Bissau-The government of Guinea-Bissau, in an official statement, says the treaty for the production of phosphate with GB Mining Ltd. is terminated and is no longer reactivated. GB Phosphate Mining Ltd. was set up in October 2005 and has invested some $15 million in its Farim phosphate mining project in the country, according to the company website of its majority shareholder, GB Mining Holding AG, Steffisburg, Switzerland. It has completed the concept pre-feasibility study report and has been involved in the prospecting stage. The company has been seeking financing to complete the bank feasibility study and to strengthen its balance sheet for the mining and infrastructure development phases. GB said the Farim deposit is high grade (around 30 percent P2O5, with low cadmium content), and can easily be brought to the market.
All posts by traceybg@gmail.com
Allana buys potash stake in Ethiopia
Toronto-Allana Resources Inc. said Sept. 18 that it has acquired three mineral concessions in Ethiopia’s northeastern Danakil Depression totaling approximately 150 square kilometers. The project area is approximately 100 km from the Red Sea coast and 600 km via good roads from the deep water port of Djibouti. Allana says the deposit is well known, with mining having been carried out intermittently from the early 1900s. Mining companies currently working in the basin include BHP Billiton and Sainik Coal Mining, a leading Indian-based coal mining company. Allana and the property vendors have completed NI 43-101 compliant technical reports for the concessions. According to Allana, highlights of the property include: an inferred mineral resource of 105,200,000 mt of potash mineralization (sylvite and kainite) with a composite grade of 20.8 percent KCl; near-surface potash mineralization (within 50 meters); potential for solution or open-pit mining; potential to use low-cost geothermal and solar power; and both MOP and sulfate of potash production feasible. Allana has agreed to acquire the properties from three private companies in consideration for an aggregate of $2.5 million in cash payments over three years and the issuance of 4 million shares. The property will also be subject to a 3 percent NSR, of which 50 percent can be purchased for C$5 million. Allana, a publicly-traded corporation with a focus on the acquisition and development of potash assets internationally, recently completed the acquisition of Latin American Potash in Argentina. Allana has approximately 45 million shares outstanding, and trades on the TSX-Venture Exchange under the symbol “AAA.”
Ravensdown eyes NZ domestic phos rock
Christchurch-Ravensdown, the New Zealand cooperative that claims to supply half of the fertilizer to the country, is now looking a some 500 hectares of old phosphate reserves in the Clarendon Hill/Wilton area. Based on previous analysis it estimates that some 34 million mt of phosphate rock may be available – enough for some 22 years. Ravensdown says the country currently imports 1 million mt, which is made into 1.7 million mt of super phosphate. Ravensdown also says the rock has very low cadmium levels. Ravensdown says the deposit has not been tapped since World War II, when the Japanese shut off the country’s ready access to product from Nauru.
Mountain Capital buys Alberta potash property
Vancouver-Mountain Capital Inc. has signed an agreement to purchase a 100 percent interest in the Vermilion 15 Potash Property, located in east-central Alberta. The property consists of four metallic and industrial minerals permit applications that were recently awarded through private bid by the Department of Energy, Alberta. The Vermilion 15 property encompasses approximately 77,665 acres (31,430 ha), located about 30 km west to southwest of Lloydminster, Sask. The property is underlain by the Prairie Evaporite Formation at depths that range from approximately 1050 to 1200 meters. “We are very excited about the potential of the Vermilion No. 15 Potash Property, as the historic geologic data suggests that this project may be part of a very extensive potash deposit that has not been adequately tested. Our review of gamma-ray logs within the area has shown a number of responses similar in magnitude to those within the Unity Potash Deposit, just across the border in Saskatchewan,” said Blair Naughty, Mountain Capital president. “The company has begun the process of a 43-101 report on the project and hopes to have it completed within the next 45 days.” The agreement calls for Mountain Capital to pay to the vendors the sum of C$230,000 and issue to the vendors an aggregate of 1,350,000 fully paid and non-assessable common shares of its capital stock upon exchange approval. The company will also issue to the vendors an aggregate of 1,350,000 non-transferable share purchase warrants exercisable for a period of two years from the approval date into one additional common share of the purchaser at a price of $0.55 per share in the first year and at a price of $0.70 in the second year.
Mag closes on private placement
Toronto-MagIndustries Corp. reports that its wholly-owned subsidiary, MagMinerals Potash Corp., has closed its previously announced private placement with Interco Potash Inc. (formerly Portonovo Inc.) of $12.16 million in MagPotash securities at a price of $5.00 per security. The offering was structured in a manner similar to that used for the financing, which was completed in April 2008. Interco has acquired 2,431,843 common shares in MagMinerals Holdings Corp. MagHoldings subsequently used the proceeds from the offering to subscribe for 2,431,843 subscription receipts in the capital of MagPotash at a price of $5.00 per subscription receipt. The proceeds from this offering will be applied to the construction of phase 1 of MagPotash’s Kouilou potash project. In connection with the closing of the offering, Socofran S.A., an affiliate of Interco that will be providing infrastructure related services for the Kouilou potash project, has agreed with MagPotash that up to $22.84 million of the consideration payable to it in return for the services to be performed may be satisfied through the issuance of securities at a deemed issue price of $5.00 per security.
