Springfield, Ill.-The Illinois Fertilizer and Chemical Association has advised members that the Nov. 5 fire at the Heritage FS facilities in Piper City should serve as a reminder to make sure local fire authorities are aware of what is stored and what procedures to follow to avoid unnecessary contamination under similar conditions. Heritage, an IFCA member, lost critical portions of its operations in the fire, which continued to smolder hours after it was put out. IFCA reported that the stainless steel storage tanks remained intact despite the intense heat, as did the containment structure. The local fire department used some water, which is not always the best choice when chemicals are involved since water mixes with fire residues from packaged goods and dry fertilizer. This was likely the reason the site continued to smolder into the evening though the fire was put out early in the day. A state EPA team was brought in to check on air quality. However, IFCA officials noted, the management at the plant did a fine job handling the situation to minimize off-site contamination. “It is always preferable to let an agrichemical facility burn rather than apply water if it can be avoided,” they noted. “Even if this can’t be avoided due to other circumstances, educating your emergency responders is vital to decrease the chances of unnecessary off-site contamination and cleanup costs.”
All posts by traceybg@gmail.com
Court delays Kern County biosolids ban
Bakersfield, Calif.-Kern County officials regard as only a temporary setback a federal judge’s order prohibiting enforcement of a ban beginning Jan. 1 on land application of biosolids within unincorporated areas. The ban was approved by voters earlier this year. Sanitation districts in Los Angeles and Orange County brought suit in U.S. District Court in Los Angeles claiming the ban would cause extreme hardships because no immediate disposal alternatives exist. Los Angeles trucks thousands of tons of processed sewage waste each year to fertilize the city’s 4,200-acre farm in the Kern area. U.S. District Judge Gary Fees indicated the ban likely conflicts with a state law intended to reduce the amount of waste dumped into landfills. Fees said he would refer the issue to the U.S. 9th Circuit Court of Appeals for further review, and that it was likely to wind up in the hands of the California Supreme Court.
Illinois holding fertilizer/seed clinics
Springfield, Ill.-A series of statewide crop management and fertilizer clinics is underway, with one of the first scheduled for Nov. 29 at Galesburg, where program topics include what to expect in 2007 from corn rootworms, Japanese beetles, and soybean aphids, and nutrient stratification and nitrogen rates. Dates and locations for upcoming Fertilizer and Seed Clinics can be found on the website of the Illinois Fertilizer and Chemical Assn., one of the sponsors. Other sponsors are the Illinois Seed Trade Assn. and University of Illinois Extension Crop Sciences.
Migao to add new potassium sulfate plant in China
Toronto-Migao Corp., a producer of specialty potash fertilizers for the Chinese market, has announced that it will be constructing a new potassium sulfate fertilizer production facility in Shanghai. Shanghai Migao will initially produce 40,000 mt of potassium sulfate for high value crop customers, particularly the fruit and vegetable growers who supply the lucrative, quality-conscience Shanghai and east coast markets. Migao has received all preliminary approvals from local government agencies to begin construction. Construction will commence in late November 2006, and is scheduled to be completed and put into production within 12 months. The Shanghai property secured by Migao covers an area that is large enough to expand the potassium sulfate production to another 40,000 mt. The new wholly owned subsidiary is Migao’s fourth production facility in China, and is eligible for tax breaks similar to Migao’s first three facilities. The new plant, when fully operational, will also produce nearly 100,000 mt of hydrochloric acid as a byproduct. With the addition of Shanghai Migao, the company will be producing close to 300,000 mt of potassium nitrate and potassium sulfate. Current fertilizer production is spread across Migao’s three operating subsidiaries ?Çô Sichuan Migao, Guangdong Migao, and Liaoning Migao.
Market Watch
AMMONIA
U.S. Gulf/Tampa: The NOLA and Tampa markets remained quiet last week, especially compared to the other nitrogens. Most saw the other commodities jockeying to go up at NOLA.
Eastern Cornbelt: Most sources continued to tag the ammonia market at $355/st FOB to dealers for spot tons, with spring prepay being offered in the $380-$385/st FOB range in Illinois and Indiana. Terra’s Nov. 13 ammonia postings included $370/st FOB Courtright, Ont. On Nov. 21 Terra announced a spring prepay program, with pricing at $395/st FOB Courtright for orders placed by Dec. 15 and paid by Dec. 20.
Western Cornbelt: Ammonia continued to move well in some sections of the region last week. Cash market ammonia was generally quoted at $345-$355/st FOB in the region, up slightly from last report. Terra’s Nov. 13 ammonia postings included $355/st FOB Blair, Neb., Greenwood, Neb., Mankato, Minn., Port Neal, Iowa, and Whiting, Iowa. The company announced a spring prepay program on Nov. 21, with orders required by Dec. 15 and payment due by Dec. 20. Program prices include $390/st FOB terminals in Nebraska, Iowa, and Minnesota.
