AMMONIA

U.S. Gulf/Tampa: Sellers have been arguing for higher prices at Tampa in recent weeks, citing stronger Black Sea prices and freight rates. However, buyers – bristling after a $23/lt increase in sulfur – were not in the mood for much of a run-up in ammonia prices. As a result, new business for September was achieved at a marginal increase of only $2/mt DEL, to $297/mt DEL. This was reported to have been concluded by Yara and Mosaic for September.

Across the Gulf, CF was also holding the line, reportedly buying a new cargo or two at the last done number of $305/mt DEL. There were reports that new NOLA barge business occurred at $265/st FOB.

Eastern Cornbelt: Illinois sources continued to report fill shipments of ammonia moving into place for the fall season. The prompt market was quoted at $465/st FOB spot Illinois terminals on the low end, with the upper end of the range pegged at the $475/st FOB range. Fall prepay offers were reportedly off the table. One supplier was offering forward contract ammonia for September through December at $490-$500/st FOB in the region.

Western Cornbelt: Ammonia pricing was quoted at $460-$470/st FOB regional terminals, with the upper end confirmed by an Iowa source as the common dealer price last week. New sales were few, however, as most have already filled for the fall run. Forward contract ammonia was available from one supplier at $475/st FOB in Nebraska, $485/st FOB in Iowa, and $490/st FOB in Missouri for September through December.

Northern Plains: The regional ammonia market was referenced at $465-$470/st FOB terminals to dealers before discounts, with delivered ammonia pegged at $485-$490/st in North Dakota. Forward contract tons for September through December were listed from one supplier at the $485/st mark FOB terminals in Minnesota and North Dakota.

Great Lakes: The anhydrous ammonia market was quoted at $475-$485/st FOB, with sources in both states talking of a trend to the $500/st mark this fall. One supplier was referencing forward contract ammonia for September through December at $500/st FOB Huntington, Ind.

Black Sea: Asian sources noted the Yuzhnyy market continues to climb. Solid business was recorded at $255/mt FOB early last week, and sources report rumors of $265/mt FOB being concluded by week’s end. Apparently anticipated increased demand from the U.S. and Europe, along with continued maintenance shutdowns, has moved the price. Sources now peg the market at $260-$265/mt FOB.

Middle East: Just about every producer is rejecting the Sabic-Indian deal of $265/mt CFR that was concluded earlier this month. Explanations for the dramatically low price range from clever marketing to naiveté. Whatever the reason, the low price – netback of $235/mt FOB – is causing grief for Sabic and other producers in the region.

One observer noted that in the past producers in the area have sold a cargo or two at below-market rates to clear out the tanks in time for a larger deal with another buyer. When that deal comes along, sources say, the producer could honestly say he was sold out or had limited quantities and therefore has to charge more for the product.

It seems that a number of customers who buy on a formula basis are expecting lower prices from the Middle East because of the deal. Sabic and the other producers are hard-pressed to explain – in contractual terms – why lower prices are out of the question.

Discussions with buyers, traders, and producers make it clear that the price from the Middle East remains stable in the upper $240s/mt FOB for most business.

The Arab Gulf price has remained steady for some time, as contracted tons throughout the world provide a steady flow of material out.

Indonesia: The two joint ventures in Indonesia have scheduled their turnarounds. KPA will shut down Oct. 23 for three weeks. KPI will go down Nov. 26 for a similar period.

China: Reportedly, the BASF plant in Shanghai is running at only 30 percent capacity. It will take a turnaround sometime in the middle of September for about three weeks. Sources say when the plant is back up and running, all the kinks will be worked out and the facility will operate at near 100 percent capacity. The improvement in its operation is expected to increase the demand for ammonia into Shanghai. Sources in Asia expect to see prices in the area move up accordingly.

Japan: Many of the local customers are in reduced output mode as the vacation season winds down. Domestic inventories are high, even as some local producers trim back on output. Those cutting back are the ones primarily depending on naphtha for ammonia production. With the price of naphtha rising, at least one producer has turned to importing ammonia to cover its contracts.