Congo Potash Co. confirms key licenses
Toronto-Congo Potash Co. (CPC) has completed the formal transfer of licenses for potash tenements in the Republic of Congo from its Congolese partner. “We are pleased to have been able to identify and secure these tenements in an emerging market that has good access to ports and infrastructure, competitively priced power, and a strong logistics advantage over other producers into the high growth markets of Brazil and Africa,” said CPC President and CEO Jean-Claude Gonneau. “The economics of crop production require faster, cheaper production with improved yields. Overlying these processes is the simple fact of the changed economics of global food production and the resulting rapidly increasing and sustained demand for fertilizers.” CPC is currently seeking to complete a pre-IPO financing through Canaccord Capital Corp. and TD Securities in Toronto with a view to obtain a subsequent public listing. The CPC deposit is reportedly south of the Koulilou area, where MagMinerals is also developing a potash deposit.
Potatoes grow well with Nitamin, says Ga. Pacific
Atlanta-New research from Brigham Young University on slow-release fertilizer applications in potatoes has shown higher yields and quality from nitrogen (N) fertility programs that include Nitamin Nfusion® fertilizer compared to conventional programs using only urea as the sole N source, according to Nitamin manufacturer Georgia-Pacific. Conducted over a two-year period, the studies demonstrated that a Nitamin Nfusion and UAN blend applied at two-thirds of the standard N rate increased total yield of potatoes by up to 45 cwt/acre over both low and high rates of urea. Nitamin is made by GP and is primarily distributed by Wilbur-Ellis Co. Nitamin Nfusion is a 22-0-0 liquid slow-release N fertilizer composed of methylene urea polymers and triazone with 94 percent slowly available N. It is blended with conventional liquid N fertilizers such as UAN or CAN 17; the final blend typically contains approximately 20-40 percent of its N in the form of Nitamin Nfusion. It provides growers with a product that has both readily available and slowly available N sources, thereby helping to overcome some of the limitations associated with conventional N fertilizers. “In general, we saw in both years that conventional fertility programs that integrated slow-release fertilizer products resulted in better yields and tuber quality with a lower rate of N,” said Dr. Bryan Hopkins, BYU professor of plant and soil sciences. “This shows our N efficiency is increasing, so that’s an environmental benefit. Plus, it’s more affordable for the grower if he can use less N while substantially increasing yield and quality.” Another benefit of using Nitamin Nfusion is that benefits were obtained with only one in-season N application at tuberization, compared to four split applications of urea. “Nitamin Nfusion fertilizer is a different approach to incorporating slow-release N fertilizers in agriculture,” said Jim Wargo, senior agronomist at Georgia-Pacific. “In the past, researchers and manufacturers wanted products they could apply all up front in one application. The problem is that performance can be inconsistent from year to year. Unknown factors, such as soil temperature, rainfall patterns and irrigation management over the course of the growing season, can make the one-shot approach risky for some growers.” Calculations by Dr. Hopkins indicate that the higher yields realized with Nitamin Nfusion treatments increased gross return per acre by up to $312 over the conventional urea-only treatments. In addition to increasing total yield, the slow-release fertilizer treatments produced an increase of 80 cwt/acre of U.S. #1 yield and tubers greater than 6 oz. in some studies. At one site there was also a significant reduction in brown center compared to urea-only treatments. “Nitamin Nfusion is designed to be used as a component of the grower’s overall N fertility program,” says Wargo. In Hopkins’ study, Nitamin Nfusion treatments were applied using a total N rate of 160 lb. N/acre, which was 66 percent of the standard N rate of 240 lb. N/acre in the “high” conventional urea treatment. In the Nitamin Nfusion treatments, 80 lb. of N was applied pre-emergence as urea. The second application of 80 lb. N/acre applied at tuberization included 40 lb. of N from Nitamin Nfusion and 40 lb. N from UAN solution. An additional urea treatment applied at 160 lb. N/acre was included as a “low” rate grower standard program for competitive purposes.
Crescent opts out of Aussie potash exploration
Vancouver-Crescent Resources Corp. said Sept. 19 that it has elected to not proceed with a letter agreement with Australian Potash Co. Pty Ltd. and its shareholders announced on July 30, 2008. Current market conditions have contributed to the decision, and Crescent would have been unable to raise sufficient funds to meet its financial commitments to APC should it have entered into a definitive agreement to pursue this opportunity. Crescent, a mineral exploration and development company with a defined growth strategy of adding value through discovery and rapid project advancement through exploration, has 30.7 million common shares outstanding.
