AMMONIA

U.S. Gulf/Tampa: Prices were under pressure at Tampa last week, with reports that $315/mt may be the new number. However, several Tampa players were out of the office last week due to the IFA meeting in Turkey, making confirmation more difficult.

In the meantime, across the Gulf, the most recent barge numbers were put within the $292-$295/st FOB range.

Eastern Cornbelt: Sources reported brisk movement of ammonia and UAN for corn sidedressing in the region. Ammonia pricing continued to fall; the ammonia market on the eastern leg was quoted at $430-$435/st FOB in Illinois, with the upper end of the regional range at $445/st FOB Indiana terminals.

Western Cornbelt: A flurry of activity at mid-month helped growers make great strides on planting in the region, and sources said sidedress applications and post-emergence herbicide work were heating up last week. Sources continued to report softening ammonia prices. The dealer market was quoted at $410-$425/st FOB regional terminals last week, with the low in Nebraska. There were reports of still lower numbers out of Nebraska terminals, but sales at those levels were not confirmed. Forward contract tons for June were being offered from one supplier at $420/st FOB in Nebraska, and $425/st FOB Iowa terminals.

California: The ammonia market remained at $475/st truck-DEL in the state, with some sources talking of a pricing adjustment coming in late June. Ammonia movement remained strong on cotton and corn, and was just starting to taper off on rice.

Pacific Northwest: The ammonia price was down from last report. Sources tagged the market at $435-$440/st DEL in the region, with the warehouse price at $420/st FOB Ritzville/Tokio, Wash. One supplier was reportedly offering forward contract aqua ammonia for June at $109/st FOB those locations.

Western Canada: Anhydrous ammonia was steady at $809-$844/mt DEL in the region. With spring planting moving quickly in the region, fertilizer dealers said attentions were starting to turn to nitrogen topdress activity on forage crops.

UREA

U.S. Gulf: New NOLA granular prompt business was called $298-$310/st FOB last week, with many calling it in the low $300s/st FOB.

Eastern Cornbelt: Granular urea pricing was on the slide in the region. The market was pegged at $360-$380/st FOB regional terminals, with the low quoted by Illinois sources out of spot river locations. Several sources said they expected additional decreases in the near term. “No one wants to lose any business at this point,” said one.

Western Cornbelt: Granular urea pricing was slipping, and sources reported little product movement last week. Dealer reference levels were quoted in the $365-$380/st FOB range in the region, but sources quoted spot sales taking place as low as $335-$345/st FOB on the Mississippi River system last week. One supplier was referenced at $372/st FOB Muscatine, Iowa., last week, and another source said dealer reference pricing at his location would likely drop to $370/st FOB in late May.

The same was true of the urea market in Oklahoma, where spot sales were reported as low as $320/st FOB last week even as reference prices remained at the $340/st mark FOB Arkansas River terminals.

California: Granular urea pricing was down slightly from last report at $390-$410/st FOB in the state.

Pacific Northwest: Granular urea was down from last report, and supplies had reportedly loosened up in the region. The dealer market was quoted at $390-$400/st DEL in Montana, and $400-$410/st DEL in the rest of the region.
One supplier was offering forward contact urea for June as low as $370-$375/st DEL in Montana and $390/st DEL in Washington, Oregon, and Idaho.

Western Canada: Granular urea remained at $550-$575/mt DEL, and sources said inventories had loosened up. “Western Canada is in the thick of ag season, but we are not experiencing any delays in getting material,” said one source. Added another, “Market weakness is a little slow to trickle out to other regions, and we are finding that in some cases importers who already had commitments on product are trying their best to pass through their costs for June despite the downturn in the Gulf.”

India: Just as more than 1,000 delegates started heading to Istanbul for the 75th annual IFA conference, MMTC settled with eight companies for just under 800,000 mt to be delivered in June and July. Many in the industry expected MMTC to hold off making a decision so they could conclude the talks while at the IFA. Instead, the move late Friday, May 18, left IFA participants with nothing to talk about except to speculate on second semester buying needs.

The prices paid for the material did not blaze new territory. Middle East suppliers offered at $323/mt FOB, but settled at $316/mt FOB. For the producers, that just moved the floor up a few dollars rather than set a new high mark. Open sourced material was bought at $339.90/mt CFR. If those tons come from Yuzhnyy, the estimated netback is $280-$290/mt FOB. Again, nothing that moved the market price up. In fact, even the high end of the calculated business lowered the ceiling on the Yuzhnyy price.

