AMMONIA

U.S. Gulf/Tampa: Expectations are that the import price on ammonia will soon fall. Discussions were occurring last week, with many players saying the perception is that product is long in the Gulf. Buyers point to lower price ideas in Yuzhnyy, as well as eroding freight rates. As a result, buyers are currently eyeing a significant drop from April’s $610/mt DEL at Tampa.

In the meantime, while reports have circulated of $540-$550/st FOB at NOLA, such has yet to be confirmed. In the interim, upriver sellers are holding to their guns on pricing.

Eastern Cornbelt: While Illinois sources continued to report spot ammonia pricing in the $680/st FOB range on the low end, some suppliers were referencing a firm $695/st FOB by week’s end and talking about a market realignment within the next few weeks when movement begins in earnest. An Illinois source said he continues to expect brisk ammonia movement in the coming weeks, despite the late start to preplant activity.

Forward contract ammonia tons for May through June were being offered at $740-$750/st FOB regional terminals, with a $25/st increase on tap for July through October.

Western Cornbelt: There was little new spot business to test the anhydrous ammonia market, but sources continued to report some fall prepay business. Missouri sources continued to quote delivered cash market ammonia in the $660-$670/st range from southern production points, but dealer reference levels out of Missouri terminals were said to be as high as $730/st FOB for fall prepay. One supplier was offering forward contract ammonia for May through June at $730/st FOB in Nebraska and $735/st FOB Iowa terminals, with a $25/st increase for the July through October period. Agrium’s anhydrous ammonia postings in the Leal, Velva, Grand Forks, and Beulah sales area in North Dakota moved on April 17 to $780/st FOB and $800/st DEL.

California: Calamco lowered its anhydrous ammonia postings, effective April 11, to $700/st truck-DEL and $715/st rail-DEL in the California market, down $50/st from the previous list prices. The company’s aqua ammonia postings in California dropped on that date to $185/st FOB from the previous $200/st.

No anhydrous ammonia pricing adjustments were reported from Agrium last week. The company’s last reference levels, effective March 24, included $750/st truck-DEL in central California and $755/st truck-DEL in northern California.

Pacific Northwest: Sources continued to quote the low end of the anhydrous ammonia market at $725/st DEL in the region last week, but higher postings were in effect as the week advanced.

Agrium raised its anhydrous ammonia postings on April 17 to $825/st rail-DEL in Oregon, Washington, and northern Idaho; $845/st truck-DEL in Oregon and Washington east of the Cascades, and in northern Idaho; and $850/st truck-DEL in Montana and northern Wyoming. Agrium’s aqua ammonia postings moved on April 17 to $211/st FOB Central Ferry and Finley, Wash., for truck shipments.

One regional supplier was offering forward contract ammonia for May through June at $730/st FOB Ritzville, Wash., with forward contract aqua ammonia referenced at $500/st Ritzville for May through October.

Western Canada: Anhydrous ammonia pricing remained at $853-$889/mt DEL in the region, but a sizable jump to $942-$987/mt DEL was slated for April 17.

Black Sea: Rumors are circulating that the KIP will drop to $440/mt FOB soon. Asian observers note that the Yuzhnyy market has been on a softening trend that has only been slowed by producers claiming they cannot sell anything below the current KIP of $480/mt FOB.

Sources report that handshake deals might have been concluded below $480/mt FOB, but nothing has shipped out at that level. What is clear, said one trader, is that the market is below $500/mt FOB.

With the lowering of the KIP, sources expect to see prices fall quickly.

Reportedly, many of the major trading houses are spending more time talking to others in the market, arguing for stability in pricing instead of further declines. One observer noted that this is most likely because they have already snatched up lower priced material and now want the market to settle a few dollars above what they paid.

One concern from some in the industry is the potential for a massive jump in urea prices. With that jump, said one source, producers may want to shift some ammonia production to urea for a better netback.

If that shift takes place, the ammonia market could quickly tighten up and pocket shortages could appear.

For now, the industry is watching the urea market closely for possible blowback on the ammonia market.

Sources put the Black Sea market at $480-$500/mt FOB, with the real possibility that it could fall to $440/mt FOB once the KIP is officially lowered.

Middle East: Indian demand is back up as phosphate producers gear up for production. Several cargoes for India were loaded last week. Producers claim an unprecedented tightness in supplies.

A while back Sabic concluded a deal with OCP at $510/mt FOB. That level is now seen as the high end of the market. The low end is pegged at $500/mt FOB.

With the announcement of record high export duties on Chinese urea, sources say Middle East urea producers will be in greater demand. Some may shift production away from ammonia for export to urea production. If that shift takes place, said one trader, the already tight Middle East market will become restrictive.

There are few substitute suppliers for ammonia if the Middle East producers decide to limit production in favor of urea.

Asia: Exports of ammonia from China will be taxed at 100 percent of its FOB value. Sources in the area say this announcement is more dramatic than any actual action, because China does not export ammonia.

One Asian source noted that ammonia was probably added in the list from the finance ministry to discourage traders trying to take advantage of the drastically higher prices exported urea now faces.