Management Briefs
Orica Ltd. reports that Andrew Coleman, group general manager, chemicals, resigned Sept. 19 to pursue other professional challenges. Greg Witcombe took over the title, effective Sept. 22.
MagIndustries Corp. has announced several management appointments. Jeff Swinoga has joined the company as senior vice president, finance, and chief financial officer. He has 17 years experience in the mining and finance sectors. Previous employers include HudBay Minerals Inc. and Barrick Gold Corporation. Swinoga is a chartered accountant and holds an MBA from the University of Toronto and a BA (Honors Economics) from the University of Western Ontario.
Errol Farr, the company’s former CFO, has left the company to pursue other opportunities.
Kate Harcourt has been named director, health, safety, environment and community. She has been involved in the environmental aspects of mining projects around the world for 18 years. She worked as an independent consultant to the company and other clients on the development of their mining projects. Harcourt has led Mag’s Kouilou Potash Project environmental and social impact assessment team for the past 19 months. She has been involved in projects in Kenya and Mozambique, as well as other international projects. She holds an Honors BSc (Environmental Science) from Sheffield University and an MSc (Environmental Technology) from Imperial College, London.
Patrick Kielty has joined the company as director, human resources. He has 15 years experience in corporate human resources and talent management in the startup divisions of Fortune 500 companies. He holds a BA from Queen’s University and a diploma in coaching from ICC Canada.
Richard Pratt has joined the company as general counsel. He has over 20 years of experience in private practice, where he represented corporate and financial institution clients in a wide array of sectors. He holds an Honors BComm from the University of Manitoba and a Bachelor of Laws from Dalhousie University.
Correction: In The Sulphur Institute brief last week, Green Markets (GM Sept. 22, p. 13) incorrectly identified Mr. Aaron Choquette, Inter-Chem’s vice president, sulfur, as Adam.
Market Watch
AMMONIA
U.S. Gulf/Tampa: The Tampa ammonia price has rolled over for October. Yara was reported to have settled with Mosaic and CF for all October shipments at $931/mt DEL. Sellers had reportedly wanted higher numbers; however, the Hurricane Gustav and Ike outages for Mosaic and Agrifos in Louisiana and Texas all diminished the need for ammonia in the near term. Before the hurricanes, some players had been eyeing $1,000/mt DEL. Afterwards, any increase was much harder to achieve. Also, sources said the heretofore strong Black Sea market was starting to weaken.
In addition, ammonia demand in Florida is expected to be off somewhat as Mosaic scales back production to concentrate on making MAP.
In the meantime, there was no word on any new trades at other Gulf ports.
Terra confirmed last week that its Donaldsonville plant was back up.
Eastern Cornbelt: Anhydrous ammonia remained at a nominal $1,040-$1,080/st FOB regional terminals for cash market tons, with little new business to test the market.
Western Cornbelt: Anhydrous ammonia was reported at $985-$1,050/st FOB regional terminals for spot tons, with the low out of Iowa shipping points on a spot basis.
Southern Plains: The anhydrous ammonia market was tagged at $900-$910/st FOB regional production points on the low end. Some claimed sales to dealers could be had as low as $880/st FOB for prompt tons, but others were skeptical. At the upper end of the range, sources quoted dealer prices at or near the $975/st FOB mark out of pipeline terminals, but there was little spot business to test that number.
South Central: Anhydrous ammonia was quoted at $990-$1,020/st FOB regional terminals to the dealer for spot tons or spring prepay tons, with the low FOB Memphis, Tenn.
Black Sea: Sources report prices have remained steady in the upper $800s/mt FOB. Asian observers say a price range of $870-$880/mt FOB is pretty accurate. Others say the low end of the market is closer to $850/mt FOB. And some even say the bottom is lower still. Several observers said further softening is expected as more of the area plants come back online.
For many, the issue of how fast and how hard the fall will come is based on U.S. demand. Sources say cutbacks by industrial buyers could lead to softer delivered prices into the States.
Asian demand remains steady because most customers are industrial buyers. Trading houses such as Mitsui and Mitsubishi have regular long-term contracts with these buyers to supply the ammonia the industries need. When shortages in the Asian market appear – as is currently the situation due to the temporary closure of the Burrup plant in Australia – the traders search far and wide for the necessary tons.
The recent appearance of these and other Asian supplying sources in Yuzhnyy help provide strength to the producers’ arguments that the price should remain high.
Tightness in the Yuzhnyy market is expected to ease up as more plants come off routine maintenance shutdowns during the next four to six weeks.
Middle East: Mitsui won the IPCC/Iran selling tender at $923/mt FOB. Sources are not clear as to the final destination for the tons. One source said South Korea, and another said India. Wherever the material is going, however, the bottom line is that ammonia in the Arab Gulf is more costly now.
Sources peg the market range at $920-$930/mt FOB based on the IPPC tender. Lower prices can be seen in some vessels being loaded, but observers are quick to point out those cargoes are contracted tons with fixed or lightly adjustable prices.