Southern Plains: Anhydrous ammonia pricing was also up from last report at $315-$340/st FOB in the region, with the low out of production points and the upper end to dealers FOB pipeline terminals in Kansas. Terra’s Nov. 13 ammonia postings included $315/st FOB Woodward, Okla., $320/st FOB Verdigris, Okla., $345/st FOB Conway, Kan., and $350/st FOB Clay Center, Kan. The company announced a spring prepay program on Nov. 21, with orders required by Dec. 15 and payment due by Dec. 20. Program prices include $360/st FOB Woodward and Verdigris, and $385/st FOB Clay Center and Conway.
South Central: Anhydrous ammonia in the region was reported at $345-$355/st FOB for cash tons and roughly $360-$370/st FOB for spring prepay. Terra’s Nov. 13 ammonia postings included $345/st FOB Blytheville, Ark., and $355/st FOB Henderson, Ky. The company announced a spring prepay program on Nov. 21, with orders required by Dec. 15 and payment due by Dec. 20. Program prices include $370/st FOB Blytheville and $375/st FOB Henderson.
Black Sea: Demand from the United States is putting upward pressure on prices, but as of the middle of last week, sources say the Yuzhnyy price remains just under $250/mt FOB. Asian sources say $245-$247/mt FOB is the current range, and with the exception of reports of some unconfirmed business at slightly higher levels, that appears to be where the market hovered going into the American Thanksgiving holiday.
Middle East: Producers are fully booked into the middle of December. And even after Dec. 15, sources say there are a limited number of tons available.
It seems the producers are in good shape, partly because they secured long-term contracts with a number of regular Asian buyers. At the same time, India buying remains strong and, like in the Black Sea, demand from the United States is helping drive prices.
Even with the strong demand going east and west from the Arab Gulf, sources say the price hovers at $260-$270/mt FOB.
Nailing down the actual price of shipped material from the region has become less transparent ever since large Asian buyers in Taiwan and South Korea shifted to long-term purchase agreements from public tenders.
One Asian trader noted that with these arrangements in hand, producers and buyers are less willing to discuss terms and prices. As a result, market analysts have to look at the freight markets and equivalent pricing formulas to nail down the most likely netback for the ammonia sold into Asia.
The SAFCO IV plant continues to operate well below its rated ammonia output. Asian sources say the best estimate has the plant running at 70-80 percent of capacity.
For the rest of the year and through the first quarter of 2007, sources say producers should be comfortable. Come the second quarter, however, Iranian production should come online. Just how much of an impact this will have on the market is still up in the air. One Asian observer noted the influx of new material to the marketplace could cause “some adjustment.” He added, however, that just how much of an adjustment will depend on the strength of demand at the time. If current demand continues to grow as expected, he said, the addition of Iranian tons would be more of a brake on higher prices rather than a force for lower prices.
Asia: Sources report the unwillingness of the Indonesian agriculture minister to approve exports of urea could mean some additional ammonia exports from that country. As granular urea stockpiles build, sources say Kaltim may need to shift from urea to ammonia production to prevent an overflow of urea in its storage facilities.
Before customers start arguing for lower prices, however, sources say the major Asian buyers have already taken into account the urea export ban. At best, said one trader, any extra ammonia from Indonesia will result in a slowdown in regional price increases rather than any softening.
Caprolactum production in Taiwan is back, and CPDC has been looking for additional tons. The expected CPDC demand should return to 20,000 mt/month. In the past few months, CPDC has not needed monthly cargoes.
The KPI/Mitsubishi plant in Indonesia went down last week for a turnaround. By the middle of the week, technicians were still waiting for the plant to cool sufficiently for the inspection to begin. Sources say the company is hoping that only routine maintenance will be required and that the plant will be back up and running by Dec. 15.
The track record of the joint venture facility, however, has not been so owner friendly. Previous turnarounds were regularly extended to deal with technical problems. Sources say the issues were related to start-up pains typical of any new plant.
Producers left the regional IFA meeting in Chang Mai earlier this month feeling very good about the next six months. Increased demand in the United States and continued strong purchase orders from India and South Asian buyers point to a healthy winter and successful spring, they say. The one cloud on the horizon for producers is the new Iranian production. But, said one trader, even that did not spoil the confidence of producers that the rest of 2006 and the first quarter of 2007 will be good times.
UREA
U.S. Gulf: The barge market was much quieter due to the holiday last week, though there were a few reports of activity. Most put prompt granular barges within the tight $247-$248/st FOB range for actual business last week, though there was one report of $243/st FOB taking place late on Nov. 17. By late day Tuesday, sources said anything prompt at $250/st FOB would be hard to find. Mid-December product was reported to have sold at $252-$253/st FOB.
Prill barges have been a little more competitive in recent weeks, with sources calling them $240-$242/st FOB last week.
Eastern Cornbelt: Granular urea continued to be quoted at $265-$275/st FOB, with reference levels at $280/st FOB and $285/st rail-DEL in the region.