Mitsubishi reportedly sold a cargo to Australia’s Orica for just under $500/mt FOB from its Indonesian plant. The deal was done under a long-term contract between the two companies.

Mitsui and Mitsubishi are both concerned about the reduced ammonia output of Kaltim. The state-owned plant often serves as a top-off supplier for the two Japanese companies’ Indonesian facilities.

The reduction in output is put off to natural gas supply issues and increased urea production.

UREA

U.S. Gulf: Much higher urea prices continued to be the rule again at NOLA this past week. Most put granular trades within the $445-$455/st FOB range, with some reports that a trade as high as $460/st FOB occurred. On the other hand, some were still suggesting sub-$440/st FOB may have been done, but others said this was simply wishful thinking.

New prill trades were hard to find, but sources said prills were trying to keep pace with granular.

Eastern Cornbelt: The news from China was driving some bullish attitudes toward nitrogen, and had reportedly “lit a fire under urea,” according to one source. Dealers talked of a $40-$60/st increase in spot pricing from the previous week, putting dealer reference levels near or over the $500/st FOB mark. Agrium raised its granular urea postings on April 14 to $485/st FOB Marseilles, Ill., and Mt. Vernon, Ind., $490/st FOB Cincinnati/Finney, Ohio, and $500/st FOB E. Liverpool, Ohio, and Saginaw, Mich.

Western Cornbelt: The granular urea market was up significantly from the prior week. Sources tagged the dealer market in a broad range at $460-$500/st FOB last week, with the higher numbers more prevalent as the week advanced. Reference prices from several regional suppliers were in the $490-$495/st FOB range by Thursday.

Agrium raised its granular urea postings on April 14 to $495/st FOB St. Louis, Mo., $500/st FOB Hoag, Neb., and $520/st FOB Marion, S.D. In the Northern Plains region, Agrium’s urea postings firmed on April 17 to $550/st FOB Shakopee, Minn., and North Dakota terminals at Alton, Carrington, Colfax, Marion, and Scranton. On a rail-DEL basis, Agrium’s April 17 urea postings included $555/st in Minnesota, Wisconsin, and the Dakotas.

On a forward contract basis, urea pricing for the May through October period was referenced from one supplier at $520/st FOB Inola, Okla., $535/st FOB Pine Bend, Minn., and $570/st DEL in North Dakota and northern Minnesota.

Southeast: Agrium raised its granular urea postings on April 14 to $460/st FOB Bainbridge, Ga.

California: The granular urea market in California was in the process of firming last week in the wake of higher barge pricing at the U.S. Gulf. While one supplier remained at $510/st FOB for single truckloads last week, Simplot planned to repost on April 18 at $525/st FOB French Camp, $530/st FOB Hanford, and $545/st FOB El Centro. Agrium’s granular urea postings firmed on April 17 to $530/st FOB West Sacramento, Calif., $550/st truck-DEL in central California, and $555/st truck-DEL in northern California. Bagged urea prills were reported at the $650/st level FOB San Diego.

Pacific Northwest: Granular urea pricing was up from last report. Sources tagged the market at $550-$575/st DEL in the region, based on new reference levels. Simplot moved its reference prices to the $550/st DEL level in the region as of April 15. Agrium hiked its granular urea postings on April 17 to $550-$565/st DEL in Montana and Wyoming, depending on location; $575/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson; $580/st DEL in Washington, Oregon, Idaho, and northern Nevada; $590/st DEL in northern and central Utah; and $595/st DEL in southern Utah.

Forward contract urea for May through October was being offered last week at $575-$580/st DEL in Montana, $590/st DEL in Washington, Oregon, and Idaho, and $590-$610/st DEL in Utah.

Western Canada: Granular urea was quoted at $575-$600/mt DEL to the dealer, with a move to $625-$650/mt DEL scheduled for April 17.

China: The rumors ended Thursday afternoon in Beijing. Urea export duties will be set at 135 percent of the dockside price effective April 20. The new tax will remain in effect until the end of September, when the traditional application season ends.

Rumors have been running rampant for more than a week that the government would increase duties to stem the flow of exported urea.

During the first two months of the year, China sent 1.2 million mt offshore. This represents a 250 percent increase over the same period of last year. Exports for the first quarter are estimated to exceed 2 million mt.

Had the new tax regime not been imposed, analysts estimate exports could have hit 6.5 million mt. Last year’s exports are pegged at 5.25 million mt.

At the same time exports were running at record levels, reports came forward that some urea production was cut back because of limited inputs. Asian sources say spot shortages of coal in the country were affecting urea production.

The shortage of coal came as the central government moved to close unsafe and dangerous mines throughout the country.

The duty on exported urea has seen a steady increase since the beginning of the year.

The export fee jumped from 15 percent to 30 percent Jan. 1. The increase at that time was expected and taken into account by purchasers.

The government had long maintained the purpose of the 30 percent export duty was to discourage exports so that the domestic market could be fully satisfied.

Unfortunately for the central planners, the international urea market kept moving up. The 30 percent duty was quickly absorbed and buying continued.

Once again, hoping to stop the export of urea vital to the domestic market, the government raised the duty to 35 percent.

And once again, the international market easily – if not grudgingly – digested the increase.

