Aurora, N.C.-The Beaufort County Board of Commissioners on Sept. 16 voted to ask the North Carolina Congressional delegation to aid PCS Phosphates in getting a permit to expand its Aurora phosphate rock mine, according to the Washington Daily News. The resolution asks the delegation to urge three federal agencies – The Environmental Protection Agency, the U.S. Fish and Wildlife Service, and the National Marine Fisheries Service – not to appeal a forthcoming decision by the U.S. Army Corps of Engineers on the permit. The board fears the impact of the delay. County Manager Paul Spruill was quoted as telling the commissioners that the PCS Aurora complex is “perilously close to imposing layoffs.” PCS is the largest employer in the county. “We simply would not be able to recover from the impact of a world without PCS,” said Spruill. The matter is expected to be put on the board’s agenda again in October so that a more strongly worded resolution can be considered. PCS told Green Markets that its schedule to receive the permit is by the end of the year, which is consistent with its mining plans. If that timeline is not met, PCS said it would have to look at its mining plans and make adjustments.
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Agrium sees positives despite stock drop
Calgary-Agrium Inc. President and CEO Mike Wilson told analysts last week that despite a 30 percent drop in the company’s stock price, the earnings potential for the company is up at least that much. He said based on current margins with fertilizer prices and costs, the company could earn $15-$17 per share annually. The company notes that it is not giving official guidance, but giving a hypothetical EPS relating to current market conditions. Agrium earned $3.25 per diluted share in 2007 and has no official forecast for 2008. Wilson said nitrogen, phosphate, and potash margins at today’s costs and prices are more than double what they were in the company’s second quarter, creating strong potential for its earnings. He added the company’s business is as strong as ever, as are farmer margins, and that the company has seen no signs of cutbacks from farmers. Wilson said the company wants to double its retail operations again after recent large acquisitions (Royster-Clark and United Agri Products) gave it a 15 percent share of the U.S. market. He said the company is now three times larger than its nearest competitor. “It’s going to be a little more difficult this time,” he said. “Rather than doing the big moves, you may see us doing a number of small moves.” Agrium expects to make a decision by the end of the year as to the location for a new greenfield potash mine. Four sites are under consideration. The company also plans to expand its existing potash mine capacity to 3 million mt/y, up from the current 2.05 million mt. Wilson was speaking before the Credit Suisse 2008 Chemical and Ag Science Conference.
Yara increases Burrup stake
Oslo-Yara International ASA said Sept. 16 that it has agreed with Mr. Pankaj Oswal to purchase from him a 5 percent ownership in Burrup Holdings Ltd. (BHL) for US$141 million. After the transaction, Yara will own 35 percent of BHL and Oswal will own 65 percent. “The purchase increases Yara’s position in a low-cost gas area. It also strengthens Yara’s contractual rights to downstream upgrading and marketing from BHL in an interesting market for both our industrial and fertilizer products,” says Thorleif Enger, Yara president and CEO. “The purchase price by Yara illustrates the leading position that BHL holds in the global ammonia market and the value of the growth opportunities being executed by the company. This transaction provides a benchmark for the floor price and underpins the IPO valuation of the company,” said Oswal. The BHP ammonia plant, located at the Burrup Peninsula in Western Australia, has an annual production capacity of approximately 850,000 mt. Yara and BHL are also continuing progress on the ammonium nitrate expansion project adjacent to the existing ammonia plant.
Michigan authorities not sure about fertilizer bomb
Greenville, Mich.-Investigators still aren’t able to say for sure that it was a fertilizer bomb that seriously injured a 27-year-old Greenville man in his own driveway when he was leaving for work the morning of Sept. 11. The victim, identified as Derek Lehman, suffered burns to his face and arm after he picked up a wooden box containing the device, which then exploded. Montcalm County sheriff’s office, which is directing the investigation, said Lehman was taken to the emergency room at the local hospital, where there were concerns that he may suffer damage to his eyesight and hearing. Press reports were consistently referring to a fertilizer bombing incident, but Undersheriff William Burden told Green Markets that those conclusions are probably premature and could have come from initial field tests at the scene. Burden said everything taken from the scene has been turned over to the Michigan state police crime lab, which will make the final determination. He described the substance in the box as a black liquid, and said the box was more sophisticated than any ordinary wooden container. “When you talk about fertilizer bombs you think of fuel oil and fertilizer, but it was nothing like that,” Burden added. Greenville Public Safety Director Mike Stuck told the local press the blast was caused by an extremely concentrated fertilizer, but he wouldn’t confirm that when contacted. Sheriff Bill Barnwell said he doesn’t think the county has ever handled anything like this before, but is convinced that it was an isolated incident with no indications that the community is in danger. No arrests have been made in the explosion, and neighbors who assisted Lehman after he was burned said he was a personable individual who didn’t have any enemies. The incident also caused the emergency room at the local hospital to be shut down temporarily because of concerns over contamination. The ER was transferred outside into a tent, and other hospitals in surrounding areas were also on alert.
