis.
Western Cornbelt: Granular urea was pegged at $275-$295/st FOB regional terminals. The Catoosa/Inola market in Oklahoma was reported in the $275-$280/st FOB range last week.
Northern Plains: The granular urea market was pegged at $270/st FOB the Twin Cities, with the upper end of the range quoted at the $285/st mark FOB Carrington, N.D.
Great Lakes: Granular urea pricing was down considerably from last report. Southern Wisconsin sources tagged the urea market at $275-$280/st FOB river terminals, with the upper end of the regional range at $310/st FOB Michigan warehouses to the dealer. A central Wisconsin source quoted the market at $290/st DEL last week to his location.
Northeast: The granular urea market was pegged at $290-$295/st FOB Baltimore and Philadelphia, with delivered urea reported in the $310-$323/st range in the rest of the region, depending on location.
China: Sources are presenting conflicting reports on the export duty situation. The week opened with sources reporting an extension by one month of lower duties on urea. The week closed with others in the industry saying the plan is still under consideration.
Sources add that also under discussion is the removal of the urea export duty, instead of just extending the period when the duty is only 10 percent.
International traders are watching the Chinese situation closely. If the duty is removed, sources say Chinese urea will instantly become competitive in the global market. If the duty is only lowered to the currently planned 10 percent on July 1, the domestic price will have to come off a few more dollars before Chinese urea can compete with the Black Sea or Middle East product.
India: As suppliers line up tons for delivery this month, sources report MMTC or STC will issue a tender around June 15.
The 450,000 mt IPL booked last month are slated to arrive throughout this month. The next tender will be looking for July delivery, say sources.
The buying houses are watching closely for an announcement from China about its export duty policy. Even if the old Chinese export duty regime is kept in place, say sources, any tender that calls for July loadings will most likely include Chinese urea in the offerings.
Pakistan: Rumors are running rampant that TCP will be asking for another 200,000 mt in the next 10-15 days. Political pressure to ensure adequate supplies in the current application season has been growing. Local media reports steady complaints from regional government officials about pending and apparent shortages of urea.
TCP has argued it is buying urea at a pace that will ensure a plentiful supply in the country.
One snag that hit the process was securing enough credit to open the letters of credit for the awards issued in the last tender. The banks finally arranged for enough money to allow the LCs to be opened.
Black Sea: Fedcominvest has been buying as many tons as possible to fulfill its commitment to IPL/India. Sources report the company paid as high as $248/mt FOB for a small prompt cargo late last week.
Word is also spreading that $250/mt FOB was done for at least one cargo, but no one could point to a specific buyer at that level.
While Fedcominvest has been buying as much as it can from CIS suppliers and traders with positions, sources say the market has remained stable in the low $240s/mt FOB.
Asian sources say the market will most likely remain in a state of flux until either India or Pakistan steps back in with major purchases.
Middle East: Producers maintain they have enough orders on their books into July that they are under no pressure to lower prices. But at the same time, there is not enough business to move the price beyond the low $260s/mt FOB.
Sabic’s successful orders with India and Pakistan, followed by orders being filled from Oman, Qatar, and Kuwait, provide for steady shipments in an otherwise slow period.
Pending tenders from Pakistan and India should give the producers more chances to secure cargoes, but only if the price is right.
Sources say the producers will not be able to push the price up – as they would like – because Middle East tons will have to compete with the Black Sea and China to make a deal.
NITROGEN SOLUTIONS
U.S. Gulf: The UAN barge market has cratered, according to most sources, who are calling it in the $125-$130/st FOB range ($3.91-$4.06/unit). Railcars were reportedly being offered at $135/st.
Eastern Cornbelt: UAN pricing continued to slide, with most sources quoting the regional market at $6.25-$6.50/unit FOB river terminals to the dealer for spot tons. One Ohio source pegged the UAN-32 market at the $215/st ($6.72/unit) FOB level in his location last week. Sources said they were waiting for summer fill numbers to come out at considerably lower levels.
Western Cornbelt: UAN pricing was migrating downward. Some Iowa sources pegged the dealer market in the $6.40-$6.75/unit FOB range for prompt tons, while others said UAN-32 could be had at the $200/st FOB ($6.25/unit) FOB level or lower on a spot basis. Summer fill programs were said to be available for as low as $165-$185/st ($5.16-$5.78/unit) FOB Midwest terminals, but specifics on locations and order/shipping periods were not confirmed.