Now the new increase is expected to put a firm brake on exports.

Urea that sold for $435/mt FOB under the 35 percent duty regime will go for about $783/mt FOB under the new plan.

Chinese urea, which was once the cheapest high-quality urea in the world, has shifted to becoming the most expensive.

Buyers who have contracts to lift tons were frantically working Thursday and Friday to arrange for cargoes to get to bonded warehouses and to nominate vessels.

The government is allowing buyers to avoid the new duty if the urea being shipped has been processed through a bonded warehouse for export and if a vessel to pick up the urea has been named by April 20. One source added that just starting the paperwork April 20 is not sufficient. Everything must be ready to go by the end of business Sunday.

Vessels can arrive later but, again, the ship must have been booked and a loading schedule secured before April 20.

One Asian trader estimates 100-150,000 mt are all that sit in the warehouses ready to go. A Beijing-based consultancy told its customers late last week that the number was closer to 1 million mt.

In the past, shifting paperwork and less than scrupulous port operators allowed shipments to pass through at a lower tariff. At that time buyers and sellers only had to show that a deal was concluded before the date the increase took effect to avoid the higher charges. Sources report a number of contracts were backdated.

When the higher duties took effect earlier this year, the new duty was imposed on tons shipped after the effective date. Little consideration was given as to when the contract was signed.

The increase in duty will cause grief for major urea buyers, especially India.

Sources report that several cargoes of urea slated for loading this month for India under contracts issued by MMTC from its tender earlier this year will be affected by the increase.

One trader noted that a number of houses would take a pounding on the change in tax policy. He said that while some may be considering walking away from the contract or declaring a force majeure, anyone wanting to do business with India in the future would need to come through with the contracted tons.

One result of the increased duty could be the elimination of smaller urea producers.

An industry analyst estimates that the larger enterprises will survive, while smaller ones are either bought out or closed.

The larger facilities enjoy advantages of government support, scale of production and raw material purchases, and more efficient use of technology. The smaller plants, many of which only have local support at best, are often older and less efficient.

Black Sea: Even on the basis of rumors of an export duty increase in China, the price of urea from Yuzhnyy jumped. Then it really hopped once China pulled itself out of the international market. By the middle of last week, $450/mt was done. After the announcement $500/mt FOB was concluded, and no ceiling is in sight.

In the past couple of years, Yuzhnyy has ignored the Indian market because of price and has focused on Latin America. Now they will have their choice of buyers in the next couple of months. Besides India, Brazil and Mexico still have to purchase large quantities for the 2008 season.

Adding to the grief of buyers, sources report the Black Sea producers are already running at the best levels they can. Sources say no extra tons can be squeezed out of the existing facilities.

At press time late last week the highest price was $500/mt FOB, but weekend activity would most likely move the price even higher. So, sources say the price from last week was $480-500/mt FOB, with anticipation that the mid-$500s/mt FOB will be easily hit this week.

Middle East: Perhaps the biggest benefactor of the increased Chinese export duty – besides Chinese farmers – will be the Middle East suppliers. That is assuming they have the tons to take advantage of the situation.

Sources report that India will need at least 3 million mt this year, and the most convenient source is the Middle East. The ease of shipping and the large number of plants in the area make the Arab Gulf the most likely winner in any competition for Indian business.

Unfortunately for the Indians, the producers claim they are tight on material.

To back up their assertion, one producer representative pointed out that in the STC tender, the Middle East producers did not offer large quantities for contracts that extended into next year.

Sabic and Fertil only offered 50,000 mt, while PIC offered 25,000 mt with an option on another 25,000 mt. Only Qafco offered 100,000 mt, to be spread out over the year.

The paltry offering, said one trader, indicates how tight the Middle East market already is. With China out of the running, demand will outstrip supply.

By press time last week, $480/mt FOB for prills was already done.

As with the Black Sea, observers say the Chinese action is almost an invitation for the area producers to print money.

With reports of higher prices circulating but not confirmed by press time, sources say the market in the area is now pegged at $480-$520/mt FOB.

And no one knows where it will end.

India: Sources report that buyers are now trying to figure out what to do. India still needs at least 3 million mt of urea to satisfy demand.

The farmers of India are a potent and volatile political force that the government does not want turned against it in an election year.

The country’s budget is under so much pressure because of the high number of subsidies already offered to fertilizer producers and suppliers that any additional expenditure could create massive economic displacement in the economy.

But it all gets back to the fact that the farmers need the urea and the government is up for re-election.

Last year the government paid subsidies of Rs450 billion (US$11 billion). Before the hike in Chinese urea prices, the government had planned to increase the subsidy to Rs600 billion and then an additional Rs400 billion, for a total of Rs1 trillion (US$25.1 billion).

The urea imported cost was pegged by the government at US$550/mt, but with the actual cost to the farmer of only US$121/mt. The difference is paid by government subsidy.

Middle East urea is already being quoted in the low $500s/mt FOB, with Yuzhnyy in the same area. Delivered prices to India will be substantially higher than the rates currently under discussion by the Indian government.

Industry observers note that in the end, India will have to buy – and they will have to pay the higher rates.