Industry observers had expected MMTC to take all 1 million tons offered, but after negotiations the company only took a maximum of 770,000 mt. The MMTC orders follow:

The original offers all called for June and July deliveries.

One trader at the IFA conference said that if MMTC was able to wait another 15-20 days in calling its tender, it might have saved as much as $50/mt on Black Sea material.

The market had begun to shift downward just as the tender was called. An upward blip in the Yuzhnyy price was laid to a major trading house securing a strong position. They then presented the new rising numbers to MMTC as a reason to call their tender now rather than later.

Still, observers in Istanbul say if the price was right, MMTC would take several more cargoes. One trader said while at the conference the MMTC folks floated a number just a dollar or two lower than the current rate with the clear understanding that if the trader could meet the price he could sell more tons. The only problem is getting the tons at that lower level.

Sources expect to see IPL and MMTC back in the market some time during the third quarter. Some place the return close to mid-June, while others say mid-July.

Black Sea: After backing off freight of $40/mt and assuming the “open” sourced urea offered in panamaxes to India will come from Yuzhnyy, sources say the market is firmly at $300/mt FOB at the top. Others who offered smaller cargoes and have subsequent higher freight rates place the market at $290/mt FOB.

No matter how one looks at it, the idea of material in the $280s/mt FOB during the IFA conference was not one many would accept. No one was willing to state categorically, however, that the price might not slip to $285/mt FOB within the next month.

For the next couple of months, sources say, Yuzhnyy is sold out with the possible exception of 20-30,000 mt.

Middle East: Just how the prices have moved in the region depends on your starting point. Bearish players at the IFA conference pointed to the IPL purchases that were made at $301-$303/mt FOB. Stable pricing fans use the post-IPL tender purchases as their benchmark. The price then topped out at $315/mt FOB.

With MMTC settling at $316/mt FOB with three producers, everyone agrees that is the new low mark. Offers to sell at higher prices are being rebuffed, and bids at lower prices are going unanswered.

Sources say with contracted tons to multiple buyers around the globe, the IPL business, and now the MMTC business, the Arab Gulf producers are quite comfortable.

Sources at the IFA conference confirmed that PIC/Kuwait would be down for several weeks because of problems with its feedstock line. The company is reducing output rather than shutting the whole operation down, said one source.

Best guesses as to when PIC will be back at full strength range from a couple of weeks to a couple of months.

Producers reportedly have full order books through July. By that time, Indian and American buyers are expected back in the market.

One source noted that the IPL business pretty much represents the low mark for this year.

Urea purchased under long-term contracts is difficult to price, note observers. Sources peg the prilled and granular markets on the MMTC tender and serious talks – but no reported action – to buy additional post-tender tons at $315-316/mt FOB

South Korea: Fertilizer manufacturers are expected to finish the last of the shipments through the South Korean government to North Korea this week. All told, about 300,000 mt of urea and NPK was sent to the north during the first semester of the year. Sources expect North Korea to request an additional 300,000 mt for the fall application season.

Besides the tons provided as humanitarian aid from South Korea, North Korea also receives substantial fertilizer and grain aid from international charity and food organizations, the European Union, and China.

South Korea has used the north’s desperate need for fertilizer to extract pledges of better behavior.

Shortly after North Korea tested its atomic weapons, the Seoul government suspended the fertilizer shipments. At other times, South Korea has been able to improve the limited family reunion program begun several years ago. Once again, whenever the government in the north threw up roadblocks to programs of political or strategic interest to Seoul, the fertilizer and grain tap was closed.

NITROGEN SOLUTIONS

U.S. Gulf: It was the same old song last week. If you needed near-term product, you would have to pay up as it was hard to find, but you could really get a deal on summer fill product in the $210s/st FOB for later in the summer.

Eastern Cornbelt: UAN inventories continued to be described as snug, with brisk sidedress movement underway in the region. UAN-32 was quoted at $290-$305/st ($9.06-$9.53/unit) FOB regional terminals, with the low quoted by Illinois sources out of spot river locations.

Western Cornbelt: UAN-32 remained in tight supply in the region, with some locations on allocation in late May. The market was quoted in a broad range at $290-$310/st ($9.06-$9.69/unit) FOB, with the low out of spot Mississippi River terminals and the high for confirmed dealer sales out of some Missouri River locations. The market FOB Beatrice, Neb., was tagged at the $295/st ($9.22/unit) level last week.

California: UAN supplies had loosened up a bit from last report, although some suppliers were still on allocation last week. The UAN-32 market was quoted at $300-$310/st ($9.38-$9.69/unit) FOB and $320-$330/st ($10.00-$10.31/unit) DEL in the state.