Western Cornbelt: Granular urea was quoted at $270-$280/st FOB regional terminals, with the upper end reflecting new dealer reference levels.
Southern Plains: Favorable weather encouraged quite a bit of field activity in the region last week, and dealers reported steady movement of nitrogen, phosphates, and potash to the field. A Kansas source said growers continue to plant more winter wheat, which was another demand source that resulted in very tight urea inventories in the region.
Arkansas River urea supplies have been “in and out” in recent weeks, according to one source, with another claiming that at least four players were out of urea in the Tulsa market last week. Spot urea prices were firming, with the dealer market quoted at $270-$275/st FOB Inola and Enid, Okla., for available tons. The upper end of the range was reportedly what many suppliers had published for reference levels by Nov. 21.
South Central: Granular urea was up from last report at $260-$265/st FOB regional terminals to dealers, with most sources quoting the upper end as the more common number last week. The reference price FOB Vicksburg, Miss., was tagged at the $265/st mark on Monday, but was scheduled to firm to $275/st FOB effective Nov. 21.
Southeast: Granular urea was also up from last report, with the market quoted at $270/st FOB Wilmington, N.C., Brunswick, Ga., and Savannah, Ga. Dealer reference pricing was tagged at the $280/st mark FOB Norfolk, Va. As of Nov. 27 dealer postings were slated to increase to $275/st FOB Wilmington and Brunswick and $285/st FOB Norfolk, with another increase on Dec. 4, bringing those reference levels to $285/st FOB Wilmington and Brunswick and $290/st FOB Norfolk.
India: Reportedly, only the Middle East suppliers extended the validity dates on their offers to MMTC. One source noted that the Middle East producers put in such high prices that they can afford to wait for MMTC to decide. The offers that came from the Black Sea had become outdated by the weekend. One source said traders would be hard pressed to cover offers at the current Black Sea price without taking a loss.
Asian sources still point to bureaucratic inertia as the reason MMTC called the tender in the first place. All the producers in the Middle East who won awards in the previous IPL and MMTC tenders received phone calls asking them to delay loadings.
It seems the ports are still congested. The Middle East tons were awarded on an FOB basis, and so the cost of demurrage in India would have to be borne by the buyer. Sources reported that the delivered price for many of the Black Sea tons offered in the most recent MMTC tender included demurrage costs.
Talks between Middle East producers and MMTC agents continued up to Wednesday of last week. Sources are confident some tons will be purchased for January and February shipping.
Middle East: Producers are comfortable. Even though the last done business puts the market at $225-$228/mt FOB, sources say that could change quickly. If MMTC/India accepts any of the regional offers made in the last tender, the price will jump to $245-$248/mt FOB for both prills and granular.
The higher price reflects healthy order books in the area and strong demand from the United States. Sources say $245/mt FOB is needed just to get a selling agent to stay on the phone.
Producers are said to have material for prompt sale only because IPL/India has asked them to slow down their loadings because of Indian port congestion. One Asian trader noted that producers are willing to sell material sitting at port side that was originally designated for IPL or MMTC to a prompt buyer, but only in the upper $240s/mt FOB. If sold, the tons can be easily replaced once the Indians clear up their unloading backlogs.
With strong demand from the States and the Indian tender, sources say the market has clearly moved into the $240s/mt FOB. One trader noted, however, that until an award is made in the MMTC tender, all other prices are either speculative – as in the case with the quiet U.S. deals – or theoretical and tentative – as with the MMTC tender offers. Still, most agree the market has moved up from the $220s/mt FOB into the $230s/mt FOB. Disagreement comes in as to how far – if at all – the price has moved into the $240s/mt FOB. With so much up in the air as of Wednesday of last week, sources say the spread is now $230-$245/mt FOB for both prills and granular.
ASSC/Iran closed its tender last week for 150,000 mt. Offers show confidence by producers that the price has moved up smartly. The prices listed below include a traditional premium most companies put on offers to Iran. Conversion from Euros is calculated on a rate of Euro1=US$1.28 as of Nov. 21.
| Supplier/Origin | Qty ‘000 mt | Price CFR as indicated | Shipment | ||||||||||||
| Transfert/Kuwait | 25 | US$281.45 | Dec-Feb | ||||||||||||
| Keytrade/Open | 25-30 | Euro 229.02 (US$293.53) |
Dec-Jan | Freedom Sky/Qatar | 30 | Euro 226.00 (US$289.57) |
Dec-Jan | 25-35 bagged | Euro 240.00 (US$307.51) |
Mekatrade/CIS/AG | 30-35 | US$329.00 | Dec-Jan | ||
| Land Delivery | |||||||||||||||
| Transammonia/FSU | 15-20 | Euro 169.50 (US$217.17) |
Dec-Jan | Unifert/Uzbekistan | 25 | Euros 158.00 (US$202.44) |
Dec-Feb | PCC/Uzbekistan | 10 | US$205.00 |
Negotiations were still taking place midweek.