Sources report many of the companies that offered tons in the STC tender are now revoking their validity offers.

Pakistan: The government is hoping Saudi Arabia will increase the amount of urea shipped under the government-to-government deal that ensures Pakistan’s supply of fertilizer.

Even with the favorable rates negotiated last year between the two governments, the Pakistan government is being forced to increase its subsidies to farmers to keep urea prices low.

The decision to increase the budget for subsidies came as the global market moved up. With the increased tightness expected now that China has withdrawn from the marketplace, area media reports say the government will have to revisit the issue of subsidies.

The government is expected to import 350,000 mt of urea for the Kharif season to meet local consumption. TCP is expected to issue a tender soon. Earlier, Pakistan utilized a $133 million Saudi financial facility for Rabi season. TCP imported about 50,000 mt from Sabic at US$450/mt.

In the meantime, the local media report that smuggling of urea to Afghanistan was on the rise from different border points. “We are receiving a number of complaints from certain quarters, intimating that huge quantity of urea is being smuggled to Afghanistan every day,” according to the Ministry of Food, Agriculture and Livestock.

Bangladesh: Industry observers say the one country that will be hurt the most by China’s decision to increase its export duty by 100 percent will be Bangladesh. This impoverished country needs to buy its urea and phosphates in bags. For the past couple of years Bangladesh has come to depend on inexpensive Chinese material for its needs.

NITROGEN SOLUTIONS

U.S. Gulf: There was a lot of trading in the UAN forward market, with major players selling for June and beyond. Much of this was reported to have occurred in the $300-$305/st FOB range until some producers reportedly maxed out their order books.

The prompt market was harder to gauge, as for weeks many have been reporting that inventories are simply too backed up in the system – so much so that no new barge sales could be accommodated. Regardless, some explained last week that folks with $300/st FOB barges were profit taking, with new trades within the $310-$320/st FOB range. Prompt was reportedly being offered at $330/st FOB by late in the week.

Eastern Cornbelt: UAN prices were reportedly “on the move” as well – or at least on the brink, following the announcements from China. Sources reported some brisk business for summer fill, and some were talking about the possibility of a shift from preplant ammonia to UAN because of the weather delays. Dealers said spot quotes for UAN-32 generally remained in a broad range at $357-$375/st ($11.15-$11.72/unit) FOB in the region, depending on location. Reference levels for forward contract tons for May through October fell in the $371-$381/st ($11.60-$11.91/unit) FOB level at midweek.

Agrium’s April 14 UAN postings included $11.10/unit FOB Paducah, Ky., $11.15/unit FOB Mt. Vernon, Ind., $11.25/unit FOB Marseilles and Meredosia, Ill., $11.30/unit FOB Cincinnati/Finney, Ohio, $11.35/unit FOB Newton, Ill., and $11.45/unit FOB Danville, Ill.

Western Cornbelt: UAN-32 remained at $360-$370/st ($11.25-$11.56/unit) FOB in the region for cash market tons only, with sources reporting lots of interest in summer fill tons.

Southeast: Agrium’s UAN postings moved on that date to $10.55/unit FOB Chesapeake, Va., $10.60/unit FOB Bainbridge and Wilmington, N.C., and $10.70/unit FOB Baltimore, Md.

Agrium’s UAN S 28 percent solution postings moved on April 14 to $276.59/st FOB Chesapeake, and $278.15/st FOB Bainbridge and Wilmington. UAN S 25 percent postings moved to $318.72/st FOB Bainbridge, and UAN S 24 percent postings moved on that date to $294.65/st FOB Chesapeake.

California: UAN-32 was pegged at $400-$410/st ($12.50-$12.81/unit) FOB in the state, with reports that summer and fall fill programs for solution have garnered lots of business.

Pacific Northwest: UAN-32 remained at $405-$410/st ($12.66-$12.81/unit) DEL, but several sources said higher postings were expected.

Western Canada: UAN-28 was steady at $362-$378/mt ($12.93-$13.50/unit) DEL in the region. Sources said the market would increase to $393-$408/st ($14.04-$14.57/unit) DEL after April 17.

AMMONIUM NITRATE

U.S. Gulf: With all the frenzy for urea, and then UAN, AN was the nitrogen wallflower last week. No new trades were reported to truly test the market. Some suggested that it was now just too late for AN barges to see much benefit from the uptick, that it was inland locations that were seeing a $10/st increase. Others, however, were more bullish, saying any new buyers would likely see quotes in the $375-$385/st FOB range.

Western Cornbelt: Ammonium nitrate remained at $385-$395/st FOB in the region.

California: No market was reported for ammonium nitrate in the region. The CAN-17 market remained at $310-$320/st FOB, while CAN-27 pricing was pegged at $385/st FOB from one regional supplier.

Pacific Northwest: Ammonium nitrate was reported at $447-$462/st rail-DEL, with the low end in Montana. CAN-17 remained at $294-$304/st DEL in the region.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was up from last report at $310-$320/st FOB in the region, with the upper end reflecting new dealer reference levels.