Northern Plains: UAN pricing was down from last report. Sources tagged the market at $6.75-$7.25/unit FOB regional terminals, depending on location, while delivered UAN-28 in central North Dakota was pegged at $7.85-$8.00/unit.
Great Lakes: UAN pricing in the region was “dropping like a rock,” according to one source last week. The dealer market was pegged in a broad range at $6.50-$7.50/unit FOB, with the low in Wisconsin and the upper end in Michigan. Reference prices for UAN-28 out of Michigan warehouses remained as high as $215-$220/st ($7.68-$7.86/unit) FOB, but sources said the true dealer market last week was a good $10/st lower and falling.
Northeast: The UAN-30 market had reportedly dropped to $185-$186/st ($6.17-$6.20/unit) FOB Baltimore. Out of terminals in upstate New York and Delaware, UAN-32 was quoted at $219.20-$220/st ($6.85-$6.88/unit) FOB to the dealer.
AMMONIUM NITRATE
U.S. Gulf: The last done business continues to be called $220-$225/st FOB, with sources saying no product is now available. Sources generally agree that AN has remained stable and scarce.
Western Cornbelt: Ammonium nitrate remained at $265-$270/st FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $225-$245/st FOB. Honeywell reportedly dropped its postings $20/st to the $225/st FOB or DEL level in the Midwest.
Western Cornbelt: Granular ammonium sulfate was steady at $225-$245/st FOB.
Northern Plains: The granular ammonium sulfate market was quoted at $225-$245/st FOB and $225-$255/st DEL in the region, depending on supplier and location. The $255/st DEL level was quoted in North Dakota last week.
Great Lakes: Granular ammonium sulfate pricing was tagged in a broad range at $225-$275/st FOB regional terminals, with the upper end in Michigan for limited tons. One Wisconsin source quoted mid-grade sulfate at $200-$205/st FOB last week.
Northeast: Granular ammonium sulfate was reported at $225-$235/st FOB in the region, with delivered sulfate at the $253/st level to some locations.
PHOSPHATES
Central Florida: While both the export and Gulf markets were showing promising signs for recovery in the near future, Central Florida was gasping for breath and emergency medical technicians were searching for a pulse last week. Several factors were stacking up against a comeback for the state’s market. First, the season was nearly over and there’s not enough time for railcars to arrive and be of much use. Second, high rail rates have driven up the delivered cost of phosphate products and made it much less competitive with the river system. Truck business, which was flourishing a couple of weeks ago, was dwindling to a precious few deals by late last week. Overall, the immediate outlook was not good.
With that in mind, CF lowered its asking price in Central Florida from $270/st FOB to $250/st FOB. A week earlier, the company dropped its price from $295/st FOB to the $270/st FOB mark. That amounted to a $45/st FOB fall in two weeks, which was an indication of the activity in the market. However, it was a much more realistic price and more closely reflected the normal difference between prices for the Gulf and Central Florida markets.
Rumors of additional curtailments continued to flourish in the industry last week, but there were no new signs from producers. PotashCorp has continued to keep its White Springs facility in northern Florida down. Mosaic would not say whether it would slow its rate of production in the near future, but admitted that its system was not running at full capacity. CF, the smallest of the three, was unlikely to curtail.
The Central Florida DAP price range was $250-$260/st FOB, down slightly from the previous week’s $270-$305/st FOB last week. PCS Sales had no published price. Mosaic had no list prices for Central Florida. CF dropped its price to $250/st FOB from $270/st FOB for DAP and was $10/st FOB higher for MAP. The price from Agrifos remained at $350/st FOB for trucks and $340/st FOB for rail shipments.
U.S. Gulf: Producers and traders both said they were getting more interest from potential buyers last week, but that did not translate into a lot of immediate sales. Still, a source said he believed the market had reached bottom and was poised to move up, and several others agreed. Early in the week sales were made in the middle of the previous week’s range, but then many stopped selling, with plans to hold off and take advantage of possible higher prices. Meanwhile, buyers were also on hold and were double-checking with other sellers to see which direction the market was going. By late in the week, sellers were offering at the high end of the previous week’s range. The glut of excess NOLA DAP barges on the river system was depleted or near to it, and that should help to stabilize the market or push it higher.