Black Sea: Business was done at $246/mt FOB for about 10,000 mt. Sources say while this is hardly a large order, it is more than mere top-off tons and clearly reflects an upswing in the market. Sources add that as last week progressed, that $246/mt FOB was beginning to look like a good deal.
Prices had hovered just under $240/mt FOB for a number of weeks on the heels of the earlier IPL and MMTC tenders. The most recent MMTC tender, however, showed a stronger market in Yuzhnyy and the Middle East. Even once the extra costs for demurrage and higher freight rates were removed from the offers made in the last MMTC tender, the market was clearly looking up.
Sources report the offers made to MMTC from Yuzhnyy have all expired. Reportedly, with the prices moving rapidly, traders were not willing to be trapped with a contract and then have to face losses in order to perform.
While some in the industry had held out hope that the producers would tire of waiting for higher prices, their dreams were shattered when Brazilian buyers reportedly stepped in and settled at around $240/mt FOB. At the same time, Turkish buyers had been snapping up tons that also seem to confirm $240/mt FOB and up.
Sources in Asia point to stronger than expected demand from the United States. They say with the States taking as many tons as possible from the Middle East, buyers had to look elsewhere for tons that might have otherwise come from the Arab Gulf. Then add the entrance of Brazil, and the die was cast. Finishing the influences, sources say the TCP/Pakistan tender added just one more push to the price increase.
Brazil or TCP by themselves would not have moved the market, say sources. When their buying came on the heels of the most recent MMTC tender and strong American demand, sources say the price could only go up.
Pakistan: The TCP tender closed Nov. 21. The initial proposals were for 50,000 mt, but sources are unanimous that if the price is right TCP will take 100,000 mt. If the traditional negotiations that follow a TCP tender fail to settle on a price to the buyer’s liking, sources say TCP would most likely award 50,000 mt and call a second tender mid-December or early January. Sources said a decision may come as early as Wednesday, Nov. 22.
Seven bids FOB Karachi were reported as of Nov. 21
| Company | Quantity | Source | Price |
| Toepfer | 25,000 firm | Qatar | 276.43 |
| 25,000 optional | Qatar | 276.43 | |
| Sabic | 50,000 | Saudi Arabia | 282.00 |
| Swiss Sing. | 25,000 | various | 284.93 |
| Keytrade | 30-35,000 | various | 288.90 |
| MultiComm | 25-30,000 | various | 290.79 |
| ConAgra | 35,000 | various | 299.50 |
| Agrofertrans | 35,000 | Ukraine | NA |
The last bid was reportedly not considered as it deviated from the shipping schedule.
China: More and more industry observers are convinced the export duty on urea will return to 30 percent Jan. 1. Government officials have not yet said anything formally, but sources say rumors of extending the current 15 percent rate have died away. At the same time, producers are anxious to find ways to get their product to the ports in time for loadings before Dec. 31.
Sources say urea is receiving a low priority in railcar and truck assignments. As a result, there are inland manufacturers who have deals in hand to ship tons offshore – mostly to Bangladesh – but have no way to get the material to the ports. And even once tons are at the ports, once again fertilizer loadings have low priority in favor of grains. And lastly, because of the delays in loading fertilizer, sources say ship owners are more willing to cut deals for other commodities because the turnaround time will be quicker than with fertilizers. A faster turnaround time means more money for the ship owner, said one trader.
Rumors of an “energy related” tax made exporters and buyers nervous. Sources now say that the tax will most likely hit commodities such as phosphates, steel, and coal. The urea export duty of 15 percent until the end of the year and then 30 percent beginning Jan. 1 is more than adequate to restrict exports, say sources.
Indonesia: Sources report the agriculture minister has firmly dug in his heels and opposes any exports of urea. Kaltim had been petitioning for export permits to allow it to ship granular offshore. Without the permits, Kaltim said, its warehouses will fill quickly.
International traders note that Kaltim has already been working to relieve pressure on its storage facilities by blending granular with prills.
Indonesia is primarily a prill market, and farmers have been reluctant to take granular. Sources say the blending of the two varieties has been done in the past. At times, the producer was clear about what was happening and priced its product accordingly, usually offering a slight discount. At other times, however, sources say the blended material was shipped without a word about its content.
Bangladesh: India does not have a monopoly on port problems. Reportedly, the strikes and civil unrest in Bangladesh are taking a toll on the unloading of cargoes. One source noted that a vessel of bagged urea from the Middle East was to have been unloaded Nov. 12 and reloaded with cargo from KAFCO for export. The unloading reportedly was finished last Wednesday, and the export tons should be ready to go by Saturday.
Companies that won awards in the previous BCIC tenders are now facing a double whammy of higher urea prices and increasing freight rates.
Sources say some award winners are walking away from their deals with BCIC.