Western Cornbelt: Granular ammonium sulfate pricing was up from last report at $305-$320/st FOB in the region, with the low in Missouri and the upper end in Iowa. One source also reported an upswing in 12-0-0-6 ammonium thiosulfate pricing, with reference prices now up some $52/st to $300/st FOB.

American Plant Food Corp. announced new ammonium sulfate postings in Texas. Effective April 16, granular ammonium sulfate moved to $280/st FOB Freeport, $290/st FOB Galena Park, $300/st FOB Fort Worth, and $310/st FOB Littlefield and Mermentau, La. APF’s coarse ammonium sulfate postings moved on that date to $260/st FOB Freeport, $270/st FOB Galena Park, $280/st FOB Fort Worth, and $290/st FOB Littlefield. Standard grade ammonium sulfate postings moved on April 16 to $250/st FOB Freeport and $280/st FOB Littlefield, while N-Pac Compacted postings firmed to $295/st FOB Galena Park.

California: Ammonium sulfate remained firm at $310-$330/st FOB, with the low quoted for standard grade and the upper end in desert areas of the state.

Pacific Northwest: Sources tagged the granular ammonium sulfate market at $325-$332/st DEL in the region last week.

Western Canada: Granular ammonium sulfate was tagged at $465-$470/mt DEL, up roughly $40/mt from last report.

PHOSPHATES

Central Florida: Orders for summer fill were on the increase last week. The reason for the price hikes was the news from China that an export tariff of 135 percent on phosphates began on April 20 and will continue through Sept. 30. That will have a major impact on the world market, and in this country as well. Phosphate companies have been using the export price as support for hiking domestic prices.

Prompt sales of railcars were made by at least one trading company last week at prices ranging from $980/st FOB to $990/st FOB, which were considerably below the asking prices of producers.

For the period of June 1 through Aug. 31, last week Mosaic was asking for a price of $1,050/st FOB for DAP but was to increase its price by an unknown amount by the end of last week. In addition, Mosaic began charging a premium for MAP over DAP of $15/st FOB, while CF was seeking an additional $40/st FOB. The reason was the high price of sulfur and the greater sulfur requirement for MAP. Last week, Mosaic and PotashCorp agreed to pay $200/lt more for sulfur in the second quarter, which put the new range at $450.50-$453.50/lt.

Meanwhile, the weather has improved in much of the country and farmers were finally able to get into their fields to begin work. The Corn Belt was expected to be the biggest customer for phosphates this season.

The Central Florida DAP price range last week moved up from $950-$1,000/st FOB to $980-$1,000/st FOB the previous week. PotashCorp’s Central Florida reference price moved again last week from $1,000/st FOB the previous week to $1,050/st FOB for DAP. MAP supplies continued to be scarce. In Texas, Agrifos’s truck price was $950/st FOB for trucks and $940-$950/st FOB for rail shipments.

U.S. Gulf: Last week, the bad news was that the Arkansas River was still too dangerous for barge travel. The good news was the Arkansas River was still too dangerous for barge travel. It all depended which end of the market you were on – buyer or seller. For sellers, it meant barges originally destined for Inola and Catoosa were either being staged at Rosedale or were diverted, which was good news for buyers, because it kept prices from rising even faster than they might have. The normal flow for the Arkansas is about 40 gallons a second, but when the rate reaches 100 gallons a second, the current is too fast for barge traffic. Last week, the rate of flow was about 220 gallons a second, so nothing moved. It will be at least another two weeks before the situation is reassessed, which means barges will not be moving up river. A source said that by the time the river opens, the season will be virtually over there.

In Oklahoma, it will make little difference. Wheat farmers were turning their backs on phosphates due to the high price. A trader said dealers have only been selling the product they have in their warehouses, at prices of around $850/st FOB, and do not plan to reorder. “Dealers have not been doing a decent job of selling wheat farmers on the need for DAP,” the trader said. The price of wheat remained high last week, but yields from Oklahoma will be lower than possible because of the lack of application. In Kansas, which has been drier than drenched Oklahoma, phosphates were moving and farmers were in the fields.

The primary market for phosphates has been and will continue to be the Corn Belt, and activity in Iowa, Nebraska, and Ohio was picking up last week. That trend should continue until around Memorial Day. As of last week, terminal prices from traders continued to trail NOLA barge prices.

Meanwhile, the price of phosphates on the river system continued to trail both Central Florida and the export market, and prices on the export market were poised to take off again. China made it official last week when it announced an export tariff of 135 percent on phosphates, which will take effect on April 20. That will push producers to hike not only the export price but domestic prices as well – only the amount was uncertain.

NOLA DAP barge sales last week were made at $940/st FOB early but moved to $1,060/st FOB by the end of the week, while a MAP barge sold at week’s end at $1,070/st FOB. The backup of barge traffic at Rosedale may continue to suppress prices this week. The NOLA DAP barge price range last week was $980-$1,060/st FOB, based on actual sales. Mosaic’s asking price for forward sales from June through August was $1,070/st FOB for DAP and $1,085/st FOB for MAP, but the company hiked both prices on Friday (April 18) by $20/st FOB. Mosaic abandoned equity pricing of DAP/MAP, because MAP requires more sulfur than DAP and the price of sulfur for the second quarter increased $200/lt last week. CF was seeking $1,020/st FOB for DAP and $1,060/st FOB for MAP for prompt deliveries.