Indonesia: Mitsui and Mitsubishi are going ahead with their planned maintenance turnarounds beginning early November. The shutdowns come at a difficult time for Asian ammonia buyers. With the Burrup plant down in Australia and demand remaining strong, ammonia is scarce.
UREA
U.S. Gulf: While most of the nation last week was worried about Wall Street, it seemed no one was stepping forward to bail out the urea market. It wouldn’t have cost anything close to $700 billion.
The most common term used to describe the market was “free fall.” Others said the market was just too overvalued. “We got ahead of ourselves,” said one source.
Early in the week sources said new trades were around the $680/st FOB mark for prompt granular barges. However, by midweek that soon turned to $660/st FOB and then to $625/st FOB, and by Thursday $575/st FOB appeared to be the new number.
Some players were saying there was not that much actual business going on, and they lamented that just a few barge trades could make so much difference. Others used words that would never get by our proofreader. In addition, they pointed to the paper market, which also saw steep drops for near term trades.
Why the big fall? There were many explanations. One player said many of the big international buyers had filled up, leaving only India as a major buyer, and that they had not bought as much as expected. In the U.S., one source added that buyers in the Southern Plains had turned to cheaper nitrogen – ammonia in particular – instead of urea, and now no longer needed urea and were out of the market altogether. While phosphate players didn’t see much connection to Wall Street, at least one urea source said he thought some were fearful of a credit crunch and of holding high-priced barges for a lengthy period of time. Add to this the global drop in urea prices.
Countering all this woe was the fact that CF’s Donaldsonville complex was down for a good two-three weeks. This obviously took a great deal of nitrogen out of the market. One player said the same positive scenario for the great spring season is still there. Another noted that the U.S. had not been getting any excess tons, only regularly scheduled cargoes.
Even at these new lower numbers it is questionable whether much new buying will occur on the part of end users, as buyers will be inclined to wait for the bottom, rather than buy now.
Galveston: The CHS terminal is still not fully operational due to power slowly returning to some parts of the Island, according to the company. The railroads are still assessing some track, and there are ongoing testing and repairs to electrical equipment.
Eastern Cornbelt: The granular urea market was reported at $760-$800/st FOB in the region, with the low out of spot river locations and the upper numbers inland.
Western Cornbelt: The granular urea market was reported at $750-$800/st FOB to dealers in the region, down considerably from last report, with the low end also quoted for delivered tons to points in Nebraska from southern shipping points. There were some reports that spot sales out of river locations could be had at even lower numbers as the week advanced, but no business was confirmed at these levels.
Southern Plains: Sources tagged the dealer market for granular urea at $730-$735/st FOB, down considerably from last report, with reference levels reported at the $745/st level FOB Enid, Okla.
South Central: The granular urea market continued to drop at $750-$775/st FOB regional terminals to the dealer, with the low FOB Vicksburg, Miss. The Memphis, Tenn., market was reported at the $760/st FOB level.
Southeast: Granular urea pricing was reported in the $780-$790/st range FOB port terminals, down considerably from last report.
India: The STC tender closed last week with dramatically lower prices. The offers in the STC tender caused many in the industry to catch their breath. Earlier this month MMTC settled for 300,000 mt at $825/mt CFR. And that was already $30/mt off the offers made in the tender. The STC purchases are $140/mt lower.
STC tender results follow on page 7.
Sources say STC did not even consider pitting one provider against another, but went straight into talks with Helm. In the end, STC bought 300,000 mt at $685.50/mt CFR.
| Quantity (mt) | Delivery Port |
| 220,000 (4-5 lots) | Kandla and Mundra |
| 30,000 | Mangalore |
| 20,000 | Tuticorin |
| 30,000 | Pipavav |
The impact on the global urea market is not going unheeded. The Middle East suppliers clearly had hoped to snag some business when they lowered their prices more than $110/mt. But it was still not enough.
The next step will be to see how quickly IPL or MMTC steps in for another tender. One Asian observer said he expected IPL to jump in soon. If STC had not settled, sources say, IPL would have been in by the end of last week. Now that 300,000 mt have been taken out of the system, observers say a brief waiting time might be necessary to prevent prices from running up again.
With the STC purchases, however, industry observers say IPL might be able to wait a few more weeks before it calls its tender. By then, said one source, the price may have softened even more.
Black Sea: Using the final numbers from the STC/India tender, sources say the price plummeted from $750-$780/mt FOB as reported in Green Markets to $620-$635/mt FOB, depending on ship size and freight rates.
The slide in Yuzhnyy urea has been going on for a while. Even so, sources expressed amazement at how rapidly and how deeply it fell.
Many of the companies offering in the STC tender pegged the market in the upper $600s to low $700s/mt FOB. Some even made offers at $710-$715/mt FOB.
But in the end, if Helm is indeed selling Black Sea tons, the price plummeted into the low $600s/mt FOB.