UREA

U.S. Gulf: Granular barge prices continued to soar again last week, moving up throughout the week. By late Thursday, sources were calling new trades within the $332-$335/st FOB range. Trading earlier in the week was called at $323-$330/st FOB, though some argued that tons traded as low as $319-$322/st FOB on Friday Aug. 17. With the higher prices, much interest was being directed toward incoming Sabic cargoes, with one due in around Sept. 9 and another two weeks later.

With the quick jump in granular, prills were also reported to be on the move, though very little was reported to be available. The latest sale was reported at $315/st FOB.

Eastern Cornbelt: Granular urea remained at $350-$360/st FOB regional terminals to the dealer, with minimal new business to test the market.

Western Cornbelt: Granular urea remained at $350-$360/st FOB to dealers, with the common dealer level in Iowa reported at the $355/st FOB mark last week. Sources said Koch raised its granular urea postings in Oklahoma by roughly $20/st last week, to the $365/st mark FOB Arkansas River terminals. As a result, one source quoted new delivered pricing into Nebraska at $370-$380/st. One supplier was also offering forward contract urea for September through December at the $370/st mark FOB Inola, Okla.

Northern Plains: Granular urea was steady at $350-$355/st FOB the Twin Cities, with delivered urea quoted at $365-$375/st in North Dakota. Sources quoted reference pricing to the dealer at the $365/st level FOB Carrington, N.D., as well. One supplier was referencing forward contract urea for September through November at $360/st FOB Pine Bend, Minn., and $385/st DEL in North Dakota and northern Minnesota.

Great Lakes: Granular urea continued to be quoted in a very broad range, although new sales were few to test the market. The low end was quoted by Wisconsin sources at $355/st FOB river terminals, while new reference pricing in Michigan was tagged as high as $400-$410/st FOB to the dealer from some suppliers.

Northeast: Granular urea remained at $365-$368/st FOB Baltimore, Md., or Philadelphia, Pa. The dealer market FOB E. Liverpool, Ohio, was tagged at the $367/st level, while rail-DEL urea into the New England area was quoted at the $375/st mark last week.

India: Just after last week’s issue of Green Markets was sent out, MMTC issued a urea tender that closed August 24.

The call came as prices in the Black Sea were on the rise. Once the tender was announced, Black Sea and Middle East prices jumped even more.

After the tender results came out Friday, sources said there would be some negotiating over the weekend, with awards issued quickly.

A quick scan of the prices makes it clear, said one observer, that even with intense negotiations MMTC will have to pay more this round than it did last time.

The Indian buyer indicated before the tender that it was willing to settle for higher prices. Sources report in pre-tender talks that MMTC and SABIC were discussing higher rates. Prices differ depending on who is talking, but the clear indication was that $280-$285/mt FOB was on the table. Quantities ranged from 50-100,000 mt.

Another glance at the tender shows that if a trading house was able to grab tons in Yuzhnyy just as the price was heading up, it might be able to get an award. With freight to India from the Black Sea pegged at $50/mt for panamax vessels, it appears as if the Transammonia offer could work.

Tender offers follow:

MMTC UREA TENDER

Besides the Middle East suppliers, China could end up a big winner in this tender – as it has in the past. With the Yuzhnyy price running up and logistics costs limiting Black Sea material to panamax vessels, Chinese tons could be shipped to India’s west coast in handimax vessels with relative ease.

The Toepfer tons are expected to come mostly from Bangladesh, where the trading house has a contract to sell KAFCO material.

The MMTC tender documents do not specify a quantity, but sources say the Indian buyer may be looking to take 1 million mt in this tender.

Black Sea: The price movement began with traders covering shorts, and then came the MMTC tender announcement. While traders moved tons back and forth to each other, the price moved up $30/mt in just a week.

Sources now peg the market at $280-285/mt FOB, with producers holding out for $290/mt FOB. One trader noted that a small cargo – about 5,000 mt – was sold for $285/mt FOB late last week.

Players who hoped to move Black Sea material to India will most likely be disappointed, said one Asian trader. Sources report Middle East suppliers are being aggressive in their offers, and more Chinese material in convenient vessel sizes is available. With freight rates to India pegged at $50/mt sources see few opportunities to offer Yuzhnyy material in the tender, although traders who moved on the Yuzhnyy market just as it was taking off might be able to squeeze a profit out if awarded a deal with MMTC.

Other buyers are digging in their heels against dramatically higher prices, but one source said they may end up having to pay up.

