AMMONIA

U.S. Gulf/Tampa: No major changes to prices were reported last week. Sources reported that November business by PotashCorp to Ineos for the Gulf Coast rolled over at the $312/mt DEL mark. New barge business was reportedly being discussed, but no one had pulled the trigger on new transactions.

The November NYMEX gas futures price dropped some as it went off the board, closing at $7.153/mmBtu. December, however, closed up a dime on Nov. 2 at $7.814/mmBtu.

Eastern Cornbelt: Several sources said fall applications of ammonia were underway last week in Illinois and Indiana as field and weather conditions permitted. Anhydrous ammonia pricing remained at $345-$355/st FOB regional terminals, although several sources said fall prepay tons were being tapped to meet field demand.

Western Cornbelt: The arrival of cooler temperatures, along with drying fields, prompted some fall ammonia movement in the region last week. Several sources said dealers still had fall prepay tons to work through before testing the spot market, but most placed the cash price in the $330-$345/st FOB range in the region, with delivered ammonia in central Missouri quoted at $340-$345/st. Reference pricing out of regional terminals ranged from $340-$360/st FOB, with the upper end reported at Palmyra, Mo.

Terra posted ammonia at $340/st FOB Blair and Greenwood, Neb., and Whiting and Port Neal, Iowa, effective Nov. 1. Postings go up $10/st Nov. 8.

Northern Plains: Terra posted product at $340/st FOB Mankato, Minn., and $360/st FOB Courtright, Ont., effective Nov. 1, with prices going up $10/st FOB Nov. 8. The Courtright price is for U.S. shipment only.

Southern Plains: Ammonia was starting to move on new corn ground in some sections of the region after October’s rainfall. The low end of the range was quoted at $300-$315/st FOB regional production points, with the dealer market FOB Kansas pipeline terminals quoted at $325/st on the upper end. Delivered ammonia was $325-$345/st, depending on location.

Terra posted ammonia at $300/st FOB Woodward, Okla., $305/st FOB Verdigris, Okla., $330/st FOB Conway, Kan., and $335/st FOB Clay Center, Kan., effective Nov. 1, with postings going up $10/st FOB Nov. 8.

An Oct. 25 rupture of the Mid-America Pipeline Company (MAPCO) ammonia pipeline, now owned by Magellan Midstream, in north-central Kansas near Clay Center caused an anhydrous release that local reports said produced a vapor cloud about a quarter-mile in length and 100 feet off the ground. No injuries were reported, but a 20-mile section of U.S. 24 from Clay Center to Kansas Highway 81 was closed for most of the day. The rupture, located about six miles southwest of Clay Center, was reported about 10 a.m. on Oct. 25, and the pipeline was shut down about 10:45 a.m., authorities said. Residents in the area were asked to leave or stay inside with their windows closed. The cause of the rupture was being investigated. The 1,000-mile pipeline originates in the Texas Panhandle.

South Central: Anhydrous ammonia remained at $330-$340/st FOB regional terminals to dealers.

Terra posted ammonia at $335/st FOB Blytheville, Ark., and $345/st FOB Henderson, Ken., effective Nov. 1, with postings moving up $10/st Nov. 8.

Black Sea: With the approach of winter, shippers are expecting to see greater delays in getting material out of the Black Sea. Ammonia carriers of a certain size – usually more than 10,000 mt ?Çô have always been restricted to slipping through the Bosporus Straits one at a time, and only during the daylight hours. Now, as the number of those hours shrinks, sources say delivered prices of ammonia from the region should start seeing an increase to reflect the expected delays.

To add to the grief buyers will feel over shipping delays and costs, sources report the $245/mt FOB price is firmly in place, with producers now asking $250/mt FOB. Asian sources say the higher amount should be seen soon, but has not yet been achieved.

The big push on prices remains strong demand from India and East Asia, notably China. Adding to the upward force are reports that Middle East suppliers have fewer tons than previously expected for export.

Middle East: The price range remains wide, but sources say it should soon see the gap close. Demand from India remains strong, as does the need for material throughout Asia. With the closing of the Kenai/Alaska plant and the pending turnaround of KPI in Indonesia, Asian sources say December tons from the Middle East will be closer to the upper range of $245/mt FOB than last month’s closing lower end of $220/mt FOB.