Bangladesh still needs material. Sources report BCIC will call two tenders next month. Both will be for 50,000 mt each of granular and prilled urea in bags.
The first tender will close Dec. 13, and the second Dec. 18.
Tons awarded so far this year total 600,000 mt. Of that quantity, one trader estimated BCIC took delivery of only 50,000 mt.
The problem of getting the much-needed urea stems from many sources, say observers. One key issue has been delays in making the awards. Another has been giving awards to nontraditional companies who make offers far below the market and then are unable to perform. And finally, the recent upheavals in the country have delayed the issuance of some of the necessary paperwork, as well as disrupted port activities.
One trader noted that unless BCIC moves smartly, it would miss the window of opportunity to buy Chinese bagged material. After Jan. 1, any Chinese material will face a 30 percent export duty instead of the current 15 percent. That would leave BCIC at the mercy of Middle East suppliers, who in the past have shown a willingness to push their advantage on pricing.
NITROGEN SOLUTIONS
Eastern Cornbelt: UAN was quoted at $5.94-$6.25/unit FOB in the region, with the low for spot tons to dealers FOB Ohio and Illinois river terminals and the upper end reported by Indiana sources for spring prepay offers.
Western Cornbelt: UAN remained at $5.95-$6.20/unit FOB regional terminals.
Southern Plains: UAN-32 was pegged in a broad range at $168-$185/st ($5.25-$5.78/unit) FOB, with the low out of regional production points. There were reports of spring prepay being offered from some suppliers at the $180/st FOB mark or higher, but that was not confirmed.
South Central: UAN-32 was pegged at $180-$190/st ($5.63-$5.94/unit) FOB regional terminals, with the reference price FOB Vicksburg quoted at the $185/st ($5.78/unit) mark last week. One supplier was reportedly referencing UAN-32 at the $190-$192/st ($5.94-$6.00/unit) FOB level out of Kentucky terminals, with spring prepay being quoted at a $15-$20/st premium to spot tons. UAN barges were reported in the $155-$160/st ($4.84-$5.00/unit) range FOB the Gulf.
Southeast: UAN-30 was quoted at a firm $170/st ($5.66/unit) FOB Wilmington and Norfolk, up from the low of $165/st ($5.50/unit) FOB in previous weeks. Sources said terminal pricing will likely increase due to high replacement costs; vessel tons were quoted last week in the $185-$190/mt C&F range.
AMMONIUM NITRATE
U.S. Gulf: Barge prices are now starting to follow urea. Players said last week that prices were moving into the high-$190s and over the $200/st FOB mark. Quotes of $203/st FOB were being bantered about.
Western Cornbelt: Regional sources continued to quote the ammonium nitrate market at $245-$250/st FOB last week.
Southern Plains: Ammonium nitrate was tagged at $240-$245/st FOB the port of Catoosa, Okla.
South Central: Ammonium nitrate was $240-$250/st FOB in the region.
Southeast: Ammonium nitrate was unchanged at $265/st rail-DEL in the Carolinas for incoming import tons.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained at $155-$160/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was unchanged at $155-$165/st FOB in the region.
Southern Plains: Granular ammonium sulfate remained at $150-$180/st FOB Texas shipping points, with the low at Freeport.
South Central: Granular ammonium sulfate was pegged at $168-$180/st FOB regional terminals, with the low FOB Memphis, Tenn. The market FOB Vicksburg was tagged at $180/st to dealers and $175/st to national accounts.
Southeast: Granular ammonium sulfate remained at $147-$152/st FOB, with the low at Hopewell, Va., and the high FOB Augusta, Ga. Delivered granular sulfate was quoted at $167-$185/st in the region, depending on location and supplier. Sources said prepay sulfate was being offered earlier, although no firm numbers were reported for that program. A sulfate price increase is reportedly scheduled on or near Dec. 8.
PHOSPHATE
Central Florida: With the Thanksgiving Holiday last week many in the industry took the opportunity to go on vacation, so naturally sales slowed across the board. Still, Central Florida was loading railcars, but mostly under existing contracts. Although activity has picked up during the past few weeks, prices have remained the same.
Mosaic has been attempting to restore the normal difference between the Gulf and Central Florida prices, so it has been working to get the price up for NOLA DAP barges while holding the line in Florida. The normal difference between Central Florida and the river system is about $10-$15/st FOB, but was only $2-$3/st FOB last week.
Optimism that the fall season will be much better than many had feared continued last week. The drop in phosphate prices appeared to have ended about two weeks ago, and last week prices in the other markets were moving up. The main reason for the smiling faces was that the prices of corn and wheat were far above what they had been about a month ago. That was an inducement for farmers to spread phosphate and other fertilizers on their fields.
Heavy rain in the Ohio Valley last week put activity on hold in that area. The Ohio Valley has received far more moisture this year than normal, and farmers have had a hard time getting into the fields. If that continues much longer, some crops may not be planted.