Sinkhole not moving toward railroad, says Silvinit
Berezniki, Russia-JSC Silvinit said that as of Sept. 4 the distance between the sinkhole and the rail bypass at Berezniki remained the same as two months before – 100 m. The sinkhole continues to expand, though, in the direction opposite to the railroad. According to the executive staff at the Emergency Commission of the Perm region, the size of the sinkhole as of Sept. 4 was 410 by 310 m. The size of the crater in the bedrock increased to 400 by 260 m from 380 by 260 m as of July 31. The Berezniki 1 mine is flooded to a considerable degree. According to the latest information, the volume of the brine in the mine has reached 73.5 million cubic meters. Silvinit’s sinkhole woes in the past few years and its alleged impact on the potash market were given as an example in the recently filed potash antitrust cases in the U.S. (GM Sept. 22, p. 1).
USDA lowers crop production estimates
Washington, D.C.-The USDA in its September Crop Production report said it expects corn yields to average 152.3 bushels/acre, down 2.7 bushels from August, but still 1.2 bushels above last year and second only to the 2004 crop. Corn production was forecast at 12.1 billion bushels, down 2 percent from last month and 8 percent below 2007. Many industry sources speculated the corn yield and total production estimates would be lowered from July and August projections, citing the lingering effects of a late planting season and the Mississippi River floods in June. The agency attributed the decline to dry conditions during August in the eastern and northern Cornbelt, the Ohio and Tennessee Valleys, and across much of the Mississippi Valley. Several sources contacted by Green Markets last week said they anticipate further reductions, due again to poor crop development in areas hit with heavy rains and flooding in June. Soybean production was forecast at 2.93 billion bushels, down 1 percent from August projections, but up 13 percent from last year. Average soybean yields were projected at 40 bushels/acre, down 0.5 bushels from last month, and 1.2 bushels lower than 2007. All cotton production is forecast at 13.8 million 480-pound bales, up 1 percent from last month but down 28 percent from last year. Yield is expected to average 849 pounds per harvested acre, up 7 pounds from last month, but down 30 pounds from the record yield in 2007. Producers expect to harvest 9.41 million acres of all cotton and 7.66 million acres of upland cotton in 2008, USDA said, both down 25 percent from last year, and the lowest harvested acreage since 1983.
Inter-Chem joins TSI
Washington-The Sulphur Institute (TSI) has announced that Inter-Chem, Tulsa, has joined the organization. Inter-Chem, founded in 1976, has several business segments, including domestic and international fertilizer marketing and distribution, as well as its energy group, which is active in the marketing and distribution of sulfur. The company has been a marketer of sulfur since 1990, serving both producers and consumers. It also operates a dedicated fleet of sulfur rail cars and trucks. “We recognize TSI’s programs as valuable in our day-to-day operations and welcome the opportunity to become involved, providing our input on direction of future activities,” said Adam Choquette, Inter-Chem’s vice president, sulfur. TSI, founded in 1960, has 36 member companies based in Asia, Europe, the Middle East, and North America.
Management Briefs
Uralchem, one of the largest producers of nitrogen and phosphate fertilizers in Russia and the FSU, has named a North American fertilizer industry veteran to its board. John M. Van Brunt, former CEO and president of Agrium Inc., was elected to the Uralchem board of directors at the company’s Sept. 16 shareholders meeting. Van Brunt will be an independent non-executive director and will head the board’s strategy and development committee.
On Sept. 17 Uralchem announced that Dmitry A. Mazepin was elected chairman of the board of directors. The company’s board also decided to create an audit committee with Van Brunt and Paul J. Ostling appointed as members; to create a staff and remuneration committee with Ostling, Mazepin, and Dimitriy V. Tatyanin as members; and to create a strategy and development committee with Van Brunt, Ostling, Anton V. Vishanenko, Mikhail V. Genkin, and Dmitry V. Osipov as members. Back in June, UralChem shareholders elected Mazepin, Ostling, Osipov, Vishanenko, Tatyanin, Genkin, Dmitry V. Konyaev, Mikhail A. Markin, and Sergey A. Drinevskiy to the board of directors, increasing the number of board members to nine from seven the previous year. UralChem decided on Sept. 16 to elect a new board of directors, with Van Brunt, Vishanenko, Genkin, Drinevskiy, Konyaev, Mazepin, Osipov, Ostling and Tatyanin as members. The company also recently announced that the board of directors of Voskresensk Mineral Fertilizers OJSC (Minudobrenya) had approved the appointment of Murad Chaparov as general director of Minudobrenya.