Eastern Cornbelt: Phosphate prices were “too darn high,” as one source put it, but were still trailing current replacement costs. Sources tagged the dealer market for DAP at $960-$980/st FOB, with MAP quoted at roughly $975-$1,000/st FOB regional warehouses. Forward contract DAP for May through June was referenced last week at $1,074/st FOB Peoria, Ill., and $1,077/st FOB Cincinnati.

Western Cornbelt: DAP and MAP were quoted at $940-$1,000/st FOB warehouses to the dealer, with the low FOB St. Louis, Mo., and the upper end reflecting new dealer reference levels from some regional supplies. One Iowa source pegged the range last week at $980-$1,000/st FOB, and a Missouri source reported dealer pricing at $960/st FOB for DAP and $980/st FOB for MAP.

Forward contract DAP for the May through June period was referenced at midweek at $1,074/st FOB St. Louis and $1,077/st FOB Inola, with a $25/st increase slated for July through October.

10-34-0 was virtually nonexistent in the region. Several sources said they’d be priced in the $850-$875/st FOB range if they had any tons for sale.

California: Sources quoted the MAP market at $1,055-$1,060/st FOB or DEL in the state, with DAP at $1,070-$1,075/st FOB or DEL. 10-34-0 pricing was up from last report at $521-$533/st FOB, and 16-20-0 was quoted at $570-$575/st FOB in California.

Effective April 1, phosphoric acid pricing firmed to $11.70/unit DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA). Simplot’s MGA postings FOB local warehouses in California also firmed on April 1 to $11.90/unit. A dime/unit increase is scheduled for both products on May 1.

Pacific Northwest: DAP was quoted at $1,060-$1,075/st FOB or DEL in the region, with MAP at $1,045-$1,060/st FOB or DEL. Agrium’s March 27 reference prices for MAP included $1,045/st DEL in Montana and Wyoming; $1,050/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $1,050/st FOB and $1,055/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County.

10-34-0 was reported in a broad range at $517-$555/st FOB in the region, depending on location and supplier. 16-20-0 pricing was up from last report at $570-$585/st DEL.

Super phosphoric acid and merchant grade acid were quoted at a firm $11.70/unit DEL in the region last week, with suppliers planning a dime/unit increase May 1.

Western Canada: The MAP market in Western Canada as of April 10 was quoted at $1,265-$1,300/mt DEL, up considerably from last report.

Export: Beginning April 20 and continuing through Sept. 30, China will impose an export tariff of 135 percent on phosphates in order to keep more of the product in their country. Exporters there were busy trying to get the stuff out of the nation before the tax takes effect, but by this week they will stop. While the impact of the withdrawal of Chinese phosphates for the market will be worldwide, India will be hit the hardest, because its heaviest buying season is the summer. Prices on the world market were likely to rise another $100-$150/mt FOB, but could be more.

Last week, India did make several purchases amounting to hundreds of thousands of tons, which included several from Russia. The buys were made at various prices between $1,230/mt CFR and $1,300/mt CFR.

PhosChem, which was taking a wait-and-see attitude to evaluate impact of the Chinese export tariffs on the market, made no sales last week. However, another U.S. trading company was negotiating the sale of 15,000 mt to South America and had already turned down an offer of $1,245/mt FOB, holding out instead for $1,260/mt FOB.

The United Nations has warned of severe food shortages in developing countries, where riots have broken out in many areas. The U.N. has asked for $500 million in food relief from developed countries to ease the problem. Worldwide food shortages will continue and likely get worse. In the U.S., food prices have taken a sharp increase as a result of higher prices for both fertilizers and fuel. The domestic situation will also continue to worsen in coming months.

TFI released its March export report, which showed a substantial increase for DAP shipments – to 335,573 mt, up 23.1 percent for the month compared to the same period last year. India, no surprise, was the biggest customer with 115,059 mt, Australia was next at 72,758, and Colombia third with 36,756 mt. For the calendar-year-to-date, India was still the biggest buyer at 296,182 mt, followed by Australia at 157,212 mt, and Mexico at 102,686 mt. For the calendar-year-to-date, exports of DAP were up 4.1 percent, to 941,418 mt.

TFI said MAP exports were down 4 percent for March. Australia was the most prolific buyer, taking 109,133 mt, Canada was second at 39,414 mt, and Brazil followed at 33,071. Total MAP exports in March amounted to 209,213 mt. For the calendar-year-to-date, exports of MAP fell 27.8 percent to 405,099 mt, compared to the previous year. Australia led the way, buying 165,933 mt; Canada was next at 105,998 mt, with Brazil third with 41,063 mt.

As a result of a lack of export sales last week, the export DAP sales range did not change and remained flat at $1,230/mt FOB. However, sources expect prices to continue moving upward.

Pakistani DAP importers showed apprehensions as China moves to slap an export due of 135 percent on DAP exports. They expressed hope it would be withdrawn in middle of this year, when China’s main growing season is over. Market sources are confident that China DAP production has increased against local demand and that the export duty will be lifted soon.