The only remaining big game in town will be another Indian tender. Sources say, however, that IPL should be able to sit out for a month or so
Middle East: Producers were anxious to show they wanted to stay in the India market, but not so anxious that they were willing to slash prices to meet the Yuzhnyy competition.
The offering price of $705-$707/mt FOB represented a drop of $115/mt. But that would have made the delivered price into India $755-$765/mt FOB, about $120/mt higher than Helm’s offer. One observer noted that the Middle East suppliers would have had to lower their prices by almost $200/mt, something they were not ready to do.
Another observer noted the producers offered what they thought to have been a fair price at the time. The rapid nature of the fall in prices and the aggressive nature of Helm and the other firms offering sub-$700/mt CFR material took the price lower than expected.
Using the last bit of confirmed public business would put the high end of the Middle East market at $820/mt FOB, and the offers in the STC tender would put the low end at $705/mt FOB. Sources say such a spread is useless for analysis. Observers now say the best indicator is what was offered in the tender – $705-$707/mt FOB for prills and granular.
China: Beijing figures 187,000 mt of urea was shipped out of the country last month. Sources say this represents regular and properly taxed material. At that time the export duty on urea was 135 percent.
For some time a number of tons have crossed over the land border with Vietnam and found their way into the international market for substantially less. The Philippines, Thailand, and Malaysia have all come to depend on the smaller and much cheaper tons re-exported out of Vietnam.
Pakistan: The country needs to import 450,000 mt of urea to meet the demand during Rabi season 2008-09 (Oct-March), according to the National Fertilizer Development Center (NFDC), which said that during the period some 2.91 million mt of urea would be required against an availability of 2.479 million mt, thereby leaving a deficit of 431,000 mt.
The season is expected to start with an opening inventory of 59,000 mt of urea. With projected domestic production, availability would be comfortable up to October 2008. However, additional imports of about 450,000 mt would be needed to guard against any shortage during the second utilization of urea in the wheat crop.
STC Tender Results |
|||||
| Supplier/Origin | Quantity (‘000mt) | US$/mt | Discharge | Comments | |
| FOB | CFR | ||||
| Helm/open | 160 – 200 | 689.00 | Kandla/Mundra | Ship by Oct. 15 | |
| 100 (s/o) | |||||
| Toepfer/open | 99 – 126 | 690.00 | Kandla | Sept. – Oct. arr. | |
| 25-40 | |||||
| 20-25 | 721.00 | Mangalore | |||
| 20-25 | 721.00 | Pipavav | |||
| 25-30 | 789.00 | Tuticorin | |||
| 20-22 | 732.50 | Vizag | |||
| Keytrade/open | 90-120 | 699.00 | Mundra (s/o) | Oct. ship | |
| 703.00 | Kandla (s/o) | ||||
| 713.00 | Vizag | ||||
| Ameropa/open | 45-65 | 708.50 | Vizag/Tuticorin | Oct. arr. | |
| 2-3 lots at S/O | 700.50 | Pipayay/Kandla | |||
| 710.00 | Paradip | ||||
| Ameropa/open | 45-65 (2-3 lots at S/O) | Oct. ship | |||
| 40-50 (2-3 lots at S/O) | 753.00 750.00 |
Vizag-Tuticorin-Pipayay-Paradip-Kandla | Oct. arr. | ||
| 20-25 | 748.00 | Oct. ship | |||
| 745.00 | |||||
| Dreymoor/open | 35-50 | 690.00 | 720.00 | Kandla-Mundra | Oct. ship |
| 35-50 (s/o) | 723.00 | Pipayay – Mangalore | |||
| 724.50 | Paradip – Kaki – Vizag | ||||
| Eurochem/CIS | 35-40 | 739.90 | Kandla – Mundra | Mid – Oct. ship | |
| Gavilon/open | 30-60 | 742.00 | Kandla | Oct – Nov. ship | |
| Fertil | 15-20 | 705.00 | Oct. ship | ||
| 20-25 (s/o) | Nov. ship | ||||
| Qafco | 25-30 | 705.00 | Sept. arr. | ||
| 25-30 (s/o) | Oct. arr. | ||||
| PIC | 50 (2 lots) | 705.00 | Sept. – Oct. ship | ||
| Sabic | 50 (2 lots) | 707.00 | Oct. ship | ||
| Transammonia/open | 75 | 750.00 | Kandla | Oct. arr. | |
| 75 | 750.00 | Kandla–Tuticorin | |||
| 25-50 | 750.00 | Vizag | |||
| Wilson-Klang/China | 50 (2 lots) | 705.00 | 728.00 | East Coast | Oct. arr. |
| 707.25 | 732.00 | West Coast | |||
| Liven/Open | 15-20 | 762.00 | Che – Kaki – Tuticorin – Paradip – Vizag | Oct. – Nov. ship | 15-20 | 763.00 |
| SC Stirol/CIS | 50 (2 lots) | 710.00 | Oct. ship | ||
| 45-50 | 715.00 | ||||
| Swiss-Singapore/open | 50 | 780.60 | Kandla | Sept. – Nov. ship | |
| 20 (bagged) | 727.50 | Vizag – Paradip | |||
*Industry sources
The NFDC pointed out that domestic production during January 2009 would suffer a little due to the annual maintenance of some plants. The NFDC requested that the government import 250,000 mt of urea by December 2008 and 200,000 mt in January 2009.