Growmark Inc. announced four new members of its management team, effective Sept. 16. Marshall Bohbrink was named vice president, risk management and treasurer; Kevin Carroll was named vice president, energy; Shelly Kruse was named vice president, Midwest retail and acquisitions; and Jim Spradlin was named vice president, agronomy.
Bohbrink joined Growmark in 1976 and was named treasurer in 1999. He holds a degree in Accounting and Finance from the University of Iowa and an MBA from Illinois State University.
Carroll joined the company in 1985 and has held various positions, including financial analyst, energy operations manager, business analysis and research director, and most recently, Northern Region manager. He has a degree in Finance from the University of Illinois and an MBA from Illinois State University.
Kruse joined Growmark in 1983 at Bureau County Service Co. She has also served as Iowa regional manager and energy division manager. She will provide leadership for the Midwest and Ontario retail subsidiaries, as well as the Illini FS division, and oversee retail and wholesale acquisitions for member cooperatives and Growmark. She earned a bachelor’s degree from Lewis University and a master’s degree from Northern Illinois University.
Spradlin has been with the company since 1982 and served as general manager for both Piatt County Service Co. and Ag-Land FS, Inc., and was energy division manager and, most recently, agronomy division manager. He will provide leadership to Growmark’s seed, crop protection, and plant food businesses. He holds a bachelor’s degree in Business Administration and Economics from Illinois College.
Potash One Inc. has appointed Ted Warren to the position of manager, operations. His focus will be on the company’s Legacy Potash project in southern Saskatchewan. Potash One says he has more than 45 years of experience in the mining industry, having worked in base metals, potash, and uranium operations. Over the years he has worked for Hudson Bay Mining, PotashCorp, what is now Mosaic Co. at Esterhazy, Cameco, and AMEC Americas mining division.
Market Watch
AMMONIA
U.S Gulf/Tampa: No new numbers were reported for imports or for NOLA last week. However, NOLA sources indicated that price ideas may be coming down. This could reflect softening prices in the Black Sea.
July ammonia imports were off 2 percent from the year-ago month, to 755,535 st from 792,844 st.
Eastern Cornbelt: Anhydrous ammonia remained at a nominal $1,040-$1,080/st FOB regional terminals for cash market tons. There were reports of spot sales that could be had at lower numbers, but no one had the room for any prompt ship business last week. Forward contract ammonia continued to be referenced as high as $1,240-$1,250/st FOB regional terminals for October through November.
Western Cornbelt: Ammonia continued to be in a broad range at $950-$1,050/st FOB for spot tons, although there was no spot business to test those numbers. One Missouri source quoted delivered ammonia at $1,050-$1,060/st from southern production points. Forward contract postings remained at considerably higher levels, with reference prices for October through November in the $1,230-$1,240/st FOB range out of regional shipping points.
Northern Plains: Ammonia pricing continued to cover a very broad range. Minnesota sources claimed spot tons could be had for as low as $1,050/st FOB, but most dealers were full in advance of the fall application season. Looking further ahead, one supplier was referencing forward contract ammonia tons for October through November at $1,235-$1,255/st FOB regional terminals. Most said no spring prepay numbers were being offered yet, with attention first being focused on the fall season.
Dakota Gasification’s Beulah, N.D., ammonia plant was down again for minor repairs that were discovered during startup after the facility’s summer turnaround. As a result, the company will most likely refrain from taking any cash ton orders until October due to low inventories, and was holding its reference price at $1,380-$1,385/st DEL in North Dakota. A Dakota Gas source said the company took as many fall prepay commitments as it wanted to, and was focused on filling those orders with current inventories.
Great Lakes: Sources quoted spot anhydrous ammonia pricing in the $1,050-$1,125/st FOB range in the region. On a forward basis, reference levels were considerably higher at $1,200-$1,250/st FOB for October or November shipments. No spring prepay numbers were reported in the region.
Black Sea: Sources now report that a deal was done for a cargo at $870-$880/mt FOB. The buyer was not named, but one trader said the cargo was most likely 35,000 mt.
Even if it was 23,000 mt or so, sources said, the price indicates a softening from the $900/mt FOB earlier this month.
One Asian source said the $900/mt FOB is now looking like an aberration rather than an indicator of more bad times for buyers. At the time the price hit that record level sources had been predicting $900/mt FOB material – but, one said, they never believed it would be achieved.
Even with a softer price, sources say demand remains strong.