Last week DAP prices in Central Florida were unchanged in the range of $218-$219/st FOB, but discounts were unavailable. Mosaic discounts MAP $4/st from the price of DAP, while CF has no price difference. PotashCorp’s Central Florida reference price was still at $245/st FOB.
In Texas, Agrifos’ truck prices for DAP or MAP were $245/st FOB for either. That company also matches the rail prices of other producers. Agrifos has sold out into January after heavy demand from areas outside of Texas, where some drought continues.
U.S. Gulf: Early last week terminal operators reported heavy activity as DAP and other phosphates were moving out and onto farmers’ fields. Weather slowed activity somewhat, but in general demand remained strong. In addition to the weather, vacations took their toll on the market, as many in the industry took extra time off, which did little to stimulate the market.
Sources continued to claim few barges were available from Miss Phos, which had orders for export shipments from both PhosChem and from third party traders. Terminals along the Arkansas River were struggling to keep up with demand.
The highest prices paid for DAP last week were for loaded barges, and the low price was for barges yet to be loaded. In what could be an indication of things to come, DAP barges were sold for river opening at $226-$228/st FOB, but those prices are not included in the week’s index because they were forward sales. One producer reported that about half of its recent sales have been for fall applications, while the balance was for spring inventories.
CF was said to be running low on its phosphate inventories on the river system, and Mosaic was as well. In some areas, MAP barges were traded more often than DAP barges, as DAP supplies have been running low. One of the reasons for the lack of supply was the reduced operation of Mosaic’s Faustina plant, which was running at about 20 percent of capacity. The plant will continue with its curtailed production until after repairs have been completed at the company’s ammonia plant, following an explosion in October.
Last week, a MAP barge actually brought a higher price on the spot market than DAP barges did; a price of $223.50/st FOB was reported on that transaction.
Producers and traders were both claiming inquiries were up last week, and much life may still remain in the fall season.
The NOLA DAP barge price range last week narrowed from $218-$222/st FOB the previous week to $220-$222/st FOB.
Eastern Cornbelt: On the phosphate front, regional sources reported some optimism due to expectations for increased corn acreage in 2007, but the extremely wet fall has resulted in significant volume reductions for plowdown applications in many locations.
Phosphate pricing was steady at $253-$263/st FOB regional warehouses for DAP. MAP was quoted in roughly the same range as DAP, with the low on the river system and the upper numbers inland. TSP was $235-$245/st FOB, with the low end on the river and the high out of inland warehouses. 10-34-0 pricing was unchanged at $255-$265/st FOB in the region.
Western Cornbelt: DAP and MAP remained at $255-$265/st FOB regional warehouses, with the low out of spot river terminals and the upper numbers inland. One Missouri source tagged the common market last week at the $260/st FOB level on the river. TSP remained at $235-$245/st FOB in the region, with the low on the river and the upper end inland. 10-34-0 was unchanged at $255-$265/st FOB, with the low in Nebraska and the upper numbers reported in Iowa.
Southern Plains: Fall phosphate and potash usage in the region was reportedly off earlier due to weather and field conditions, but volumes were catching up to normal by late November, sources said. DAP and MAP were both quoted at $250-$255/st FOB Catoosa, with brisk demand reported. 10-34-0 remained at $255/st FOB in Kansas.
Agrium’s phosphoric acid prices are slated to move on Dec. 1 to $545/st for merchant grade and $555/st for superphosphoric acid in Colorado, Kansas, Oklahoma, New Mexico, and Texas. A $5/st increase is scheduled for both products in January, and again in February and March.
South Central: While some areas reported decent fall phosphate movement earlier in the season, most areas last week were stalled due to wet conditions. Wet weather delays have been particularly lengthy in Kentucky, where one source described progress as stop-and-go since the second week of October. DAP pricing was quoted last week at $250-$260/st FOB regional warehouses, with the upper end reflecting dealer reference levels FOB Vicksburg.
MAP was the same price as DAP, where available, and TSP was quoted at $225-$227/st FOB the warehouse.
Western U.S.: Agrium announced a winter fill program for ammonium phosphate, effective Nov. 21 for orders placed by Nov. 27 and shipped by Jan. 15. Program prices included MAP at $315/st FOB and $320/st DEL in Washington, northern Idaho, and Oregon; $315/t DEL in southern Idaho and Utah; and $310/st DEL in Montana.
U.S. Export: Last week the export DAP market opened with a yawn before promptly falling asleep for the Thanksgiving Holiday, as neither PhosChem nor any third-party traders reported any new sales. PhosChem was working on a tender from India for 200,000 mt, and a smaller tender for 40,000 mt to the same country. Apparently, India will continue buying during the winter this year and next, which it does not normally do. Pakistan was basically out of the market last week.
With no new sales, the export DAP price was unchanged at $250-$257/st FOB.