Syria, Nigeria, and Turkey all have major tenders or purchasing calls forthcoming. At the same time, Latin America continues to need tons. Lastly, Europe is expected to start looking for cargoes by early October. Yuzhnyy suppliers and their Baltic counterparts should be able to secure most of the business.

If the predictions of Yuzhnyy material being left out of the MMTC tender come true, sources expect to see the price out of the Black Sea fall significantly. One observer noted that the Black Sea price usually falls after each Indian tender anyway. Even with the potential business lined up, sources say the Black Sea producers will be hard-pressed to convince buyers that the current prices are what should be paid later this year.

Middle East: Reportedly, producers began offering tons to MMTC/India before the tender was issued. One source noted that at least one producer offered 100,000 mt at $280/mt FOB for prills or granular. Another argued the deal was for 50,000 mt at $285/mt FOB.

Sources don’t think MMTC took the deal, but negotiations over the weekend could end up having the price end up in the mid-upper $280s/mt FOB.

The offers made in the tender show a strong desire to push the price up quickly. Oddly enough, said one observer, the Middle East suppliers were not in lockstep in pricing.

In the past, the prices offered from the Middle East have all been the same. This time the Arab Gulf producers are all over the board, with prices ranging from $289/mt FOB to $295/mt FOB. While some of this difference might be passed off as producers trying to get a granular premium back in place, sources are not so sure.

The offers in the tender reflect a dramatic push. Recent smaller sales have shown netbacks closer to $275/mt FOB. Other efforts to push the price into the $280s/mt FOB have failed.

The big competitor to Middle East suppliers are Chinese producers. An Asian trader noted that Chinese producers are currently asking $270/mt FOB for prills and $280/mt FOB for granular. He added that unless the Chinese producers get desperate to sell and unless the Middle East producers get greedy, there would probably be enough orders to make both supply centers happy.

China: Prilled prices for September are pegged in the $270s/mt FOB and the $260s/mt FOB for October-November deals. The difference in pricing is based solely on the anticipated drop in the export duty from 30 percent to 15 percent Oct. 1.

Some cargoes are still available at lower prices, but only those previously booked but not lifted.

Sources say some of the Chinese tons that were offered in previous BCIC/Bangladesh tenders are still available for shipment once BCIC issues the necessary paperwork.

One source reported that at least one trader who was looking for September material to offer in the Indian tender was rebuffed by more than one producer. October and November look much better for supplies.

Indonesia: Gresik and Pusri are closing selling tenders this week. The Gresik tender for 20,000 mt could be sold in one lot to an international trader. If the price is right, said one trader, chances are the material will be part of a larger complement of tons offered in the MMTC/India tender.

The 40,000 mt offered by Pusri will most likely be broken up into smaller lots for local shipment. The plant faces a shallow draft at its port and thus limits how many tons can be exported at one time. Sources say the company is offering such a large number of tons in one shot because it did not accept the prices in its last tender.

The most likely end users for the Pusri tons will be found in neighboring countries.

The last done business was at $243/mt FOB for prill and $259/mt FOB for granular. Producers are hoping for at least $260/mt FOB for the prilled tons.

NITROGEN SOLUTIONS

U.S. Gulf: Most players last week saw no change to the NOLA barge market, saying price ideas are firm, especially in light of higher urea prices. They say that price ideas for East Coast imports are now moving up toward $290/mt DEL after having weakened since some European tenders that found no takers. However, there was at least one report that there may have been some profit taking early in the week on some barges bought much earlier in the summer.

Eastern Cornbelt: The UAN-32 market remained at $295-$305/st ($9.22-$9.53/unit) FOB regional terminals. One northern Illinois source quoted the common dealer price at the $9.40/unit FOB mark for prompt shipments in late August.

Western Cornbelt: The UAN-32 market was generally quoted at $9.20-$9.40/unit FOB regional terminals to the dealer, and in tight supply.

Northern Plains: UAN was in short supply, with sources tagging the market at $9.40-$9.60/unit FOB regional terminals, where available. The upper end reflected pricing for fall prepay tons out of some Minnesota locations. North Dakota sources quoted delivered UAN-28 at $270-$275/st ($9.64-$9.82/unit).