A number of plants are still in turnaround in the area, and demand remains strong in Asia and the U.S.
By November all the area plants should be back up and running. By that time, however, restrictions on passage through the Bosporus Straits will create the annual slowdown of deliveries.
The Turkish government has long required the ammonia carriers to pass through the straits only during daylight hours, and only one carrier at a time. One trader said the rules could mean adding a few extra days to the delivery schedule.
The tightness in the market that is holding prices up comes largely from strong demand in Asia and the shutdown of the Burrup facility in Australia. Supplies from the Middle East remain tight, offering scant opportunities for spot cargoes.
Calls for lower prices are growing stronger. Sources say some are talking about the price dropping to $800/mt FOB by this week. However, by the end of last week, Asian sources were reporting $860/mt FOB as the lowest rumored deal done, with a more realistic market closer to $880/mt FOB.
Middle East: Producers cling to their story that they are all sold out – and buyers believe them. Trading houses looking for material for Asian buyers are finding no help from any of the producers in the area.
The tightness is so severe that the IPCC selling tender out of Iran drew the big names in the ammonia business. Transammonia, Yara, Mitsui, Mitsubishi, and at least one other company took part in the tender.
IPCC offered 23,500 mt for early October shipment.
Mitsubishi and Yara were the most competitive at $920/mt FOB. Sources say Mitsubishi got the award.
Sources are not sure if the bid of $920/mt FOB is an aberration similar to the $900/mt FOB in the Black Sea or a new base mark. Even once the premium on Iranian material of $20 is knocked off, that would represent an increase in the Middle East pricing of at least $60/mt.
Asian sources report that previous problems with IPCC delivering the tons to the port on time have all been smoothed over. One source noted that Mitsui takes monthly cargoes from Iran without incident for its Asian customers.
The cargo from this tender is expected to head for Asia, where the market is tighter than any other region.
Indonesia: Mitsui’s KPA announced it will close down in November for a 20-day routine turnaround. The Mitsubishi KPI plant is also slated to shut down in November, but for 40 days. If both plants shut down and come back as scheduled, about 100,000 mt will be lost to the market. One trader said major trading houses are already having a difficult time fulfilling their contracts with the Burrup plant out and with the Middle East so tight on supply.
Reportedly, the commercial end of Mitsubishi was arguing with the technical people at KPI in the hopes the plant could stay open a little longer. The technicians won. One source said safety and efficiency won out over sales.
UREA
U.S. Gulf: You would almost think granular barges were on the New York Stock Exchange last week, as their fate was about the same. Granular barges were trading last week at $700-$710/st FOB, down from the prior week’s $730-$755/st FOB. Most attributed the decline to a small number of buyers and a large number of sellers. Some sellers lamented the drop, saying other sellers should have waited. They cited the problems caused by Hurricane Gustav, both the lost production at CF, as well as delays in barge traffic. They noted that the fundamentals for the 2009 corn crop remain strong.
U.S. urea imports were off 22 percent in July, according to the U.S. Department of Commerce. They were 230,031 st, down from 299,994 st.
Eastern Cornbelt: The granular urea market was pegged at $800-$830/st FOB to the dealer, with the low out of spot river locations and the upper numbers out of inland shipping points.
Western Cornbelt: Urea was reported in the $800-$820/st FOB range to the dealer. There was one report of spot pricing as low as $775-$780/st FOB on the river system, but no sales to confirm the lower levels.
Northern Plains: Granular urea was pegged at $800-$805/st FOB the Twin Cities to the dealer. North Dakota sources pegged the market at $825-$845/st DEL, with the upper end of that range also reflecting dealer reference pricing FOB Carrington. One supplier was referencing forward contract urea for October through December at $843/st FOB Pine Bend, Minn., and $855/st DEL in North Dakota and northern Minnesota.
Great Lakes: Granular urea was quoted in a broad range at $800-$860/st FOB to the dealer, with the low in southern Wisconsin and the upper level reflecting referenced pricing out of Michigan shipping points. Those numbers were down considerably from last report, and some said they expect the upper end of the range to drop more to reflect current replacement costs.
Northeast: Granular urea was quoted at $830-$850/st FOB in the region, with little new business to test the market.
India: All eyes are on the STC tender scheduled to close Sept. 23. The tender, which has no indication of how many tons will be purchased or what pricing ideas the company has, is slated to be a fixed price deal instead of the graduated formula tender format the company tried earlier.
The problem for many traders is STC’s willingness to scrap a tender if the price is not to their liking. One trader noted that MMTC and IPL will at least negotiate on prices to get a better deal. STC, they say, just walks away.