The Fertilizer Institute released its export statistics for October last week. China was the biggest U.S. DAP customer last month, receiving 215,293 mt, while India was second at 183,641 mt, and Pakistan had the third largest shipments with 113,001 mt. Overall, exports were up 16.9 percent. For the calendar-year-to-date, India, normally PhosChem’s biggest consumer, had a 9.3 percent increase over the previous year to 2,053,868 mt, China had a decrease of 9.5 percent at 906,204 mt, and Mexico was third so far this year with 364,496 mt, a decrease of 8.9 percent. For the calendar-year-to-date, total sales were 5,252,192 mt, a decrease of 13.5 percent.
TFI said MAP sales were down 23.9 percent in October over the same period last year to 145,281 mt, with Thailand receiving 43,736 mt and Canada second at 38,506 mt. For the calendar-year-to-date, total export MAP sales were down 22.4 percent at 1,901,644 mt. Canada was the biggest buyer at 456,546 mt, an increase of 3.6 percent, followed by Australia at 274,859 mt, a 48.3 percent drop, and Argentina was third at 247,803 mt, a small fall of 4.6 percent.
POTASH
Eastern Cornbelt: Potash continued to be quoted at $201-$204/st FOB most regional warehouses.
Western Cornbelt: Potash was steady at $201-$209/st FOB regional warehouses, depending on grade and location. A Missouri dealer pegged the common price for granular potash at the $204/st FOB mark last week.
Southern Plains: Potash postings were unchanged at $192-$198/st FOB Carlsbad, N.M., depending on grade. Warehouse pricing continued to be quoted at $198-$202/st FOB in the region, with delivered potash at $208-$210/st on the upper end.
South Central: Potash out of regional warehouses was tagged at $193-$198/st FOB, up slightly from last report.
Southeast: Dry potash was quoted at $217-$225/st DEL in the region, depending on grade and location.
SULFUR
Tampa: Many in the sulfur business took extra time off for the Thanksgiving Holiday. Those who were sticking it out in the office last week said it was extremely quiet. Negotiations for first-quarter sulfur prices had not yet begun, but it appeared the price would likely drop somewhere between $3/lt and $5/lt for that period. The world market continued to be weak, and there were no signs that would change anytime soon.
MARKET NOTES
India: The Department of Fertilizers is making a fresh demand to the finance ministry for a Rs80bn hike in fertilizer subsidies for 2006-07. The budgeted subsidy bill this fiscal is Rs187.52bn. “We have reviewed the subsidy requirement in view of the surge in input cost on account of high naphtha prices three months ago. A detailed note has been prepared and the same would be submitted to the finance ministry shortly,” said a DOF official.
The DOF is eyeing Yemen as a possible investment destination for setting up ammonia-urea plants by domestic urea majors. Yemen has been identified by the DOF as a priority country due to the fact that it is said to have about 10.15 trillion cubic feet of gas reserves.
The DOF recently stated that a total of 3.35 million mt/y of new urea capacity is needed. So far, proposals have come from Kribhco, Indo-Gulf, and RCF. The DOF has also confirmed 2.518 mt/y in new capacity from debottlenecking proposals that would use natural gas or LNG. The following are being considered under the debottlenecking proposals:
| Unit | Proposed capacity mt/y |
| Indo-Gulf – Jagdishpur | 244,000 |
| CFCL – Gadepan I | 290,000 |
| CFCL – Gadepan II | 224,000 |
| TCL – Babrala | 290,000 |
| NFCL – Kakinada I | 260,000 |
| NFCL – Kakinada II | 260,000 |
| IFFCO – Aonla I | 135,000 |
| Aonla II | 125,000 |
| IFFCO – Phulpur I | 125,000 |
| IFFCO – Phulpur II | 125,000 |
| SFC – Kota | 41,000 |
| RCF – Thai I & II | 397,000 |
Pakistan: The Privatization Commission (PC) is expected to hold bidding for the sale of a minimum of 90 percent of the shares of Lyallpur Chemicals & Fertilizers Ltd. Dec. 2. (LCFL). The National Fertilizer Corp. of Pakistan Limited (NFC) is the owner of LCFL, which is an unlisted public company. LCFL produces powdered SSP (72,000 mt/y), zinc sulfate (500 mt/y), and sulfuric acid (30,000 mt/y).
The Week in Fertilizer Stocks
| Company | Symbol | Price | Week Ago | Year Ago |
| Producer | ||||
| Agrium | AGU | 30.43 | 29.60 | 20.88 |
| CF Industries | CF | 22.98 | 21.68 | 15.82 |
| Mosaic | MOS | 21.33 | 21.10 | 13.00 |
| PotashCorp | POT | 144.02 | 138.72 | 75.28 |
| Terra Industries | TRA | 10.33 | 9.86 | 6.00 |
| Terra Nitrogen | TNH | 31.36 | 28.70 | 25.15 |
| Distribution/Retail | ||||
| Andersons Inc. | ANDE | 42.28 | 41.18 | 20.10 |
| Lesco | LSCO | 8.49 | 8.07 | 15.42 |
| Scotts | SMG | 49.86 | 49.76 | 46.25 |
| UAP | UAPH | 24.42 | 24.80 | 18.53 |
SPOT BARGE PRICES
Agriliance 3Q, YTD fertilizer earnings and volumes off
Agriliance LLC reported a pretax loss of $8.1 million on sales of $633.6 million for the third quarter ending Sept. 30, 2006, according to co-owner Land O’Lakes Inc., in recent filings with the Securities Exchange Commission. This compares to a year-ago loss of $6.5 million on sales of $669.3 million.