Pretty much everyone has been bullish on the fall season, although it was a bomb last year. So was spring, so the thinking was that dealers must re-supply. They probably do, but they haven’t been giving their suppliers much information. Not hard to understand, since dealers were the ones who took the biggest beating when phosphate prices dropped around $1,000/st FOB last year.
The price of corn was encouraging last week, somewhere around $4.55/bushel for December. A source noted that hedge funds were reentering the grain market and that was creating bigger price swings – both up and down – than without their participation. It appeared at least some DAP was going back onto pasturelands, which had gone without due to prices for phosphate and beef. If the price of cattle continues to rise, much more fertilizer will be applied.
Warehouse prices remained relatively stable last week, with lows on the Arkansas River of $315-$320/st FOB and highs on the Mississippi and Ohio rivers of $320-$325/st FOB. MAP was $10/st FOB more. As the rain subsided, the Arkansas River became easily navigable last week, but it made no difference because the season was essentially over, in terms of re-supply.
CF posted a new DAP price for NOLA barges of $270/st FOB for June and July, with $5/st FOB increases for each succeeding month. Transactions last week were found as low as $250/st FOB and as high as $255/st FOB, but asking prices were rising late in the week. The NOLA DAP barge price range last week was $250-$255/st FOB, compared to $249-$260/st FOB the previous week. Both Mosaic and CF had a $10/st FOB additional charge for MAP.
Eastern Cornbelt: DAP continued to be quoted at $320-$330/st FOB most regional terminals to the dealer for prompt tons, although some sources talked of summer fill DAP being offered for as low as $285/st FOB for later delivery. CF’s phosphate postings for the May 29 through June 5 order and shipping period included DAP at $320/st FOB Peoria and Cincinnati.
10-34-0 pricing continued to slip as demand and movement ebbed. Sources tagged the market in a broad range at $500-$600/st FOB regional shipping points to the dealer, depending on location and supplier.
Western Cornbelt: The DAP market was pegged at $320-$330/st FOB regional warehouses to the dealer for prompt tons, with summer fill DAP quoted as low as $285/st FOB for delayed shipping dates. MAP was $10/st higher than DAP. CF’s phosphate postings for the May 29 through June 5 order and shipping period included DAP at $320/st FOB St. Louis, Mo., and Inola, Okla., with MAP referenced at $330/st FOB Inola.
10-34-0 pricing had reportedly fallen dramatically, with sources tagging the dealer market in the low-$400s/st FOB in Nebraska and the Southern Plains, and $450/st FOB in Iowa.
Effective June 1, Agrium’s phosphoric acid postings dropped to $610/st rail-DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA) in Colorado, Iowa, Kansas, Nebraska, New Mexico, Oklahoma, Texas, and Wyoming. That level represents a big adjustment from the company’s April 1 reference level of $1,050/st rail-DEL in those states. Going forward, Agrium’s SPA and MGA postings will move in July to $635/st rail-DEL, and to $660/st rail-DEL in August.
Northern Plains: DAP was pegged at $325-$335/st FOB in the region, with MAP roughly $10/st higher. A North Dakota dealer reported delivered MAP at the $366-$370/st level last week. CF’s phosphate postings for the May 29 through June 5 order and shipping period included DAP at $325/st FOB Pine Bend, Minn., and MAP at $335/st FOB at that location.
The only 10-34-0 price confirmed by regional sources last week was $550/st DEL in North Dakota, which reflected a sizable drop from last report. Effective June 1, Agrium’s phosphoric acid postings dropped to $610/st rail-DEL for SPA and MGA in Minnesota and the Dakotas.
Great Lakes: The spot market for DAP was reported at $330-$350/st FOB regional warehouses, with the low in Wisconsin and the upper end quoted by Michigan dealers. Wisconsin sources also reported delivered DAP as low as $310/st, however, as well as summer fill quotes for as low as $285/st FOB river warehouses for later delivery.
MAP was $10/st higher than DAP. 10-34-0 pricing was down dramatically from last report, although movement was pretty much finished in the region. Sources tagged the regional 10-34-0 market at $500-$625/st FOB, depending on location and supplier.
Northeast: MAP was pegged at $340-$365/st FOB, with the low FOB Philadelphia. DAP was $10/st lower than MAP, where available. 10-34-0 pricing had reportedly fallen to $695/st FOB the tank in upstate New York.