Sources speculate that just about all the major players will participate in the tender. Some traders are holding positions that come due soon, and a home has to be found. For others it is a chance to gain a strong position in India that could lead to future business.
Some Asian sources are reporting that winners in the IPL and MMTC tenders are facing problems getting letters of credit issued in a timely manner. One observer noted that funds normally allocated for urea purchases by the government are being diverted to more public projects to garner support in the upcoming election. Another source said the delay is a tactic to get the producers and traders to lower their prices to reflect the current market, and not the market at the time the deal was struck.
Not surprisingly, traders and producers are pushing back.
The best bet now is that once the STC tender is done – whatever its outcome – Indian buying for the rest of the calendar year will stop.
Black Sea: Traders say the price has come off nearly $50/mt to almost sub-$700/mt FOB. Producers say the price remains steady closer to $800/mt FOB. The problem, say industry observers, is that no business has been conducted to prove either contention.
The last public bit of business was the MMTC tender that showed prices at $760-$780/mt FOB. Now traders are saying producers are willing to talk when bid at $720/mt FOB.
To make matters more complicated, Asian sources report IPL and MMTC are looking to renegotiate the prices of material sold in the two recent tenders. The Indians are looking at the softening urea market and hoping to force suppliers to ship material that reflects those prices.
Traders and producers are balking at this idea.
Despite the efforts of the producers to hold the line on pricing, sources say the buyers are in the driver’s seat. And the main buyer is India.
Asian traders said they could not think of any place that would accept material at $750/mt FOB. One trader added that finding a home for sub-$700/mt material is equally difficult.
Until a new deal is publicly struck, sources say the price they have in their models is $750-$780/mt FOB. But they also say the likelihood of sub-$700/mt FOB in the next week or so is a real possibility.
Middle East: Buyers and traders are saying talks with producers include a price range of $770-$805/mt FOB. Producers, however, are holding to their ideas as set out in the last Indian tender. With no new spot business on hand, sources say the market has no choice but to continue to look at what was done in the IPL tender – $820/mt FOB – and what was offered in the MMTC tender – $850/mt FOB – as the current range.
Reports that Egypt sold material below $770/mt FOB do not seem to faze the Arab Gulf producers.
Sources say the AG companies have plenty of orders on hand and are regulating production so no surpluses are building.
Reportedly, the producers are sitting back and waiting for the STC/India tender to run its course. If STC awards to traders with Black Sea backing, the Middle East guys will be the only source available for a future IPL tender.
Sources say buyers are pressuring the producers to lower their prices, but so far no one is making a firm bid for a named destination at a lower price. Observers note all the talk about pricing is just talk.
Sabic sent two vessels to Pakistan in the past 10 days as part of the government-to-government deal between Saudi Arabia and Pakistan. The deal is an aid package that includes a total of 300,000 mt of urea.
Indonesia: PIM closed a selling tender for 40,000 mt Friday, Sept. 19.
The bids showed a drop of $100/mt in pricing ideas across the board. Bids were as follows.
PIM Tender |
||
| Company | Quantity mt | US$/mt FOB |
| Unitrada | 5,000 | 695.00 |
| Parnaraya | 10,000 | 688.00 |
| Indevco | 5,000 | 687.00 |
| BBSC | 5,000 | 685.00 |
| Diva | 5,000 | 650.00 |
After a brief negotiation, Parnaraya was awarded 10,000 mt at US$700/mt FOB. The remaining tons will be offered in a follow-up tender October 17, 2008.
The winning bid represents a $90/mt drop in prices from the last tender.
The industry watched this tender closely because of its timing. It came due just a week before an STC/India buying tender, and just as reports of price drops in the Black Sea.
Sources expect to see the PIM tons offered into the STC/India tender at prices that could help push the Yuzhnyy prices down even further.
Pakistan: Jamuna Fertilizer Factory (JFF) resumed production on Sept. 11 after a suspension of four days due to leakage in the boiler tube in its ammonia plant.
NITROGEN SOLUTIONS
U.S. Gulf: The barge market was reported to be very quiet. While most were putting the most recent business around $485-$490/st FOB ($15.16-$15.31/unit), others argued that if a buyer were to bid much lower they might wind up with a barge. The argument is that upriver tanks are full, and on the East Coast, buyers sense falling international prices and no need to pay up right now. Just wait and see.
U.S. UAN imports were up 14 percent in July, to 188,527 st from the year-ago 165,861 st.
Eastern Cornbelt: UAN remained at $16.00-$16.79/unit FOB regional terminals for cash tons, with reference prices for forward contract UAN-32 for October through February posted as high as $596.80.40-$606.40/st ($18.65-$18.95/unit) FOB in the region.