Meanwhile, TCP has already opened LCs for the import of urea worth $125 million from Saudi Arabia, for which the Saudi authorities have provided a credit facility. Earlier, Saudi Arabia had provided a $133 million credit facility for the same purpose. It said that Pakistan has requested that the Saudi authorities, including the Islamic Development Bank of Jeddah, provide an additional credit facility of $300-$400 million for the purchase of urea.
NITROGEN SOLUTIONS
U.S. Gulf: UAN barges were hard to peg last week as most of the attention was on urea. Sources said inland tanks were pretty full and East Coast importers were skittish, sensing that prices are weak. As a result, demand and movement were hard to find.
Eastern Cornbelt: UAN remained at $16.00-$16.79/unit FOB regional terminals for cash tons, with reference prices reported at the $17.40/unit FOB level or higher, depending on time of delivery.
Western Cornbelt: UAN-32 remained at $510-$528/st ($15.94-$16.50/unit) FOB regional terminals for cash tons, with one source quoting the dealer market FOB Dubuque, Iowa, at the $520/st ($16.25/unit) FOB mark for spot business. There were reports of spring prepay numbers circulating at much higher levels. “If we have a big fall on ammonia, there may be some long UAN,” said one source, noting as well that if weather prevents a strong fall ammonia run, the opposite may be true next spring.
Southern Plains: UAN-32 was quoted at $495-$510/st ($15.47-$15.94) FOB to the dealer, with the low out of regional production points. Sources reported little activity to test the market.
South Central: UAN-32 remained at $495-$510/st ($15.47-$15.94/unit) FOB regional terminals to the dealer for spot tons.
Southeast: The UAN-30 market was quoted at $460-$470/st ($15.33-$15.67/unit) FOB East Coast terminals, down slightly from last report. Sources noted, however, that the material in tanks was purchased during late spring or summer, when replacement costs were high. In fact, several sources said the vessel ton market had recently dropped from summer values in the $548-$550/mt range to current indications at the $500/mt CFR mark.
AMMONIUM NITRATE
U.S. Gulf: Urea was the “newsy” nitrogen last week, leaving ammonium nitrate and the others in the back seat. While some claim that fall AN barges have been sold as high as $555-$570/st FOB for fill, you would not find too many touting those numbers last week. Instead, sources called the market an anemic $500-$515/st FOB at best.
Western Cornbelt: Ammonium nitrate remained at $560-$600/st FOB in the region.
Southern Plains: One source described ammonium nitrate movement as “fair” last week. The nitrate market was quoted at $560-$570/st FOB Tulsa to the dealer, with reports of limited inventories at the port.
South Central: The ammonium nitrate market was quoted at $535-$550/st FOB in the region.
Southeast: Ammonium nitrate pricing remained at $550/st FOB Tampa, with the market in the Carolinas reported at $560/st FOB to the dealer.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $495-$505/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was steady as well at $475-$495/st FOB.
Southern Plains: Granular ammonium sulfate was unchanged at $410-$450/st FOB Texas shipping points, with the low FOB Freeport. One Texas source said sulfate demand on preplant wheat has been off despite cooperative field and weather conditions.
South Central: Granular ammonium sulfate was tagged at $450-$460/st FOB regional warehouses, reflecting a slight drop from last report.
Southeast: Granular ammonium sulfate remained at $465-$470/st FOB and $490-$495/st DEL in the region.
PHOSPHATES
Central Florida: New, prompt sales of phosphate in Central Florida were still absent last week, and it may be another several weeks before business begins to take off again, because the harvest from the spring season has yet to begin in most areas and fall planting of winter wheat has been delayed.
The biggest question facing the phosphate industry in Florida last week was the future price of sulfur, which accounts for about 40 percent of the current cost of production. The world price of sulfur has taken a major tumble during the past month, and the expectation was for a huge cut in prices for the fourth quarter. That may be just in time for phosphate producers. With new sales stagnating, the expectation was that phosphate prices would also begin to decline once the fall season gets underway. If so, the decrease in the sulfur price would help cushion the blow for producers, although ammonia prices were still running at $931/mt for October.
The big credit crisis will probably not have a big impact on phosphate and other fertilizer prices, most sources said last week. The reasons most gave were that farmers will have more money than normal to spend, the banks they and dealers use were not investment banks, and most have steady lines of credit. However, one warned that banks would have only daily and not long-term rates, and that would create a domino effect on lending practices. The big bailout was still being hashed out late last week in Washington and was most likely to be approved in some form within days.