Pacific Northwest: UAN-32 was tagged at $300-$310/st ($9.38-$9.69/unit) DEL in the region, down slightly from last report but still in short supply. Dealer reference pricing remained as high as $325/st ($10.16/unit) DEL in the region last week.

Western Canada: UAN-28 was unchanged at $341-$356/mt ($12.18-$12.71/unit) DEL in the region.

AMMONIUM NITRATE

Western Cornbelt: Ammonium nitrate was tagged at $320-$325/st FOB in the region, with delivered nitrate at the $335/st mark in Nebraska from Oklahoma shipping points.

California: No market was reported for ammonium nitrate in the state. CAN-17 was tagged at $220-$230/st FOB, with the low FOB Stockton, Calif. Sources continued to report very tight CAN-17 inventories, with supply on strict allocation at several locations.

Pacific Northwest: Ammonium nitrate remained at $327-$335/st DEL in the region. CAN-17 pricing was up slightly from last report at $222-$227/st FOB and $232/st rail-DEL.

AMMONIUM SULFATE

Eastern Cornbelt: Sources continued to report difficulty sourcing granular ammonium sulfate. The market was pegged in the $230-$250/st FOB range, provided spot tons could be had.

Western Cornbelt: Granular ammonium sulfate was quoted at $230-$250/st FOB in the region, with the low reported at Dubuque, Iowa. Inventories remained very tight last week.

California: Granular ammonium sulfate pricing remained at $210-$230/st FOB, with the high reported in desert areas of the state.

Pacific Northwest: Ammonium sulfate supplies remained tight in the region. Granular ammonium sulfate was quoted at $205-$225/st DEL last week, depending on location.

Western Canada: Granular ammonium sulfate was firm at $350-$355/mt DEL in the region.

PHOSPHATE

Central Florida: The season was rapidly winding down last week in areas served by Central Florida phosphate producers, and prompt sales were rare – although far from nonexistent. Most purchases were for summer fill, but dealers in some areas were taking a wait-and-see approach in hopes prices will fall below current levels. So far, that has not been the case.

Mosaic was pleased with the results of its summer fill plan, and will begin shipping some of the June orders in late May. The plan offered a set price or the option to pay the indexed price at the time of loading. The actual price could be as much as $25/st FOB above or below the current price, and was generally determined based on the customer and the order. However, the vast majority chose to take the current price, which at the time was either $360/st FOB, which was the initial price, or $365/st FOB, which was set a week or two after the program began. CF had a future pricing plan, which required a twenty-five percent deposit at the time of the sale, and the balance due after shipment. CF’s prices were between $360/st FOB and $370/st FOB. As a result of those two successful programs, a benchmark price of $365-$370/st FOB appears to have taken hold.

Meanwhile, inventories remain well below normal, and the fill and future price programs will require heavy shipping during the next few months. In addition, India will be a major buyer of phosphates offered by PhosChem, beginning around July. Not only that, but Mosaic was said to be planning to take one unit of production off line for a turnaround in June at both Uncle Sam and New Wales. Those factors will keep inventories low at least until – and probably through – fall, and prices are likely to remain static. Current prices for Central Florida DAP are more than $20/st FOB below the price for export DAP, so it appeared to be more likely prices will go up, rather than down.

Central Florida DAP prices remained at $365-$370/st FOB. Mosaic’s list price was $365/st FOB for DAP and $4/st FOB less for MAP. PotashCorp’s Central Florida reference price was unchanged at $370/st FOB. In Texas, Agrifos’ price was $415/st FOB for both truck and rail.

U.S. Gulf: Warehouse sales were either running strong or beginning to sag on the Gulf’s river system, depending on the location and the seller, but barge sales were absent. Several large traders said they were planning to wait before committing to any large purchases, in hopes prices will deteriorate. Despite estimates that the current price for a NOLA DAP barge on the water was available for $370-$375/st FOB, no purchases were made. That in itself was curious. If a barge was available for $10-$15/st FOB below the current market and below the recent fill and future pricing programs offered by Mosaic and CF, why didn’t anybody snap them up? One source said he heard those prices were being offered and sought to buy, but no one was willing to sell at that level. “I’m a buyer now,” he said. “I think the price is going to go up.” That source speculated that those claiming lower prices were available might have made buys under Mosaic’s fill program under a collar arrangement, in which the price could rise or fall by up to $25/st FOB at the time of loading. The collar prices would be based on the index price at the time of shipment, so if the index goes down, they would save money. Still, most who bought in the fill program agreed to pay the fixed price at the time of signing, which was either $380/st FOB or $385/st FOB for a NOLA DAP barge.