According to market sources, during the last three months (January-March 2008) Pakistan booked imports of about 240,000 mt of DAP at prices ranging between US$800-$1,060 mt, mostly from China. Most of the shipments have arrived, and one or two cargoes are expected in April/May.

The breakdown showed that Engro Chemical imported 82,000 mt from China and Lithuania, respectively. Chawla imported 11,000 mt of DAP from China, Pak American 30,000 mt from China, Fauji 34,000 mt from Tunisia, Jaffar Brothers & Pak Arab 27,000 mt from Tunisia, Pak Arab 30,000 mt from Russia, and Khalid Javed Brothers 25,000 mt from China.

India: Egypt has assured India that it will receive special treatment on the export of phosphate rock. The assurance was made by the visiting Egyptian Trade and Industry Minister of Egypt, Rachid Mohamed Rachid. He told Indian Minister for Chemicals and Fertilizers and Steel Shri Ram Vilas Paswan that Eqypt will also consider India’s request for giving Free Zone status to the location for setting up a joint venture between IFFCO and Egypt. IFFCO holds 76 per cent equity in the $ 325 million project. Shri Paswan also requested the visiting Rachid to export low grade rock to India, which could be used for the manufacture of SSP. The two also discussed steel and pharmaceuticals, with Shri Paswan urging Rachid to increase imports of Indian pharmaceuticals.

POTASH

Eastern Cornbelt: Potash pricing continued to climb for brokered or reseller tons. Sources tagged the spot market at $575-$615/st FOB in the region last week. Agrium’s postings for 60 percent red premium potash postings for the July 1 forward shipping period included $627/st FOB regional warehouses, and $622/st rail-DEL in Illinois, Indiana, and Ohio

Western Cornbelt: Potash pricing on the secondary market was quoted at $585-$615/st FOB regional warehouses to the dealer, reflecting another increase from last report. Agrium’s 60 percent red premium potash postings for the July 1 forward shipping period include $626/st FOB Dubuque, Iowa, and Kansas City, Mo., and $621/st rail-DEL in Iowa, Missouri, and Nebraska.

Southeast: Agrium’s postings for 60 percent coarse potash firmed on April 14 to $560/st FOB Bainbridge, Wilmington, and Tifton, Ga. Granular K-Mag postings from the company firmed on that date to $283/st FOB Bainbridge and Tifton, and $293/st FOB Wilmington, while premium K-Mag postings moved to $290/st FOB Bainbridge.

California: Sources continued to report no firm spot values for potash last week, due to the strict allocation of producer tons and minimal sales taking place on the secondary market.

Granular sulfate of potash (SOP) was pegged at $715/st FOB, with water soluble SOP pricing from one supplier firming on April 16 from $755/st to $805/st FOB in California. Those levels were up significantly from last report.

Great Salt Lake Minerals Corp. (GSL), a subsidiary of Compass Minerals, announced in late March that it would increase the price of its SOP specialty fertilizer products by an average of $72/st, effective with all shipments April 14 or as allowed by existing contracts. “This price increase will help support our announced plans for a multi-phased expansion of our SOP production capacity at the Great Salt Lake in Utah, allowing us to better meet the long-term needs of the growers who rely upon our specialty fertilizer products,” said Ronald Bryan, GSL vice president and general manager.

With this latest increase, GSL also introduced a simplified SOP price list, which is posted on the company website at www.gslminerals.com. The list price for standard, nongranulated SOP is $658/st at the company’s Ogden, Utah, solar evaporation plant, while granular SOP is $670/st. These new prices took effect April 14 to all new customers and spot transactions, and will be progressively implemented throughout 2008 as current contracts expire.

Potassium nitrate pricing was also up significantly from last report. Sources tagged the California market at $1,010/st FOB for bulk and $1,080/st FOB for bags, up $150-$160/st from March pricing levels.

Pacific Northwest: The low end of the potash market remained at $485/st FOB to the dealer on a spot basis last week, but several sources said they don’t expect that number to be around for long. Some described that business for dealer-to-dealer trades, with no current price quotes available from producers. “It’s all on the secondary market, nothing is from producers,” said one source, noting as well some rumors that domestic potash shipments could face volume reductions of up to a third due to export demands.

Sources quoted the regional potash market at $554/st FOB on the upper end, with delivered potash reported in the $539-$585/st range.

Agrium’s 60 percent red premium potash postings for the July 1 forward shipping period include $636/st rail-DEL and $641/st FOB in southern Idaho, Utah, and Oregon’s Malheur County; $641/st rail-DEL and $646/st FOB in Washington, the Idaho panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $646/st rail-DEL and $651/st FOB in Oregon’s Willamette Valley.

Intrepid Potash also announced additional price increases for its muriate of potash grades. Effective May 1, the company’s postings FOB Moab, Utah, will firm $29/st to $532/st FOB for 60 percent granular and $526/st FOB for 60 percent standard. Postings at Wendover, Utah, will firm $33/st on May 1 to $550/st for 60 percent granular potash and $544/st for 60 percent standard grade potash.

Western Canada: No current prices were reported for potash in the region due to very limited availability on the spot market.