No new hurricanes were threatening Florida or the Gulf area late last week, which makes two weeks in a row. Agrifos was still attempting to determine the extent of damage to its processing plant at Pasadena late last week and had no estimate of when it will resume production. However, some of its inventory survived Hurricane Ike, but how much and when it could be delivered was still unknown. A source said Agrifos lost about 20,000 tons of inventory.
The Central Florida DAP price range last week remained at $1,070-$1,080/st FOB, but considering the difference in the range of NOLA DAP barges, prices in Central Florida will either have to go down or prices on the Gulf will have to go up. PCS Sales’s Central Florida reference price was unchanged at $1,070/st FOB for DAP and had a $25/st FOB premium for MAP. Mosaic’s asking price was $1,090/st FOB for DAP and $1,115/st FOB for MAP, but the company was making sales at $10/st FOB less for both products. CF’s price was $1,040/st FOB for DAP, and its MAP was priced at $1,100/st FOB. In Texas, Agrifos’ last price for DAP was 1,050/st FOB for trucks and $1,045/st FOB for rail shipments, but nothing will be available until after production resumes.
U.S. Gulf: Most agreed on a couple of things in the Gulf river phosphate market – prices were down, supply was down, and demand was down. None of that contributes to an active market. Terminals were full in most cases, and warehouses that were not full don’t see any reason to buy now. Farmers were still not heading to dealers to make fertilizer buys, except perhaps nitrogens in Kansas, because they also sense a decline in phosphate prices.
In Oklahoma, where activity normally first begins, wheat farmers were not making moves to lay down phosphate for ground preparation but were in better shape than they have been for several years, after successful crops last season. Some said application rates may drop significantly, but others said farmers were just waiting to take advantage of price declines.
Activity to meet the deadline for the closed river was nonexistent last week, but most don’t see that as a problem. Dealers’ warehouses were full, and orders could be placed as late as Oct. 5 to arrive in time.
Mosaic’s Faustina processing plant was back in operation last week after ceasing production with the approach of Hurricane Gustav, but lost production was estimated at between 70,000 and 150,000 st. Add to that the production that will be lost by Agrifos from Hurricane Ike, which amounts to around 5,000 st a day, and it was obvious less phosphate was in the system. However, considering there was no demand, that was having little or no effect on prices last week.
The economy was on the industry’s mind last week, but there was no panic, at least in terms of credit. Corn prices were still over $5.50/bushel and showed no sign of weakness. One reason was that investment banks, which were in trouble, had not taken big positions in the commodities markets. In addition, a large percentage of the fertilizer industry has secure credit and the problems many other industries face were absent. While traders and dealers were losing money on some phosphate deals, “There’s less red on the way down than there was black on the way up,” one said. Most in the industry made a lot of money earlier this year and were in good shape to weather the storm.
New, prompt sales were hard to find last week, but one deal was done at $910/st FOB. Although the seller was less than thrilled with the prospect of losing money, the price was better than many had anticipated.
The NOLA DAP barge price fell last week to $910/st FOB from $950/st FOB the previous week. MAP barges were $25-$60/st FOB more than DAP. Mosaic’s asking price for NOLA DAP barges was $1,100/st FOB and $1,125/st FOB for MAP, and its prices for October and November were scheduled to increase $10/st FOB. CF was seeking $1,050/st FOB for DAP and to $1,110/st FOB for MAP for prompt deliveries.
Eastern Cornbelt: The DAP market was pegged at $1,010-$1,060/st FOB, with MAP roughly $25/st higher than DAP. Those levels reflected another drop from the previous week, although new sales were few. 10-34-0 was quoted at $1,200-$1,250/st FOB /st FOB for very limited tons.
Western Cornbelt: DAP was reported at $1,000-$1,050/st FOB regional warehouses to the dealer, reflecting another decrease from last report, although interest in spot business was virtually nil. MAP was tagged at $1,025-$1,075/st FOB; one Nebraska source reported a $1,050/st FOB dealer price at midweek.
10-34-0 was quoted at $1,200-$1,250/st FOB in the region, and remained in very tight supply.
Southern Plains: Phosphate prices continued to slip, with the Catoosa, Okla., DAP market quoted at $980-$1,010/st FOB last week. The low was confirmed after a pricing adjustment at midweek. The range was down considerably from last report, and reportedly down $20-30/st from the previous week. MAP was following suit at a $25/st premium to DAP.
10-34-0 was reported in the $1,200-$1,250/st FOB range for any available spot tons, with reports of forward prices being referenced as high as $1,400/st FOB from some regional suppliers.
South Central: Phosphate prices were down significantly from last report, but sources reported little buying activity to test the market. DAP was tagged at $980-$1,040/st FOB regional warehouses to the dealer, with most quoting the lower end of that range as the week advanced. MAP was $1,005-$1,065 FOB in the region. Although normally priced below DAP, TSP last week was reported in the $1,030-$1,040/st FOB range to the dealer, but with very little movement to test the market.