Western Cornbelt: The UAN market was reported at $16.00-$16.50/unit FOB terminals to the dealer, with reference pricing reported at the $17.20/unit FOB level from some suppliers. One Missouri source quoted the dealer price for UAN-32 in his location at $525/st ($16.41/unit) FOB.
Northern Plains: UAN continued to be quoted by Minnesota sources at $17.40/unit FOB, give or take, with some claiming product is short in the Northern Plains market. North Dakota sources pegged the UAN-28 market at $510-$530/st ($18.21-$18.93/unit) DEL. On a forward contract basis for October through February, one supplier was referencing UAN-32 at $608/st ($19.00/unit) FOB Pine Bend.
Great Lakes: UAN pricing remained in a broad range in the region. The low was reported at $17.40/unit FOB in Wisconsin for spot tons, with the upper level for UAN-28 at $529-$539/st ($18.89-$19.25/unit) FOB in Michigan for reference pricing to the dealer.
Northeast: The UAN market was pegged at $15.60-$16.00/unit FOB Baltimore, Md., and Philadelphia, Pa., with delivered UAN-30 to points in southern Pennsylvania quoted at the $495/st ($16.50/unit) mark. Out of terminals in upstate New York, the UAN-32 market was reported at the $16.75/unit FOB mark to the dealer.
AMMONIUM NITRATE
U.S. Gulf: Price ideas continue to span a broad range. While some argue the market is headed toward $500/st, some sellers are posting $555-$575/st FOB for near-term business. Some of the discrepancy is reportedly product age and quality.
Imports were off 46 percent in July, to 36,581 st from the year-ago 67,542 st.
Western Cornbelt: Ammonium nitrate was quoted at $560-$600/st FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $495-$505/st FOB, with the upper end reflecting the list price.
Western Cornbelt: Granular ammonium sulfate remained at $475-$495/st FOB, with the low in Missouri on a spot basis. Dealer reference pricing was as high as $505/st FOB in the region.
Northern Plains: The granular ammonium sulfate market was pegged at $495-$505/st FOB, with delivered sulfate referenced at $525/st in North Dakota, $530/st in South Dakota, and $535/st in northern Minnesota.
Great Lakes: Granular ammonium sulfate was reported at $480-$505/st FOB in the region, depending on supplier. A Wisconsin source reported mid-grade sulfate referenced at the $485/st FOB level last week.
Northeast: Granular ammonium sulfate remained at $475-$500/st FOB in the region.
U.S. Imports: Imports were off 29 percent in July, to 16,979 st from the year-ago 24,042 st.
PHOSPHATES
Central Florida: Despite its precarious position dangling down from the continental U.S., Florida again defied the odds and dodged another severe hurricane last week in the form of Ike, which hit the Houston area and damaged fertilizer facilities, oil refineries, homes, and businesses in that area. For the first time in about a month, no new hurricanes or tropical storms were threatening the state or the Gulf of Mexico region. The peak of the hurricane season was on Sept. 10.
Agrifos’ processing plant at Pasadena, which is located on the shipping channel, was damaged by the storm but was not as serious as anticipated. The basic operating units were essentially undamaged (see page 1). The flood damage was primarily to pumps, motors, and motor controls, which will take time to repair or replace but was not considered severe. One of the company’s two large warehouses suffered a collapse in the central section of the roof, but most of the product was undamaged. Labor and materials will be the biggest challenges to the company’s restoration plans, because many employees have lost their homes. The sulfuric acid plant will be the first part of the plant to return to service, which will likely happen in the next couple of weeks, rather than months.
New business has been nonexistent for weeks in Central Florida, although railcars were still being loaded with purchases made earlier this year. Due to extremely wet weather in the spring, crops were late getting planted and will be late coming out of the ground. The fall season, which should already be underway, will probably not get started until sometime during early to mid-October. Even then, it was unclear how much phosphate will be used, but most in the industry were predicting a lower application rate than during the previous year.
With no new prompt sales the price range has not changed, but will most likely head downward once the season gets underway.
The Central Florida DAP price range last week remained at $1,070-$1,080/st FOB. 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’ DAP was $1,050/st FOB for trucks and $1,045/st FOB for rail shipments.
U.S. Gulf: New prompt sales of phosphates on the river market last week may have been no more plentiful than life on the moon, but speculation on the impact of Hurricane Ike was running rampant. Apparently obituaries on Agrifos were premature, because the company was not as dead as rumored. That could make life interesting for some in the business.