Buyers in the States remain a major purchaser of Middle East product under long-term contracts that provide favorable rates, especially when compared to what the Asians have to pay.

The continuing problems with the SAFCO 4 ammonia production line and a reported problem with the IPPC/Iran facility have left the region short hundreds of thousands of tons annually. One Asian source noted that all the producers in the area are sold out for November and currently are unwilling to discuss December.

Efforts by one buyer to pick up some tons for late November were rebuffed. He noted that if the issue was just the price he would receive signals that his bids were just too low. Instead, he was never given the opportunity to raise his bid. He was firmly but politely shown the door, he said.

For the Middle East producers the main influence is the strong demand from India. Besides ammonia for the DAP producers, sources say industrial demand is also growing.

East Asia: Demand from fertilizer users as well as heavy industry has boosted the price in the region. Add to the increased demand a planned turnaround in Indonesia and the closing of a North American plant for the winter, and, say sources, buyers are looking at higher prices and tighter delivery requirements.

The KPI plant in Indonesia is going down for about four weeks beginning this week or next. Originally, the plant was to go down late last week, but sources say that management decided to squeeze out a few extra tons to keep their regular customers happy.

Malaysia is reportedly sold out for the rest of the year.

The closure of the Kenai/Alaska plant for the winter also closed off a traditional source of ammonia for Asian buyers.

Korean buyers are able to take advantage of the long-term contract with Yara to supply tons from Australia’s Burrup facility. Other regional buyers also have deals to take Burrup product. All told, about 90 percent of the Burrup production is committed. That leaves precious little for other buyers in the region.

Increases in industrial demand in China, Taiwan, Korea, and Japan are also leading to a tighter market.

China in particular is a source of concern for other regional buyers. With new downstream plants opening regularly, ammonia is being snapped up as soon as it clears the final production pipeline.

Japan is facing a growing problem as well. Many of the plants that produce ammonia in the country are getting old, and the parent companies have been reluctant to put too much money into renovating the facilities. The main problem seems to be the lack of land to expand and neighbors hostile to ammonia production near them.

Japanese buyers also face the problem of not being able to import large cargoes at one time. Most ports are limited to being able to handle small cargoes – 10,000 mt or less – and they have little or no chance for expansion. One source noted that the governmental procedures alone are so cumbersome as to make expansion difficult even if the land could be arranged. He added that additional roadblocks are in the way because permission from all the neighbors – industrial and residential – has to be obtained as well.

Alaska: The closing of the Kenai plant for the winter was required to ensure enough natural gas to heat the homes and businesses in the area this winter. Asian sources say the absence of the Kenai ammonia will be felt.

Local media report efforts to promote coal degasification as a way to increase the amount of natural gas available to the area. An Asian observer noted that this process could only be economically viable if the developers set their sights on a large facility that will help power the local electrical grid.

A feasibility study commissioned by Agrium is looking at just that option.

The objective is to build a consortium of industries in the area to develop and run a low-emission coal degasification facility to increase dramatically the availability of natural gas in the area. An Asian observer noted that under such a plan the product generated would be good for not only the fertilizer production units, but also the entire region around the plant. Asian buyers would also benefit because they would not have to face the annual winter shutdown of the Agrium plant.

The best-time estimate for a degasification plant to be up and running is sometime during 2011.

UREA

U.S. Gulf: Prompt granular barge prices continued to move up as the week progressed. Early week trades were reported at $217-$218/st FOB. However, by Thursday, sources said those were history, with prices moving into the $222-$225/st FOB range. Earlier in the week, December cargoes were being called $225-$228/st FOB. However, by Thursday, some were eyeing $230/st FOB and above.

Eastern Cornbelt: Granular urea was unchanged at $250-$260/st FOB, with the low again reported at Cincinnati, Ohio, and out of spot Illinois River terminals.

Western Cornbelt: Granular urea was quoted at $245-$255/st FOB to dealers, with the low reported by Iowa sources out of spot Mississippi River locations and the upper end reflecting dealer reference numbers out of Missouri River terminals.