Great Lakes: UAN was pegged at $9.40/unit FOB Wisconsin terminals on the low end for prompt shipments, with dealer pricing for UAN-28 in Michigan reportedly referenced in the $273-$277/st ($9.75-$9.89/unit) FOB range to the dealer. Wisconsin sources also talked of prepay solutions tons being offered on a spot basis at the $9.60/unit FOB mark, with orders required by Sept. 15 and payment by Oct. 15.

Northeast: The UAN-30 market was quoted at $248-$252/st ($8.27-$8.40/unit) FOB Baltimore. Dealer pricing FOB Seaford, Del., was reported in the $256-$260/st ($8.53-$8.67/unit) range, with the upper end reflecting reference pricing since the first of August. Reference prices for UAN-32 out of tanks in upstate New York were pegged at the $305/st ($9.53/unit) FOB level before discounts.

New vessel tons of UAN-32 were reportedly being indicated in the high-$280s/mt C&F, which sources said was up approximately $10/mt from pricing indications of the previous week.

AMMONIUM NITRATE

U.S. Gulf: Actual new barge business was hard to find, but with higher urea prices, sellers have higher figures in their eyes for the next round of business – say, $270-$280/st FOB.

Western Cornbelt: Ammonium nitrate remained at a nominal $315-$325/st FOB for the last sales.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was pegged at $220-$240/st FOB, with continued reports of very tight inventories.

Western Cornbelt: Granular ammonium sulfate was pegged at $210-$230/st FOB in the region.

Northern Plains: Granular ammonium sulfate was quoted at $205-$210/st FOB and $210-$215/st DEL in the region. Agrium’s ammonium sulfate postings will move up on Sept. 22 to $225/st rail-DEL in Minnesota, Wisconsin, the Dakotas, and Nebraska.

Great Lakes: Granular ammonium sulfate was pegged at $220/st FOB in Michigan, while mid-grade sulfate in Wisconsin had reportedly firmed to the $200/st FOB mark from $185/st at last report.

Northeast: Granular ammonium sulfate was up from last report. Sources tagged the dealer market at $220/st FOB Philadelphia and $225/st FOB E. Liverpool.

PHOSPHATE

Central Florida: Some prompt DAP railcar sales were made in Central Florida last week, but more was sold on a forward basis – in some cases into February. All of the sales, both prompt and future, were made at $385/st FOB, which was an indication of the strength and stability of the market.

Slow sales are typical at this time of year. Sources said they expect business to pick up in September, when farmers go to the fields for winter wheat or to prepare the ground for the spring season. Many dealers had already filled their bins, and were waiting for word from their customers – farmers – to let them know what they will need. Once started, the fall season should run from mid-September into mid November, and some refilling will be needed then.

Despite the summer slowdown in the domestic market, inventories will remain low – probably until the end of the year or longer – as a result of the strong export market. Prices were likely to remain stable, although some said prices appear to be a little soft due to the lack of demand.

Last week, the DAP price range was unchanged at $382-$385/st FOB. Mosaic’s asking price was $385/st FOB for DAP and $381/st FOB for MAP. CF was listing a price of $382/st FOB for prompt DAP and MAP, and $385/st FOB for forward sales; however, CF rarely makes sales to the dealer level. PotashCorp’s Central Florida reference price remained at $385/st FOB. In Texas, Agrifos was asking $410-$415/st FOB for truck sales and $410/st FOB for railcars, but was sold out through the end of September for rail-delivered phosphates.

U.S. Gulf: As of late last week, the Army Corps of Engineers had not yet begun dredging the Arkansas River north of Lock 17 because the large dredger being brought from Little Rock had still not arrived. Meanwhile, a narrow channel was opened, which allows barges to move single file to Inola and Catoosa. How the Corps will choose to dredge the river was still unknown late last week. If the Corps chooses to lower the river to make dredging easier and faster, that will shut down the single-lane channel currently operating. The option would be to not lower the river and dredge one side while leaving the small channel open.

Sales of NOLA DAP barges last week were at a standstill, and that will probably continue into early September, when the fall season gets into full swing. The season should run until the Mississippi River closes north of St. Louis sometime in mid October. Prices were expected to remain firm, but could soften if demand does not meet expectations.