A sale of MAP railcars last week was made after the buyer moved to replace product a customer had ordered earlier. The phosphate was to have come from Agrifos and at a significantly higher price than the current market, so the buyer in the transaction replaced the material with lower cost product from another source and his customer was locked into the earlier price. However, Agrifos may be able to make good on its original deal, despite damage to its facility at Pasadena. While one of its two large warehouses was damaged, most of the phosphate it had stored was not, and could be shipped within the allowable time frame if the material that survived matched the specs for the order. Transportation and loading could be the problem, rather than availability. The company expected to make a “progressing restart” during October.
Mosaic’s Faustina plant was still down late last week, and company officials declined to state when it would return to operation. An outside source said sulfuric acid production had resumed at Uncle Sam and power had been restored to the processing plant. Considering the slow pace of new business, Mosaic could decide to keep the facility offline until the market improves.
Winter wheat farmers in Oklahoma were beginning to prepare their fields in some areas, but no serious movement of phosphates out of warehouses was underway last week. Other sections of that area had not begun ground preparation, and the start of the fall season was likely to be delayed until the end of the month or later, rather than starting last week, which would be the norm.
The price of corn was around $5.50/bushel last week, but heavy rain from the remnants of Hurricane Ike could affect crop yields, which could push prices higher. Higher prices would encourage the use of more fertilizers.
The NOLA DAP barge price was $950/st FOB last 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: Phosphate pricing continued to slip out of regional warehouses, though there was little actual spot business to test the market. Sources pegged the DAP market at $1,040-$1,080/st FOB, with MAP at $1,080-$1,120/st FOB. One supplier was referencing forward contract DAP tons for October through December at $1,058/st FOB Peoria, Ill., and $1,063/st FOB Cincinnati.
10-34-0 was quoted at $1,150-$1,200/st FOB for very limited tons, with the low reported in Ohio on a spot basis for recent confirmed business.
Western Cornbelt: The DAP market was pegged at $1,040-$1,075/st FOB regional warehouses to the dealer, with MAP at $1,075-$1,115/st FOB. Both ranges reflected another drop from the previous week, with some sources claiming spot prices on the river system were at even lower numbers as the week advanced. Sources reported no new business to test the ranges, however.
Several sources quoted the 10-34-0 market firmly at the $1,200/st FOB level for very limited spot tons, with some speculating that $1,300/st FOB might be just around the corner.
Northern Plains: Phosphate pricing covered a wide range in the region. Minnesota sources said DAP could be had on the spot market for as low as $1,050/st FOB last week, with MAP at the $1,100/st FOB mark to the dealer. A North Dakota source said MAP prices ranged all the way from $1,100-$1,200/st DEL, with some regional warehouses in the western part of the state listed at $1,160/st FOB to the dealer.
North Dakota sources also quoted delivered 10-34-0 last week at $1,275-$1,300/st, provided you can find any tons for sale. Effective Oct. 1, Agrium’s postings for both super phosphoric acid and merchant grade acid will firm to $2,650/st rail-DEL in Minnesota and the Dakotas. Postings will firm again to $2,700/st rail-DEL in November.
Great Lakes: The DAP market was quoted in a broad range at $1,050-$1,113/st FOB regional warehouses, with the low reported by Wisconsin sources out of river locations and the upper level in Michigan. MAP was $1,100-$1,155/st FOB in the region. No current prices were reported for 10-34-0, but one Wisconsin source speculated that any available prompt tons could be as high as $1,300/st FOB by October.
Northeast: The DAP market was quoted at $1,080-$1,100/st FOB in the region, with the upper end reported out of Pennsylvania warehouse locations. MAP was $1,105-$1,125/st FOB to the dealer. 10-34-0 remained at a firm $1,100/st FOB in the region.
U.S. Export: PhosChem was still staying out of the export market last week due to sluggish prices, but its – and the world’s – biggest customer, India, made no buys anyway. However, India was likely to make additional buys before the end of the year to meet its needs.
Venezuela made a purchase of 30,000 mt of MAP from China last week, but the price was not available.
TFI issued its export phosphate report for August, which to no one’s surprise showed India as the largest customer with purchases of 421,050 mt that month. Brazil was a distant second with 34,800 mt, followed by Canada at 25,491 mt. For the month, a total of 516,203 mt was exported, a decrease of 1 percent. India has purchased 2,062,947 mt of the total exports of 3,265,709 mt from January through August. The second biggest buyer was Japan at 195,335 mt, and Australia was the third biggest customer with 168,236 mt for the calendar year-to-date.
Canada was the top importer of U.S. MAP in August at 71,849 mt, Australia was next at 29,097 mt, and Brazil third with 28,936 mt. Total MAP exports for August amounted to 178,604 mt, an increase of 22.3 percent. Canada also leads the list for the calendar year-to-date, taking 364,097 mt, followed by Australia at 244,600 mt and Brazil with 241,943 mt. The total for the first eight months of the year was 1,201,326 mt, a decrease of 14.4 percent in comparison to the same period in 2007.