Southern Plains: Sources said there continued to be talk of tight urea supplies, but, as one Kansas source noted, “We’ve never seemed to run out, and we don’t really need that much more.” Product continued to move on preplant wheat last week, and spot pricing was up slightly from last report. Most sources pegged the market at $245-$250/st FOB Inola and Enid, Okla., after spot pricing reportedly dropped as low as $235/st FOB in October.

South Central: Granular urea remained at $245-$250/st FOB regional terminals, with one Kentucky source saying tons were virtually “nonexistent” out of the warehouse system last week.

Southeast: Granular urea was quoted at $250-$260/st FOB port terminals, with the upper end to dealers FOB Savannah, Ga. The low end of the range was reported at Wilmington, N.C., with some sources claiming the market had firmed recently from the $245/st FOB level. Others, however, said the new price in Wilmington was now closer to the $260/st FOB level after additional increases in recent days.

Middle East: Producers remain comfortable. Sources say the order books are full for November, and few are willing to talk about December spot or contract business.

Observers that are more generous say the refusal to discuss December business is because the order books are in good shape for the first half of the month and looking better for the second half. Less kind observations note that once the Indian tons are loaded and gone – most expect this to happen midDecember – there is precious little more on the horizon.

The Pakistan/TCP business – if it goes ahead – is only for 50,000 mt with an option for another 50,000 mt, and, say sources, could just as easily be taken with competitive Black Sea or Chinese material.

At the same time, American buyers are hesitant to step forward because the pricing ideas are still too high for their tastes.

There are reports that one cargo was sold at $230/mt FOB to Iran, but the only source for that, say traders, is a producer. The combination of a sale to Iran and only the word of a producer led some traders to discount the price several dollars.

So for now, the price of granular and prills remains unchanged and at parity at $225-$228/mt FOB.

Black Sea: Reports of shorts being covered for India and top-off tons for November appear to be pushing the price to about $215/mt FOB.

While most in the industry will agree that $215/mt FOB was done for these smaller prompt sales, only producers are claiming this is an upward trend.

A trader at one major house said he would pay $215/mt FOB only if he needed a couple thousand extra tons right away, but that level was too high for any serious business anywhere in the world.

The last done business to India and Brazil indicates the price remains about $205-$210/mt FOB, with some trying to argue $203/mt FOB – the KIP minimum – is possible.

What is clear, said one source, is that even at the KIP, finding a home for Yuzhnyy material is difficult. Competition from China excludes markets that prefer quick shipping and bagged material. And willing big buyers such as India to take granular or prills pits the glutted granular market against prills and thus forces prilled offers to match the lower granular offers. Finally, once the small Pakistan business is done, there appear to be no other major selling opportunities until late in the first quarter of next year, when India is expected to return to the market.

Bangladesh: Last week was a real roller coaster ride for companies with offers still standing in the BCIC tenders.

At first, it appeared as if BCIC would scrap the tender. The conventional wisdom was that the caretaker government would not commit the necessary funds to buy 300,000 mt of prilled and granular urea. This was a position many in the industry expected, and so as word sifted out of Dhaka that the deal was going to be scrapped, it was readily believed.

However, by the end of last week, traders and producers began getting calls saying BCIC was issuing letters of intent to buy.

When the recommendations were made a couple of weeks ago, industry watchers were waiting to see what the caretaker government would do about releasing funds. Early last week the government surprised the industry and released the money necessary to close the deals on hand. As far as the companies listed below are concerned, the LOIs are the same as winning a portion of the tender.

The awards are based on recommendations made two weeks ago and follow.

Each shipment is to be bagged material.

The move came quickly, sources say, because BCIC desperately needs the tons. Because most of the companies are offering Chinese product it will have to be loaded by December 31 or face possible higher export duties.

The estimated netback on the Chinese tons offers is about $220/mt FOB bagged, with a couple of traders saying the price is even below that. Just how all the deals will be consummated will be interesting, because most Chinese producers are now looking at $224-225/mt FOB bagged.

Once awarded, shippers will have to watch the port lineups carefully. Even though the loadings and deliveries are slated to occur from mid-November through the end of December, there is always a possibility that unloadings may not move as quickly as planned or that some shipments could be affected by other forces and require earlier or later loadings. If too many of the cargoes try to arrive at the same time, shippers could be facing major anchorage costs.