LOL said Agriliance’s third-quarter fertilizer volumes were off 12 percent from the year-ago period, and pretax earnings decreased $3.3 million in that sector. Pretax earnings from Agriliance’s Southern retail business were $3.9 million lower than last year due to higher interest costs, competitive margin pressures, and devaluation for herbicide. Pretax earnings from its Northern retail business increased $2.6 million, primarily due to an increase in rebate income. Pretax earnings from the crop protection sector increased $3.1 million, primarily due to program timing.
Agriliance’s nine-month net earnings were off almost $30 million in the current year at $56.6 million on sales of $3.04 billion, versus the year-ago $86.2 million and $3.13 billion, respectively. YTD fertilizer volumes were off 15 percent and pretax earnings decreased $21 million, primarily due to lower margins because of the effect of falling energy prices on amounts realized for inventory and higher interest costs. Despite higher sales and margins, Southern retail pretax earnings were $1.6 million lower than last year due to increased interest costs. Northern retail pretax earnings were up $1.9 million, primarily due to an increase in rebate income. YTD crop protection sales decreased 3 percent due to continued valuation related to products losing patent protection, while pretax earnings increased $7.6 million due to an increase in rebate income and timing of sales programs.
LOL received $28.9 million in dividends from Agriliance for the year ending Dec. 31, 2005. Any dividends from Agriliance for 2006 are expected to be paid in the fourth quarter 2006 or first quarter 2007.
Industry sources were quick to speculate last week that changes in the Agriliance crop nutrient sales team (see page 10) likely correlated with the joint venture’s financial results.
Cheyenne AN plant to get $50 million expansion
Dyno Nobel Inc. confirmed last week that it plans a $50 million expansion of its existing explosives-grade ammonium nitrate plant near Cheyenne, Wyoming. Demand from Wyoming’s growing Powder River Basin coal industry is prodding the growth.
The company is expected to increase production by 50 percent, or approximately 150,000 st/y. Current capacity is listed as 322,000 st/y by the International Fertilizer Development Center, Muscle Shoals, Ala.
Plant Manager Doug Chandler told Green Markets the construction is expected to be complete in October 2007. The expansion will be on adjacent property, the former location of an MTBE facility. An existing nitric acid and ammonium nitrate prilling plant will be brought to the site from Florida. This will bring the number of nitric acid plants at the site to four. Chandler could not confirm more specific origin of the new plants, except that they are coming from Florida. Industry observers will note that the Nitram Inc. ammonium nitrate facility in Florida went out of business a few years ago (GM Archives).
No additional ammonia capacity will be added. The existing facility currently produces 530-540 st/d of ammonia. Chandler noted that the ammonia plant uses Wyoming natural gas, which is made into products to assist in the mining of Wyoming coal.
The upgrade will add 10-15 new employees. The location currently employs 110.
Uralkali expansion plans will help offset mine flooding
Existing expansion plans will help Uralkali get back to normal production levels by 2008, according to Uralkali Director General Vladislav Baumgertner, in an interview posted on the company’s website last week (www.uralkali.com). “Last year we produced 5.4 million mt,” said Baumgertner. “This year we initially expected to produce 5.6 million mt, and 6.2 million mt next year. Taking into account that mine No. 1 shutdown means losing up to 1 million mt of products in 2007, I guess, the product output will hardly exceed 5 million mt.” He went on to say that expansion projects will allow the company to reach 2005 levels in 2008 and 7 million mt in 2009.
Baumgertner hesitated to give a cost of the actual No. 1 damage; however, he did say that lost profits would be close to $30 million in 2006. To avoid a loss of income in 2007, he said the company would need to see a 15-20 percent increase in potash prices. Major contracts are again up for negotiations at the end of 2006. With less product on the market due to the flood, and another Russian producer, Silvinit, having supplies in the flood risk zone, potash producers are now optimistic about a price increase. Add to this annual demand growth of approximately 3 percent per year and the expectations for increased corn acres in North America in 2007.
In addition to upgrades and expansions at existing facilities, Baumgertner noted that the company has a license at another site – Ust-Yaivinski, where a new facility will be built. The new facility will be designed to produce up to 4 million mt/y. He said the company will have to speed up the process in view of the loss of mine No. 1. From the interview, it did not appear there was much hope of mine No. 1 being rehabilitated, at least any time soon.