Western U.S.: Effective June 1, Agrium’s phosphoric acid postings dropped to $610/st rail-DEL for both SPA and MGA in Arizona, California, Idaho, Montana, Nevada, Oregon, Utah, and Washington. That level is down dramatically from the company’s April 1 reference level of $1,100/st rail-DEL in those states. Agrium’s SPA and MGA postings will move in July to $635/st rail-DEL, and to $660/st railDEL in August.
U.S. Export: After the bearish International Fertilizer Association’s conference in Shanghai, it was surprising that the market began to stabilize and prices firmed. PhosChem sold 25,000 mt into Brazil at prices ranging from $270-$273, and a source said another sale of 20,000 to 25,000 mt was done in the same price range to a customer in Central America.
During the same period, inquiries began to sharply increase. Interest was strongest from Pakistan, India, Brazil, Uruguay, Mexico, Turkey, and Vietnam. Most were offering to buy below the $270/mt FOB mark, but sellers were not biting. The general belief was that export phosphate prices had hit bottom and were stabilizing or on the rise.
Reports that China was eliminating its export duty on TSP but maintaining the 10 percent tax on phosphate exports may help other countries sell DAP.
Based on sales last week, the export DAP price range was $270-$273/mt FOB. The price may rise this week, although not much.
POTASH
Eastern Cornbelt: Potash pricing was also dropping from brokers and resellers, with most sources tagging the regional market last week at $590-$630/st FOB warehouses on the secondary market, depending on location and grade. There were reports of imported potash priced as low as $550/st for direct-transferred tons off the barge, but some sources reported quality issues with this lower-priced material.
Western Cornbelt: Potash pricing was under pressure on the secondary market. The dealer market was tagged at $590-$630/st FOB regional warehouses for brokered tons, depending on grade and location.
Northern Plains: Producer reference levels for potash FOB Saskatchewan mines remained at $767/st FOB for standard, $780/st FOB for soluble, $772/st FOB for granular, and $780/st FOB for white granular. Delivered potash in North Dakota was pegged at the $755/st level from secondary suppliers, but sources reported no new sales to test the market. Several sources said Russian potash could be had for as low as $550/st FOB Pine Bend, but some expressed doubts about both the quality and availability of that tonnage last week.
Great Lakes: Potash was reported at $590-$650/st FOB regional warehouses for brokered tons last week, reflecting a sizable drop from last report. The low end of the range was reported by southern Wisconsin sources, while the high was quoted for red granular potash in Michigan. Reference prices out of Michigan warehouses remained as high as $725/st for red granular and $733/st FOB for white, but there was no business reported at those levels. “Producers are out to lunch on their pricing,” said one contact. “We didn’t move 20 percent of our normal potash this spring.”
Northeast: Pennsylvania sources tagged the potash market as low as $635/st for spot tons FOB the warehouse from brokers or resellers last week, while delivered potash was pegged at $706-$710/st to points in Maryland and Delaware.
International: Coming out of the IFA meeting, sources say the potash market is still a tense waiting game. While producers had predicted new business with India and China by the end of the second quarter, Agrium President and CEO Mike Wilson told analysts last week at the Goldman Sachs Materials Conference that the negotiations with China could drag into July, noting that they dragged into July in 2006 before there was a settlement. He said the Chinese are sitting on 3 million mt and the Indians 500,000 mt.
While producers say prices need to remain firm-to-stronger, Chinese domestic producers have dropped their own prices, leaving buyers with the perception that importers should as well, particularly since other major fertilizer products have seen reduced prices.
SULFUR
Tampa: China didn’t do the sulfur industry a big favor last week when it announced its 17 percent duty on imported sulfur was in place. The industry has a more than adequate supply, and that will not help reduce the load or increase the profit margin – or loss margin.
“The sulfur industry’s on a suicide watch,” one sulfur source said last week, which was a mostly optimistic attitude.
However, one area that has been a bright spot of late for sulfur has been the prillers along the Gulf Coast. Enough vessels were expected to load to put a serious dent in the inventories. Business to China was down, but was up for Brazil and Morocco, which are not traditional customers. Ocean freight rates to China were running about $10/mt higher than the other destinations.
It was far too early to worry about third-quarter sulfur prices, but early indications were that the price was more likely to go down than up. The biggest fear was additional curtailments of phosphate production, which would have to come from Mosaic. However, the big phosphate producer has made no official announcement of any such plans, but it has said only it was not running at capacity.