India: A number of ports along the west report congestion. The local media say wheat shipments were pushed to second place in favor of urea deliveries during the past week, and that only as the week ended were the wheat vessels moved back to the front of the line.

While much of the congestion is reported at larger ports, sources say even the small ones are having problems. One vessel of wheat arrived about the 21st and as of the 30th was still waiting for its turn at the dock.

Shipments of urea for IPL and MMTC are pouring into the country at a time when the wheat shipments usually get priority. One source noted that usually urea and wheat share the top of the priority list, and was surprised to see wheat get pushed back.

Once all the contracted tons are shipped, unloaded, and moved inland, sources say they expect to see Indian buyers take a break and stay out of the market for a while. The last of the tons is expected to arrive late December or early January. After that, new purchases will not be needed until late March.

Sources say many of the tons purchased in the latest round will be used as a buffer into the next application season. One trader noted that IPL and MMTC appear to be laying the groundwork for a program of steady year-round buying instead of the quarterly sporadic buying most recently seen.

If the two buyers do indeed go to this new system of buying, they will be emulating the successful efforts of Vietnamese buyers, who were able to take the spikes out of the market by slowly and deliberately buying tons spread out over several months.

One observer noted, however, that even if MMTC and IPL come back in as big as they did in the past couple of months, the effect would not be the same on the market as in the past. With granular and prills competing against each other and no other major buyers around, there are few indications the price could spike on these purchases alone. In fact, one trader noted, every time IPL or MMTC has called a tender in the recent past, the Black Sea price cratered soon thereafter.

Pakistan: TCP is pushing its tender back a week. The new deadline is now Nov. 13. Sources say the Economic Coordinating Committee will not meet until Nov. 7. At that time, the government body will decide how much it is willing to pay for the urea and the subsequent subsidies to farmers or importers.

The tender was to have closed Nov. 6.

The original call for tons remains the same, say sources. Offers should be for 50,000 mt, with an option for a second cargo of the same amount.

The delay will not do any damage to the urea stockpiles in the country, say sources. Reportedly, about 100,000 mt is still sitting in Karachi warehouses waiting to be shipped inland. The glut of material at a time when new tons are not needed – this is still the DAP application season – appears, said one trader, to be motivated more by politics than by actual need.

Sources say even the usual buyers of the material from TCP have been quietly supporting the delay in the tender.

China: Producers are still asking about $224-$225/mt FOB bagged for their product. Sources say for Chinese urea to be competitive in the BCIC/Bangladesh tender that is currently being awarded, the price will have to come off about $4/mt.

Some producers may be willing to shave off a few dollars for the export opportunity. However, others are said to be just as willing to hold onto the tons and wait for the domestic season to kick in early next year.

NITROGEN SOLUTIONS

U.S. Gulf: Price ideas on barges spanned the gamut, with one player calling the market sloppy. In reality, there was no firm word of new business to truly test the market. While some speculate that business may occur in the low-to-mid $150s/st FOB, based on CF forward postings, others suggested that the NOLA market may be long, justifying prices in the mid-$140s/st FOB.

Eastern Cornbelt: UAN was steady at $5.70-$6.07/unit FOB in the region, with the low on the river system and the upper numbers out of inland tanks.

Western Cornbelt: UAN-32 was quoted in a broad range at $178-$190/st ($5.56-$5.94/unit) FOB regional terminals, with the low again out of spot Mississippi River locations and the upper end to dealers FOB Missouri River terminals. Several sources noted, however, than most tons being shipped now were presold, so there was little new business to test the market. There were also reports of some dealers inquiring about spring prepay in early November.

Southern Plains: Most sources tagged the regional range for UAN-32 last week at $165-$170/st ($5.16-$5.31/unit) FOB, with the low at Coffeyville, Kan.

South Central: UAN-32 was described as “thinly traded” at $175-$180/st ($5.47-$5.63/unit) FOB regional terminals to dealers.

Southeast: UAN-30 was quoted at $172-$175/st ($5.73-$5.83/unit) FOB Wilmington and Norfolk, Va. One source noted a large number of players in the Norfolk market now that Koch has leased new space in that location.

UAN vessel tons covered a wide range of pricing, depending on time of delivery and to whom you talk. Sources quoted the vessel market at $170-$171/mt C&F on the low end, with the upper end tagged in the mid-$170s/mt up to $185/mt C&F.