SULFUR

Tampa: Last week both PotashCorp and Mosaic settled all of their second-quarter Tampa contract prices at $200/lt above the previous quarter, which put the new range at $450.50-$453.50/lt. Although that price may seem high – and it is – it was still well below the world price, which was about $200/mt higher. Sources said it was likely the sulfur industry will seek another large bump in prices for the third quarter.

How long the high price of sulfur will continue was debatable. Some said another 18 to 24 months, while others thought a year or less. Either way, when it falls, it will fall far and fast once new supply sources come online, according to many sources.

Regardless of the price, sulfur remained critically short. Some industrial customers told their providers that they will have to shut down operations due to a lack of sulfur. The sulfur shortage has also taken a toll on the phosphate industry. TFI reported phosphate production was down about 100,000 st in March. Both Mosaic and CF have instituted price premiums on MAP – Mosaic was plus $15/st FOB and CF $40/st FOB, because it requires more sulfur to produce.

As a result of the price of a barrel of oil being close to $115, refineries were reducing production; many were operating at about 80 percent or less of capacity, rather than the expected 90 percent. That will impact the price of fuel at the pump – and the sulfur supply situation.

Sulfur transportation availability was good last week, but railroads were planning on hiking the fuel surcharge by about 10 to 15 percent beginning May 1. In most cases, that will not affect buyers, but it will sellers’ bottom lines.

West Coast: Now that prices for the second-quarter sulfur contracts have been settled for Tampa, refineries on the West Coast, i.e. California, will begin their own set of talks. Odds were that the price will be more than the $200/lt bump for supplies to Tampa.

Vancouver: Brazil was said to be in the final stages of negotiations for Canadian sulfur supplies, and the price was expected to wind up at $650/mt FOB.

Pakistan: State-owned Oil & Gas Development Co. on April 16 issued a tender to sell 5,000 mt of sulfur at a minimum base price of US$640.52/mt in 15 lots. Bids are to be received through April 24.

MARKET NOTES

Pakistan: The country’s only DAP producer, Fauji Fertilizer Bin-Qasim Ltd. (FFBL), says it has successfully expanded its plant capacity to meet growing demand. CFO S. Amir Ahsan told the press that around $33 million had been spent on an expansion of the DAP plant to increase its production by 50 percent. He said that in the past the annual production of the DAP plant was 445,000 mt, which now has been increased up to 670,000 mt. “The project has been completed within a record period of 23 months,” he said.

Poland: Polish Oil and Gas Co., which is the only supplier of gas to fertilizer plants, managed to raise gas prices by 16.1 percent. The company wanted 34 percent more for gas, but the government cut the request in half. The new price will be frozen through the end of the year. The gas company complained it was losing $2 million per month. In the meantime, the fertilizer industry is expected to have to raise its prices 20-30 percent.

The Police plant reportedly lost nearly $5 million resulting from a recent two day power outage. Strong winds and snow destroyed power installations in Szczecin near the German border.

Polish Prime Minister Donald Tusk is expected to approve the construction of a natural gas terminal at Swinoujscie near the German border. His decision is linked with offers of Qatar firms that want to deliver gas to Poland.

India: Tata Chemicals plans to shore up its Babrala urea plant capacity to 1.25 million mt from the existing level of one million mt by October of this year. “There will be a mixture of both. There will be acquisitions and there will be greenfield expansions as well, depending on how the fertilizer scenario shapes up and improvement in gas availability,” Tata Chemicals Managing Director Homi Khusrokhan told reporters at a recent conference. Khusrokhan also said that the company was open to acquisitions as well as greenfield expansions. If gas becomes easily available, there was also a possibility of doubling capacity at its Babrala plant, he said. He said that the company has registered a 41 percent year-over-year growth in the past five years. Questioned on the funding of the company’s future projects, Khusrokhan said that it would be done through internal resources. “Our balance-sheet is very strong,” he said.

India: There is a wide gap between the highest and lowest costs of production of urea in the country, according to data placed before the Parliament. “The cost of production of urea is different across various units in the country,” Minister of State for Chemicals and Fertilizers B K Handique told the Lower House in a written reply. He said the highest cost of urea production stood at Rs22,899 per ton reported by Madras Fertilizers Ltd, while the lowest was Rs5,054 a ton by National Fertilizers Ltd’s Vijaipur-1 unit.

“The main reason for the difference in the cost of production of these units is due to the wide difference in the price of feedstock being used by these units for production of urea,” he said. The cost of production also varies as some of the units are old, with negligible depreciation costs, whereas others are comparatively newer units with significant depreciation cost, he added. The minister also informed the House that the cost of production of DAP is lower, at Rs17,767 per ton, in the units that are using imported phosphoric acid than those where imported rock phosphate is used. The cost of production of DAP by manufacturing units that are using imported rock phosphate is Rs19,786 a ton. In a separate reply, the minister said the fertilizer subsidy is estimated to be Rs606.49bn in 2008-09.

India: Kandla port, which has emerged as the country’s number one cargo-handling port with a traffic throughput of 64.89 million mt in 2007-08, hopes to cross the 100 mt mark by 2012, according to port sources. This, as the sources point out, should be possible because of the additional infrastructure being created in the port.