MARKET NOTES
China: Sources reported early last week that the Chinese government announced the elimination of all export duties on TSP until the end of the year. Urea is also to have an extended period of lower export duties, they said. By the end of last week, however, nothing was posted on Chinese government web sites, leading Asian observers to wonder when the move will be made official. Reducing the TSP export duty is seen by many in the industry as a logical step. Sources in Asia say the government has been concerned that growing stockpiles of phosphates, especially TSP, could cause local producers to shut down operations unless exports were encouraged. Under the original plan, TSP exports would be taxed at 10 percent for the rest of this year after sitting at 110 percent from February through May. The plan under consideration will eliminate the duty. Urea exports are currently scheduled to be taxed at 10 percent for July and August, down from the current 110 percent. But under the new plan, the lower rate will be extended to include September. Urea stockpiles have been building in the country. The specter of layoffs in the industry became a growing concern.
Turkmenistan: India is eyeing fertilizer manufacturing in Turkmenistan, with a team traveling to the country for an on-the-spot assessment. India is trying to secure one of the three plants that are planned for construction in Turkmenistan with a urea capacity of 400,000 mt/y each. Others being proposed include a 400,000 mt/y ammonia plant, a 3 million mt/y ammonium sulfate facility, a 1 million mt/y potassium chloride plant, and a 200,000 mt/y potassium sulfate facility.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 46.86 | 49.72 | 88.43 |
| CF Industries | CF | 79.46 | 78.39 | 142.30 |
| Intrepid Potash | IPI | 33.25 | 32.91 | 48.34 |
| Mosaic | MOS | 53.68 | 55.18 | 128.74 |
| PotashCorp | POT | 114.79 | 114.77 | 208.38 |
| Terra Industries | TRA | 27.30 | 28.22 | 42.93 |
| Terra Nitrogen | TNH | 121.21 | 123.90 | 133.11 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 28.22 | 24.43 | 41.14 |
| Deere & Co. | DE | 46.42 | 41.85 | 78.75 |
| Scotts | SMG | 34.23 | 33.92 | 27.87 |
SPOT BARGE PRICES
Final CSB report on Allied Terminal collapse calls on Virginia to strengthen tank regulations
U.S. Chemical Safety Board (CSB) investigators found that welds performed on tanks were substandard and post-welding inspections were not conducted prior to filling at Allied Terminals in Chesapeake, Va., where an above-ground liquid fertilizer tank collapsed catastrophically last November. The collapse resulted in the release of 2 million gallons of liquid urea ammonia nitrate, seriously injuring two workers and spreading fertilizer on a nearby neighborhood and into the Elizabeth River (GM Nov. 17, 2008). In its final report issued May 27, CSB recommended that Virginia regulate, or authorize local jurisdictions to regulate, the design, construction, maintenance, and inspection of large fertilizer storage tanks located on the Elizabeth River. At least part of 200,000 gallons of spilled fertilizer that was unaccounted for reached the Elizabeth River, and possibly flowed into the Chesapeake Bay.
“By recommending regulation of similar storage tanks located on the Elizabeth River, we hope to protect not only communities and workers but also the vitality of the Chesapeake watershed,” William Wark, CSB member, commented in the report. CSB investigators found that the tank involved in the accident ?Çô referred to as Tank 201 ?Çô had undergone welding work. Contractors removed the vertical riveted seams and replaced them with welded plates, with the intent of strengthening the joints. Similar work was done to three other tanks at the facility. “The CSB’s investigation found that the welding performed on the tanks did not conform with recommended industry practices,” said Investigations Supervisor Robert Hall, P.E. “Additionally, the company did not ensure that post-welding inspections were conducted prior to refilling the tank to its maximum capacity.”
The report noted that the U.S. Environmental Protection Agency (EPA) regulates the safety of petroleum storage tanks, but liquid fertilizer and other non-petroleum tanks are regulated by individual states. Virginia is one of 33 states that do not currently have regulations for liquid fertilizer tanks, CSB noted. In addition to calling for state action to regulate storage tanks, the board urged EPA to revise and reissue a safety bulletin on liquid fertilizer tank hazards, and asked The Fertilizer Institute to urge member companies to require appropriate inspections of tanks used to store liquid fertilizer at terminal facilities.