In Oklahoma, the winter wheat season was getting ready to get started. Farmers were said to be planning to plant fence-to-fence in order to take advantage of the high price of wheat. The price went up drastically as a result of the devastation of about 50 percent of the crop due to heavy rains and flooding, and farmers were eager to recoup those losses.

Mosaic’s loading facility at Donaldsonville remained out of service last week, and will continue to be for a prolonged period. In the meantime, the company has been loading at its other dock there, so the impact, if any, has been minimal. Meanwhile, Mississippi Phosphate has still not returned to full production.

Due to a lack of prompt sales, the NOLA DAP barge price range remained unchanged at $401-$403/st FOB.

Eastern Cornbelt: Sources quoted the DAP market in a broad range at $428-$438/st FOB in the region last week, with the low out of spot river warehouses in Illinois and the upper end at inland shipping points in Ohio. MAP was pegged at $425-$434/st FOB, with the upper end again in Ohio to the dealer. One supplier was reportedly referencing forward contract DAP for September at $435/st FOB Peoria, Ill., and $438/st FOB Cincinnati, Ohio.

TSP was reportedly moving primarily to the industrial market for roughly $15-$20/st less than DAP in Ohio. 10-34-0 was pegged at $340-$350/st FOB, with few new sales to test the market.

Western Cornbelt: DAP and MAP were pegged at $425-$435/st FOB regional warehouses, with the low end reflecting the St. Louis, Mo., market. 10-34-0 was pegged at $345-$360/st FOB and in tight supply, with the upper end reflecting updated dealer postings from some suppliers in Iowa.

Agrium raised its phosphoric acid prices for Iowa, Missouri, Nebraska, Colorado, Kansas, Oklahoma, New Mexico, and Texas. Effective Aug. 17, postings moved to $685/st rail-DEL for merchant grade acid (MGA) and $695/st rail-DEL for super phosphoric acid (SPA). Postings for both products will increase by $5/st in September, followed by a $15/st increase in October, a $10/st increase in November, and another $10/st increase in December.

Northern Plains: DAP and MAP pricing were up from last report at $435-$438/st FOB warehouses in the region, with delivered MAP pegged at $445-$450/st in North Dakota and in very tight supply. One supplier was referencing forward contract tons FOB Pine Bend at $438/st for MAP and $441/st for DAP for September through early 2008.

10-34-0 was tagged at $345-$350/st FOB in Minnesota, with delivered product reported at the $375/st mark in North Dakota for the last business.

Agrium raised its phosphoric acid prices for Minnesota and the Dakotas. Effective Aug. 17, postings moved to $685/st rail-DEL for merchant grade (MGA) and $695/st rail-DEL for super phosphoric (SPA). Postings for both products will increase by $5/st in September, followed by a $15/st increase in October, a $10/st increase in November, and another $10/st increase in December.

Great Lakes: DAP was pegged at $435-$443/st FOB in the region, with the low quoted by southern Wisconsin sources out of river locations and the upper end by Michigan dealers FOB Webberville. Delivered DAP to points in central Wisconsin was quoted at the $446/st mark. MAP was tagged at $434-$439/st FOB, with the upper end again in Michigan to the dealer. No market was reported for TSP in the region.

10-34-0 remained in tight supply, with the regional market tagged at $345-$351/st FOB.

Northeast: DAP and MAP pricing were up as well. The regional markets were quoted at $440-$446/st FOB, with the upper end FOB E. Liverpool. Sources also quoted the dealer price for MAP at the $446/st mark FOB Philadelphia. 10-34-0 was pegged at $325/st FOB tank locations in upstate New York, with a $5/st increase slated for Sept. 1.

California: Effective Aug. 24, Agrium raised its MAP postings in California and Arizona to $460/st rail-DEL or FOB warehouse.

U.S. Export: PhosChem made no new export sales last week, but business was done by others on the international market. Brazil was said to have purchased DAP at $494/mt DEL, most likely from the Chinese. In addition, India bought another 125,000 mt at $495/mt DEL from China and Australia, and was in the market for another 70,000 mt. Pakistan was also in the market.

PhosChem has not offered bids on the recent Indian and Pakistani tenders because of a lack of inventory. However, the world market remained hungry and prices continued to be strong.

The export DAP price range last week was unchanged at $430-$433/mt FOB. Ocean freight rates will continue to affect FOB prices.