Export: India, the world’s primary customer for phosphate, held off making new buys last week and may be trying to take advantage of its monopoly situation to fill the balance of its needs this year. Sources said they believe the next buy the Indians make will most likely be for less than $1,000/mt FOB, which was well below the current market.
PhosChem made no new sales last week and did not appear eager to get into the game. The organization has shipments scheduled for delivery to India through November of this year.
With no new sales by U.S. producers, the export DAP price range remained unchanged at $1,160-$1,215/mt FOB. When the next sale is made, watch for a really big drop in price.
Pakistan: The country will require 850,000 mt of DAP to meet the requirements in Rabi season 2008-09 (Oct-March), according to the National Fertilizer Development Center. The NFDC believes domestic production will be sufficient at least through the close of 2008.
POTASH
Eastern Cornbelt: The potash market remained firmly in the $900-$930/st FOB range, depending on location, grade, and time of delivery.
Western Cornbelt: Potash was steady at $900-$935/st FOB regional warehouses, depending on grade and location.
Southern Plains: Sources quoted the potash market at $875-$900/st FOB regional warehouses to the dealer, with little new business to test the market. One Kansas source reported an $850/st DEL price out of Carlsbad, N.M., for allocated tons. Posted prices at Carlsbad included 60 percent granular at $800/st FOB; 60 percent standard at $794/st FOB; 62 percent standard at $820/st FOB; 62 percent fine standard at $823/st FOB; and 62 percent granular at $826/st FOB.
South Central: Potash was reported in a broad range at $875-$950/st FOB to the dealer, with most sources putting the market last week in the $890-$900/st FOB range.
Southeast: The potash market in the Southeast was pegged at $920-$930/st DEL in the region from secondary sources.
China: Migao Corp., a China-based specialty potash fertilizer producer, reports that it has received major purchase orders to supply 50,000 mt of potassium sulfate (SOP). The SOP is to be supplied by Migao’s wholly-owned subsidiary, Guangdong Migao, and delivered by rail to three surrounding provinces for application on high value crops. Delivery is to be completed by Jan. 30, 2009. “As a result of this order and other commitments for our specialty potash-based fertilizers, all of our production, across all of our facilities, is sold forward until March 2009,” said Mr. Liu Guocai, Migao’s CEO. “We continue to experience strong demand for our fertilizers from the high value crop market sectors we serve throughout China. For farmers to achieve the yield and quality consumers are demanding for crops such as tobacco, fruits and vegetables they must continue to apply our fertilizers in the prescribed manner.”
Migao also reports it has secured a long-term supply of potassium chloride, a major input for its processing of SOP, from its Russian supplier. The term of the supply agreement extends to Aug. 31, 2009, from the previous term of March 31, 2009. Migao says the amount of potassium chloride secured under the revised contract will fully satisfy its needs, including new production capacity coming online during the term of the agreement. Pricing of the potassium chloride is subject to prevailing prices at the time of each delivery, which is anticipated to be on a monthly basis.
Migao, through its wholly owned subsidiaries, owns and operates fertilizer production plants in various locations across China for the production and sale of specialty potash fertilizer (potassium nitrate and SOP).
SULFUR
Tampa: The goal posts have been moved. Last week, one of the phosphate producers said it was no longer seeking a rollback of $240/lt for the fourth quarter and was seeking to wipe out half of all of the increases for 2008. On January 7, 2008, Green Markets listed the range for Tampa sulfur at $110.50-$113.50/lt, and the price for the third quarter was $615.50-$618.50/lt, a total increase of $505/lt for the year. Half that amount would be $252.50/lt, which would result in a new price of $363-$367/lt, if the phosphate producer got its way. However, considering the fourth quarter had not begun and settlements are not normally reached at the beginning of the quarter, there was still plenty of time for world prices – the driving factor both up and down – to fall even more. Spot prices on the world market have fallen by roughly half during the past month, and indications were the drop was gaining momentum. One long-time sulfur source said prices would fall faster than they went up.
Although prices were certain to go down, supplies will also fall. Hurricane Ike knocked most of the refineries from Louisiana to Texas out of service for a couple of weeks or longer, which puts a crimp in Tampa’s sulfur supplies. At the same time, phosphate prices domestically and internationally have been on the decline. Inventories would be increasing if not for the loss of production at Mosaic’s Faustina, which returned to service last week, and Agrifos at Pasadena, which will be out for an indefinite period. If phosphate producers are forced to curtail production due to a sulfur shortage, it will help slow price deterioration of phosphates, so they will have little motive to settle sulfur agreements in a timely manner or for a smaller price decrease. Reduced phosphate production could also put pressure on ammonia suppliers to lower their prices. Negotiations were likely to be long and contentious.