TFI Vice President of Communications Kathy Mathers told Green Markets that the CSB team met with TFI during the investigation and then again a few weeks ago, after the investigation had been concluded, to inform TFI of the TFI-specific recommendation in the final report. She said the team was very pleased with the TFI tank guidelines, but was concerned that while TFI had issued the recommended guidelines for liquid fertilizer tanks in 2001, Aboveground Storage Tanks for Liquid Fertilizer ?Çô Recommended Inspection Guidelines, incorporating API 653 by reference, that Allied was unaware of the guidelines prior to the incident.
Mathers said CSB has advocated that TFI formally “recommend” to all of its members that the 2001 guidelines be followed, and in addition suggested that all contracts for UAN storage contain a recommendation that these guidelines be followed. She said TFI will be receiving a formal letter from CSB regarding the recommendations and that it has 60 days in which to advise CSB of the action TFI will take, at which time CSB will determine if TFI’s plans are satisfactory. She added that after the meetings with CSB, TFI is stepping up its efforts to ensure its members are aware of the guidelines’ value in evaluating tank safety.
In December 2008, CSB issued an urgent recommendation calling on Allied Terminals to take immediate action to reduce the risk of a catastrophic failure of three tanks located at its facility – one about 250 feet from the South Hill Neighborhood. CSB also recommended that Allied Terminals select an independent engineering firm to evaluate the specified tanks, and within 30 days provide a report prepared by the independent tank engineering firm to the City of Chesapeake. The independent report resulted in Allied Terminals significantly reducing the maximum liquid levels of the remaining tanks.
The CSB investigation identified 16 other tank failures at nine facilities in other states between 1995 and 2008. These 16 failures resulted in one death, four hospitalizations, one community evacuation, and two releases into waterways. CSB, an independent federal agency charged with investigating industrial chemical accidents, does not issue citations or fines, but does make safety recommendations to plants, industry organizations, labor groups, and federal regulatory agencies.
Simplot mine work halted
The 9th U.S. Circuit Court of Appeals has overruled U.S. Magistrate Mikel Williams’ recent decision that would have allowed the J.R. Simplot Co. to resume expansion work on its Smoky Canyon phosphate mine in Eastern Idaho, issuing a second stay in as many months to give the federal appellate court more time to digest material in the case.
The Smoky Canyon mine provides 1.5 million tons of phosphate annually to Simplot’s Pocatello fertilizer plant. Company officials have said the mine’s reserves will be exhausted by 2010 if the company is not allowed to expand onto two sections in the Caribou-Targhee National Forest.
The Greater Yellowstone Coalition filed an emergency motion for an injunction pending its appeal of Williams’ May 13 lifting of the 9th Circuit Court’s April temporary stay. Williams ruled Simplot could resume clearing trees, removing topsoil, constructing roads, and installing utilities for the mine expansion, effective Friday, May 22.
On Thursday, May 21, the three-judge federal panel once again blocked commencement of the expansion work, essentially extending its original stay. It stated: “In light of the voluminous filings by the parties, we have not had adequate time to evaluate the serious issues raised by this case. We therefore reimpose our temporary stay of Simplot’s preparatory activities at the mine in order to maintain the status quo until we have had the opportunity to consider fully the Coalition’s motion and the opposition briefs filed by the federal appellees, Simplot, and the Intervener cities and counties. … The temporary stay will remain in effect until further order of the court.”
Simplot spokesman David Cuoio responded by saying, “We had hoped that a ruling would be forthcoming last week, but we certainly understand that the judicial process takes time. We are hopeful the 9th Circuit Court will rule in our favor in the very near future so we can resume site work in preparation for opening the new sections of Smoky Canyon Mine.”
On April 10, the 9th Circuit Court temporarily halted preparatory work for the mine’s expansion not far from Afton, Wyo., after the Greater Yellowstone Coalition, Natural Resources Defense Council, Sierra Club, and Defenders of Wildlife argued it would contaminate nearby waterways, harm wildlife, and damage roadless areas.
The three-judge panel remanded the case back to Williams, who declined last November to issue a preliminary injunction blocking the mine’s expansion, upholding the project’s authorization by the U.S. Forest Service and the Bureau of Land Management.
Simplot attorneys filed a motion on April 12 to lift the temporary stay and requested an expedited proceeding, arguing that stopping work in the middle of the project poses problems for maintaining existing work, preventing erosion from untended work, and impacting timber and well-drilling contractors and their employees.