AMMONIUM NITRATE

Western Cornbelt: Ammonium nitrate was steady at $245-$250/st FOB in the region.

Southern Plains: Ammonium nitrate was down from last report, with the market quoted at $235-$240/st FOB the port of Catoosa, Okla. One source said there was some lower quality imported nitrate available earlier, which was still possibly making the rounds in blends that were netting back to $228-$230/st FOB the port.

South Central: Ammonium nitrate was $235-$245/st FOB, with the low out of regional production points.

Southeast: Ammonium nitrate was reported at $265/st rail-DEL in the Carolinas for a new cargo slated to arrive in Wilmington within the next month.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was unchanged at $155-$160/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate remained at $155-$165/st FOB in the region, with most dealer quotes at the $260/st FOB mark or higher.

Southern Plains: Granular ammonium sulfate was unchanged at $150-$180/st FOB Texas shipping points, with the low at Freeport.

South Central: Granular ammonium sulfate was pegged
at $168-$175/st FOB regional terminals.

Southeast: Granular ammonium sulfate remained at $147-$152/st FOB, with the low at Hopewell, Va., and the high reflecting dealer listings FOB Augusta, Ga. Delivered granular sulfate was quoted at $167-$185/st in the region, depending on location and supplier.

Western U.S.: Agrium posted a fill program for granular ammonium sulfate, with orders required by Nov. 10 and shipped by Dec. 15. Program prices, effective Nov. 1, in Washington, Oregon, Idaho, Montana, Utah, Nevada, and northern Wyoming, include $159/st FOB the warehouse and $164/st rail- or truck-DEL direct from the plant. On Nov 11, those postings move to $170/st FOB and $175/st DEL.

PHOSPHATES

Central Florida: Last week, Mosaic decided to take four of its Central Florida mines down for a total of 14 days during November and December. However, the impact will be only marginal in terms of supply and demand, in part because many of the days include holidays – Thanksgiving, Christmas, and New Year’s Day – as well as weekends, when workers would be off anyway. The mines include Hookers Prairie, South Fort Meade and Four Corners, and Hopewell. The dates for the closings will begin Nov. 23 for four days and Dec. 23 for 10 days. That means workers will be off only a total of an extra three or four days during those periods. The processing plants those mines feed at New Wales, Bartow, and Riverview will continue to operate using existing stockpiles. The Faustina plant in Louisiana will continue to be out of service for another several weeks following a minor explosion at its ammonia plant in October. Recently, the company reduced its 2007 projections for phosphate sales to 8.5 million to 9.3 million mt, from the previously estimate of 9.5 million to 9.9 million tons.

Phosphate producers were continuing to load railcars in Central Florida last week, but most were under existing contracts and new sales were scarce. The biggest problem with making sales out of the area has been the high rail rates charged by CSX Transportation, which has made Central Florida phosphates less attractive than prices on the river system. As of last week, the low FOB price on the river was $2/st lower than at Central Florida. Adding to that situation was that barge rates were much more reasonable than rail, which increases the reverse differential. That was an abnormality, because the Central Florida price has traditionally been $10-$15/st FOB lower than the river. Mosaic will attempt to change that situation this week, when it raises its asking price for NOLA DAP barges by $5/st FOB. However, with demand weak that may not spur much in the way of new business for either market. Most in the industry had anticipated a reduction of the price in Central Florida to reestablish the price differential, and will not likely be motivated by the move.

Déjà vu – the Central Florida DAP price range last week was unchanged at $218-$219/st FOB. Customers who place large orders get the lowest prices, but sources said no discounts were available at the low end of the price range. 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 dropped from $255/st FOB Houston for DAP or MAP to $245/st FOB for either.

U.S. Gulf: Although barge sales appeared to pick up steam last week, most purchases were for the purpose of filling the warehouses of the buyers. According to almost everyone, most of the buying last week was from warehouses, where prices continued to be reasonable. Because the season was beginning to grow late, most were not inclined to buy barges for the purpose of reselling – but some did. One was able to sell a couple of barges already in position for as high as $220/st FOB, but most sales were made in the $217-$218/st FOB range.