As was the case in Central Florida, Mosaic’s and CF’s programs set a baseline price. On the river, Mosaic’s fill price was $385/st FOB, after being bumped up from $380/st FOB at the start. CF’s ranged from $382/st FOB currently for July to $390/st FOB at the beginning of its offering for June-July. Mosaic’s program provided a thick book of business, which will continue at those prices until the end of August. In June, Mosaic was said to be planning to take down one processing unit each at Uncle Sam in Louisiana and New Wales in Florida, which will help control inventories. India will also figure into the demand picture, and that should help keep inventories very low well into the fall season.

Regardless of whether traders and dealers fill in the summer or wait until fall, farmers are likely to demand additional phosphate and other fertilizer products for their fall planting. With estimates of the next corn crop occupying 92 to 95 million acres and corn prices around $4/bushel, there was no reason to assume prices will deteriorate.

The NOLA barge price range last week was unchanged as a result of a lack of new prompt sales, $382-$385/st FOB. If any cheaper barges are available, they will probably disappear this week.

Eastern Cornbelt: DAP remained at $413-$430/st FOB regional warehouses last week, with the upper end inland and the low reported in Illinois out of spot river warehouses. One source quoted a common dealer reference price of $420/st FOB in his location last week. MAP pricing was in roughly the same range as DAP, but no current prices were reported for TSP. 10-34-0 remained at $335-$350/st FOB for the last business.

Western Cornbelt: DAP and MAP remained at $413-$425/st FOB most regional warehouses, with the low FOB St. Louis, Mo. One Missouri River source quoted dealer pricing at the $420/st FOB mark for both products at his location, but reference prices remained as high as $433/st for MAP and $436/st for DAP FOB Sioux City, Iowa, from another regional supplier. 10-34-0 was quoted at $335-$350/st FOB in the region.

California: Movement of dry phosphates was winding down, although sources said activity remained on coastal vegetables crops. MAP was tagged at $415-$420/st FOB or DEL in the state, with DAP roughly $7/st higher. 10-34-0 remained at $269-$275/st FOB last week, but one supplier was expecting a $45-$50/st increase in June due to higher acid prices.

Super-phosphoric acid remained at $5.70-$5.80/unit DEL, with merchant grade acid at $5.70/unit DEL. Effective June 1, phosphoric acid prices from Agrium will firm to $700/st for SPA and $690/st for MGA rail-DEL in Arizona and California, with a $5/st increase for both products slated for August and again in September. Simplot’s prices will also go up June 1, to $7.00/unit for SPA and MGA on a rail-DEL basis in California and Arizona, with nickel/unit increases slated for August and again in September.

Pacific Northwest: One source said spring phosphate volumes were off in his trade area due to price and weather. MAP was quoted at $405-$415/st FOB or DEL in the region, with the low in Montana. DAP was $7/st higher than MAP, or $412-$422/st DEL in the region.

16-20-0 was quoted at $280-$290/st DEL in the region. 10-34-0 remained at $277-$295/st FOB, but higher prices are expected in June due to firming acid prices and higher conversion costs. One supplier was reportedly moving its 10-34-0 price to $320/st FOB in early June.

Phosphoric acid was steady at $5.70-$5.80/unit DEL for SPA and $5.70/unit DEL for MGA, but a significant increase is on the way. Effective June 1, postings from Simplot will move to $7.00/unit for SPA and MGA on a rail-DEL basis in Idaho, Montana, Nevada, Oregon, Utah, Washington, and Wyoming. A nickel/unit increase is slated for August and again in September. Agrium is also planning an increase June 1 to $700/st for SPA and $690/st for MGA rail-DEL in those states, with a $5/st increase for both products in August and again in September.

Western Canada: MAP was quoted in a broad range at $595-$640/mt DEL in the region, with the upper level reflecting dealer list pricing. One source also quoted a $615/mt DEL MAP price last week.

U.S. Export: The IFA meeting at Turkey last week was bullish on phosphates, with talk that India will again play a major role as a buyer this year. That will help U.S. producers. India tends to become most active around July, when North African and Russian phosphates become scarce, and when U.S. producers are beginning to wind down the summer fill programs. Actually, that may not be the end of the summer fill programs in the U.S., which may continue another month or so this year due to heavy domestic demand.