Intervening on April 20 in support of lifting the temporary stay were United Steelworkers Local 632; the Idaho Farm Bureau Federation; the cities of Pocatello, Chubbuck, Soda Springs, and Afton; and Bannock, Power, Caribou, and Lincoln counties, who said halting the Smoky Canyon Mine’s expansion would cause widespread economic harm.
Williams is expected to issue a final ruling on the merits of an overall lawsuit to block the mine’s expansion by Aug. 4.
CF and Agrium continue pursuits
CF Industries Holdings Inc. and Agrium Inc. both continue to file paperwork in order to keep their respective purchase goals intact. CF said late May 22 that it has extended the expiration date of its exchange offer for all of the outstanding shares of Terra Industries Inc. common stock to Friday, June 26, 2009. The exchange offer had been scheduled to expire on June 12, 2009. All other terms and conditions of the exchange offer remain unchanged.
As of the close of business on May 21, 2009, a total of 56,814 shares of Terra common stock had been tendered into the exchange offer. CF has been gaining a little ground. It said as of the close of business on April 23, 2009, a total of 19,370 shares of Terra common stock had been tendered into the exchange offer. As of March 31, 2009, there were approximately 100 million Terra shares outstanding.
On May 26, Agrium said that in order to allow more time for the Federal Trade Commission (FTC) to review information submitted in connection with Agrium’s proposed acquisition of CF under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), Agrium has withdrawn its notification and report form (HSR Form), and plans to re-file at the appropriate time.
Agrium originally filed its HSR Form on March 24, 2009, and re-filed it on April 27, 2009. Since the original filing of its HSR Form, Agrium and the staff of the FTC have been engaged in informal discussions, during which Agrium provided the staff with additional information about Agrium’s business. Agrium believes the staff has continued to narrow the focus of its investigation of the proposed acquisition of CF.
Agrium says the current withdrawal and future re-filing of Agrium’s HSR Form will provide the FTC with more time to review the information submitted by Agrium, without requiring a Request for Additional Information or “second request.”
Agrium says it remains committed to working cooperatively with the FTC as it conducts its review of the proposed acquisition. Agrium added that it remains confident the HSR waiting period will ultimately expire without any material effect to the transaction.
Shermen completes Westway purchase
New Orleans-Shermen WSC Acquisition Corp., a special-purpose acquisition company, on May 28 announced the completion of its acquisition of the Westway bulk liquid storage and liquid animal supplement businesses of ED&F Man Holdings Ltd (GM Dec. 1, 2008). In connection with the acquisition, Shermen changed its name to Westway Group Inc. Shermen (now known as Westway) expects to set a record date in the next several days with respect to the previously announced $1.00 per share special dividend payable to each holder of its common stock as of the record date. “The management of Westway are very excited about the merger with Shermen.,” said Peter Harding, Westway’s new CEO. “It gives Westway an excellent platform to materially grow its bulk liquid storage and liquid supplement businesses.” Francis P. Jenkins, Jr., founder and chairman, noted, “Westway is an excellent company that will reap strong benefits from its new status as a public company.”
CFI testifies on fert industry’s importance
Ottawa-The Canadian Fertilizer Institute (CFI) appeared before the House of Commons Standing Committee on Agriculture and Agri-Food on May 7 to discuss the fertilizer industry’s importance to the competitiveness of the Canadian agriculture industry. In their presentation to the Committee, CFI President Roger Larson and Vice-President of Strategies and Alliances Clyde Graham highlighted a number of key ways the Canadian fertilizer industry contributes to the competitiveness of crop producers, including delivering fertilizer on time from the Peace River District to the Annapolis Valley; ensuring farmers have reliable access to high-quality fertilizer products; providing the latest scientific advice to allow farmers to get the most from every dollar spent on fertilizer; managing stewardship programs to protect the environment and protect the public from accidents or criminal misuse; improving farmer access to the latest fertilizer and supplement technology through the Canadian Fertilizer Products Forum; and educating the public about the critical role that plant nutrients play in feeding the world by sponsoring and supporting the Nutrients for Life Foundation “Fertilizer is the foundation of Canadian agriculture,” said Graham. “There is no substitute for adequate crop nutrition for the production of an abundant food supply and the preservation of green spaces at home and around the world.”