With no new sales by U.S. producers, the export DAP price range remained unchanged at $1,160-$1,215/mt FOB
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 reported at $900-$935/st FOB regional warehouses, with the upper end quoted by Missouri sources for white granular tons. One Iowa source pegged the granular potash market firmly at the $925/st FOB level last week, but said reports of new Russian tons valued at $950/st FOB the U.S. Gulf would put the warehouse market at more than $1,000/st FOB before long.
Northern Plains: Potash was quoted at $900-$925/st FOB level for brokered or reseller tons out of Minnesota warehouse locations. A Dakota source pegged the delivered potash market in a broad range at $850-$950/st, depending on supplier, and also noted that early indications are that growers may cut back on fall plowdown rates due to a later-than-normal harvest schedule, a potentially narrower window for fall fieldwork, and some price resistance at the retail level.
Potash postings FOB Saskatchewan mines for the Sept. 1 through Nov. 30 shipping period include $767/st FOB for standard, $780/st FOB for soluble, $772/st FOB for granular, and $780/st FOB for white granular.
Great Lakes: The potash market was quoted at $910-$960/st FOB regional warehouses to the dealer, with the low in Wisconsin and the upper level in Michigan. One Michigan source said that number would probably jump to $980-$990/st FOB in the near term based on replacement costs for brokered tons.
Northeast: Sources quoted the potash market at $846-$900/st FOB, depending on grade and location, with delivered potash reported in a very broad range at $850-$950/st.
Intrepid Potash raised their Intrepid Trio price $50/st to all Eastern U.S shipping points. Effective September 8, the Florida Granular Trio price is $460/st DEL, and standard Trio is $433/st DEL.
U.S.Imports: Imports were up 5 percent in July, to 721,804 st from the year-ago 689,911 st. The July 2008 average value was $380.64/st versus the year-ago $136/74/st, according to DOC, an increase of 191 percent.
Bangladesh: The government has reportedly decided to import 100,000 mt of MOP from India to meet its needs.
SULFUR
Tampa: Refineries in the Galveston and Houston area suffered damage from Hurricane Ike, but most were expected to return to service much sooner than initially anticipated. The biggest problem most were facing was a loss of power, and that should be restored in less than two weeks from the time the storm struck. Without a doubt sulfur supplies to Tampa will be affected, but probably not significantly, as had been feared. First, refineries will be back in operation soon, and second, phosphate processors in Central Florida had stored sulfur prior to the storm. In addition, three sulfur vessels that had been harbored in Texas during Ike were previously loaded and sailed for Tampa last week.
Martin’s sulfur handling terminal at Beaumont had lost power but was running generators and was expected to begin receiving trucks by this weekend. In addition, the priller and ship loader there suffered no serious damage from Ike, other than having power and water issues, and was expected to return to service by the weekend.
An unconfirmed report said a unit train of sulfur from Lost Cabin was at Galveston when Ike struck, and the product was lost. Mosaic was Lost Cabin’s customer. Another sulfur supplier said its railcars were moved out of the city prior to the arrival of the storm and doubted the report on the loss of the Lost Cabin sulfur cars.
Once refineries in the area restart production, it will be another two-to-five days before sulfur production resumes.
Refineries near Agrifos that supply the phosphate producer with sulfur may have a problem and must wait until issues there are resolved and production resumes. However, sulfuric acid production will be the first thing to restart at Agrifos.
U.S. Imports: Imports were up 104 percent in July, to 244,750 st from the year-ago 120,206 st. The average value of the July 2008 imports as assessed by DOC was $417.70/st versus the year-ago $35.35/st, a 2,306 percent increase.
The Week in Fertilizer Stocks
| Producer | Symbol | Price | Week Ago | Year Ago |
| Agrium | AGU | 75.76 | 74.18 | 50.59 |
| CF Industries | CF | 110.34 | 116.25 | 68.66 |
| Intrepid Potash | IPI | 31.97 | 34.65 | N/A |
| Mosaic | MOS | 84.73 | 85.60 | 46.36 |
| PotashCorp | POT | 163.50 | 150.94 | 92.37 |
| Terra Industries | TRA | 39.75 | 39.24 | 27.33 |
| Terra Nitrogen | TNH | 118.43 | 123.57 | 104.28 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 45.41 | 41.20 | 48.04 |
| Deere & Co. | DE | 62.02 | 61.58 | 71.98 |
| Scotts | SMG | 26.41 | 28.85 | 44.19 |