China has been able to beat the prices offered by PhosChem by as much as $50/mt FOB, but that appeared to have changed. China adopted a 20 percent export tax on its phosphate, which made U.S. product look a lot better. A 100,000 mt DAP tender by India’s RCF resulted in a bid from China that was $50/mt FOB higher than PhosChem’s, but another Chinese bid came in just $5/mt FOB higher. Another factor that will make PhosChem more competitive was that ocean freight rates began heading downward. High rates had been taking a big bite out of FOB prices.

PhosChem made no export sales last week, but Transammonia made two small deals in Latin America. The first was 3,000 mt at $427/mt FOB, while the second was 6,000 mt at $428/st FOB. Last week, PhosChem was seeking $430/mt FOB, and Transammonia will likely raise its price this week.

Based on sales last week, the export DAP price slipped slightly, to $427-$428/mt FOB from $429-$433/mt FOB the previous week.

POTASH

Eastern Cornbelt: Potash was steady at $224-$235/st FOB regional warehouses, depending on grade and location, with one source quoting rail-delivered red granular potash at the $237/st level to his location for new sales.

Western Cornbelt: Sources continued to report firming potash prices. The regional warehouse market was quoted at $224-$235/st FOB last week, depending on grade, location, and supplier.

California: Potash remained at $244-$250/st FOB in the state, depending on grade, but dealers talked of an increase taking effect in June. Potassium nitrate pricing was steady at $480/st FOB for bulk and $540/st FOB for bags.

Sulfate of potash (SOP) pricing was firm at $358-$368/st FOB in the state, with one supplier talking of another $10/st increase in June. Great Salt Lakes Minerals, a subsidiary of Compass Minerals, announced that it will increase prices on all SOP specialty fertilizer products by $20/st on June 1.

Pacific Northwest: Potash was pegged at $246-$260/st DEL in the region, depending on grade and location, with the upper end reported for white granular potash in Washington. Sources talked of a $14-$20/st increase in June, and said truck availability remains tight.

Western Canada: Potash was steady at $260-$275/mt FOB plant sites or warehouses in the region.

SULFUR

Tampa: The supply of sulfur for both the Gulf and the world markets was extremely tight last week, and there were no signs that situation will change anytime soon. Word was China had agreed to purchase sulfur at $150/mt on the spot market, and that got the attention of producers – not just in Vancouver, but also along the West Coast of the U.S., where sulfur supplies just began flowing again.

Martin was loading a vessel of prill sulfur at Beaumont last week, but did not have enough molten sulfur to plan another vessel during June. A rumor, which was not denied, held that Mosaic agreed to purchase two 15,000 mt sulfur vessels from Europe at more than $100/mt.

With FOB prices in Vancouver on the rise, at least for the spot market, more Canadian sulfur will go overseas.

As a result of the tight supply situation, most in the industry were predicting the price for third quarter sulfur contracts will go up again – but no one was guessing at an amount.

In Venezuela, President Hugo Chavez recently said he planned to take control of several industries there, including sulfur. PotashCorp takes about 400,000 mt of sulfur from Venezuela for its Aurora phosphate processing plant in North Carolina.

At Texas City, Valero’s refinery shut itself down last Wednesday after an instrumentation problem caused a compressor to shut down, and then all of the other systems began to automatically turn themselves off. Twenty-four hours later the refinery was back up to half capacity, but no estimates were given for when it will return to normal production. The cause of the problem had not been determined late last week. The Texas City plant produces about 600 lt of sulfur a day. Valero’s Houston refinery was still down last week. The plant produces about 45 tons/day of sulfur, and the plan was for it to be switched to making a sweeter, low-sulfur diesel fuel, which would increase sulfur output to around 100 tons/day. That was supposed to have happened by last week, but did not.

MARKET NOTES

Bangladesh: Private sector export-oriented urea manufacturer Karnaphuli Fertiliser Co. Ltd. (KAFCO) plans to conduct a pre-feasibility study to select the site for setting up its second unit, with a capacity to produce 2,500 mt/d of urea at the cost of $500 million. This unit will need around 100 million cubic feet of gas daily. According to local media, KAFCO’s board decided in principle last week to carry out the study after the government representatives on the board proposed that the plant ought to be set up in a northern district like Sirajganj, but the other board members of the joint venture were reluctant to set up the plant in the northern region as they wanted it to be near the first one in Chittagong. The Bangladesh representatives clearly stated at the meeting that it would not be possible to supply any additional gas to Chittagong for the planned second unit as gas production in Sangu gas field is declining rapidly, and added it would be easy to supply gas to Sirajganj or any district adjacent to it as there was little demand for gas there despite the huge gas network. The existing export-oriented fertilizer plant at Anwara in Chittagong, just beside the Karnaphuli, annually produces around 680,000 mt of urea.