India: The Indian government indicated late last week it was considering a plan to include MAP and TSP in its subsidy program. The idea, the government release said, was to offer farmers a viable substitute for DAP. The government statement added that the move would not require additional funds because the costs will be shifted from DAP subsidies to the other phosphate products.

POTASH

Eastern Cornbelt: Potash was pegged at $254-$260/st FOB regional warehouses and in tight supply, with new orders reportedly reflecting new prices slated for September.

Western Cornbelt: Potash pricing was firm at $260-$265/st FOB the warehouse for new sales. Sources talked of product being pulled at slightly lower numbers, but most agreed that this material was purchased earlier.

Northern Plains: Potash remained at a nominal $202-$212/st FOB Saskatchewan mines, depending on grade, with granular potash quoted at the $207/st FOB mark or higher at the mine. Warehouse and/or delivered pricing was reported in the $254-$260/st FOB range in the region, depending on grade and location, with very tight inventories and strict allocations.

Great Lakes: Potash was also in very tight supply, and regional pricing had reported firmed to $254-$265/st FOB. Delivered potash was reported firmed at $260-$270/st in Wisconsin, depending on location, with the low for railed tons and the upper end for trucked product.

Northeast: Potash pricing had reportedly firmed to $257/st FOB E. Liverpool. That number was also quoted for delivered granular tons in Delaware, while postings for delivered soluble potash had reportedly firmed to as high as $306/st DEL to some locations in the region.

SULFUR

Tampa: As of late last week, all of Valero’s refineries were either back to normal production or were getting close. A week earlier, Port Arthur, St. Charles, Houston, Texas City, and Corpus Cristi were either on turnarounds or were having problems that affected sulfur production. As of late last week, all but Port Arthur and Texas City were back to normal, while the remaining two were running at about 75 percent of capacity – and those plants were expected to return to normal soon. However, the Motiva and Marathon refineries near New Orleans were at reduced production, according to a source. Sulfur was said to be extremely tight at New Orleans.

Domestic sulfur supplies continued to be tight last week, and there were no indications that will change anytime soon. The Sulfur Enterprise will go into dry dock for three weeks, beginning Sept. 9. The 25,000 lt vessel is owned by Gulf Sulfur, a 50-50 partnership between Savage and Mosaic.

While the industry breathed a sigh of relief that Hurricane Dean avoided the U.S. last week, there was some concern about the storm’s impact on Mexican oil production. Mexico supplies about 400,000 lt of sulfur to the Tampa market. In preparation for Dean, oil production there was shut down, and about a week’s worth of production will be lost. As of late last week, there were no new hurricanes or tropical storms on the horizon to threaten sulfur supplies.

Although it’s very early in the game, speculation last week was that sulfur prices would go up again for the fourth quarter, but only moderately. Prices on the world market remained high but firm. However, high ocean freights were said to be cutting into the high profit margins.

West Coast: Refiners were still struggling to deal with the vast difference between the offshore and domestic markets last week, but had not been resolved, according to a source. The domestic market serves agricultural, industrial and liquid sulfur, and prices were far below the world market, only about $18/t.

Vancouver: Shell Canada was said to be in the process of a reorganization of its sulfur division, which could grow to as large as 150 employees. Details will be announced at TFI World Conference at Boston in September.

MARKET NOTES

Pakistan: The headquarters of Engro Chemicals Pakistan Limited (ECPL) suffered heavy damage due to a fire Aug. 19. The offices were in a 16-story building of Pakistan National Shipping Corp. (PNSC), near Karachi Port.

India: In view of a huge demand supply gap (import of about 4.5 million mt of urea in 2006-07) and rising cost of fertilizers, the Government of India wants to revive five closed fertilizer units of FCI/HFC. The idea was to utilize the available infrastructure and install new ammonia and urea plants. RCF has been entrusted with the responsibility of reviving HFC’s Durgapur plant and FCI’s Talcher plant by erecting new ammonia and urea capacity. The Durgapur plant will be based on gas from the Kakinada-Haldia-Bardhaman pipeline of Reliance Industries Ltd. The Talcher plant will either be based on gas supply from this pipeline or from coal gasification. RCF has already carried out a study, and is also in negotiation with GAIL for the formation of a joint venture company for the supply of natural gas through coal gas.