Business appeared to be the strongest in southern to Central Illinois, Iowa, Oklahoma, and Kansas, but wet weather in the Ohio Valley was depressing activity. Regardless of the location, the strongest sales were being made from warehouses, which have been able to make a profit with current barge prices.

Mosaic’s Faustina processing plant will remain down for another several weeks while repairs are done to the facility’s ammonia plant, where an explosion in October put it out of commission. This week, Mosaic plans to increase its asking price for DAP barges by $5/st FOB, in part because of Faustina’s problems.

New DAP barge sales by Miss Phos appeared to come to a halt last week, which was probably due to its loading of a handymax vessel for Pakistan under a deal arranged by PhosChem. That will remove about 60 percent of Miss Phos’ monthly production from the river market. That company will officially withdraw from PhosChem at the end of this year. Meanwhile, CF was said to have increased its asking price for DAP on the river to $219/st FOB, but that should be below the approximate $221/st FOB Mosaic was believed to be seeking under its new pricing scheme. To help restore the price differential between Central Florida and the river, Mosaic will not increase the Central Florida price.

The NOLA DAP barge price range for the Gulf’s river market last week was up $1/st FOB on the low end of the previous week’s range of $215-$220/st FOB, to $216-$220/st FOB. The lowest prices were for barges in New Orleans, while the highest were for barges in position.

Eastern Cornbelt: DAP remained at $253-$265/st FOB regional warehouses, with the low FOB Cincinnati and other spot river locations, and the higher numbers out of inland points. MAP was generally quoted in the $255-$265/st FOB range last week, while TSP was unchanged at $235-$245/st FOB. 10-34-0 was pegged at $255-$260/st FOB in the region.

Western Cornbelt: DAP and MAP were unchanged at $255-$265/st FOB, with the low on the Mississippi River and the upper numbers out of warehouses on the western side of the region. Out of Missouri River locations, the dealer market for DAP and MAP was pegged at $255-$260/st FOB last week.

TSP remained at $235-$245/st FOB, with the low on the river and the upper numbers inland. 10-34-0 was quoted at $255-$260/st FOB in Nebraska and $260-$265/st FOB in Iowa.

Southern Plains: DAP was quoted at $252-$254/st FOB Catoosa, also down from last report, with MAP in roughly the same range. As with urea, there were reports of phosphate supplies running thin after steady preplant wheat movement. 10-34-0 was tagged at $250-$255/st FOB in central Kansas, with delivered product quoted in a broad range at $255-$275/st in the region, depending on location.

South Central: DAP and MAP were both tagged at $250-$255/st FOB regional warehouse, with most dealer quotes at the upper end of that range. Reference pricing to dealers was quoted at the $260/st mark FOB Vicksburg, Miss. TSP remained at $220-$225/st FOB the warehouse.

Arkansas growers are expected to plant near-record wheat acreage this fall, but one source there said preplant applications of phosphates and potash have been down from expectations due to rate cutbacks. He said brisk topdress movement is expected in February, however.

U.S. Export: PhosChem made no new export sales last week, but it did get some good news. China lowered its import tax on phosphates from 4 percent to 1 percent, and Argentina eliminated its 6 percent tax entirely. That will help any company or country attempting to make sales into those countries, and not simply PhosChem.

Export sales were being hurt by the ongoing drought in Australia and uncertainties in the agricultural markets in Pakistan and Brazil. PhosChem loaded two panamax-sized vessels for China in October, and will do another three this month. It will still have to deliver at least another seven to China before the end of March.

The DAP export price range was unchanged last week at $250-$255/mt FOB.

POTASH

Eastern Cornbelt: Potash continued to be quoted at $197-$202/st FOB regional warehouses, depending on grade and location.

Western Cornbelt: Potash remained “sloppy,” as one source called it, with dealer pricing at $195-$200/st FOB regional warehouses. Reference levels were at $204-$210/st FOB, depending on location and supplier. There were reports as well of direct-transferred barge tons trading in the $185-$188/st range on the Mississippi River in late October.

Southern Plains: Potash postings were unchanged at $192-$198/st FOB Carlsbad, N.M., depending on grade. Warehouse pricing remained flat at $198-$202/st FOB in the region, with delivered potash at $208/st on the upper end.

In October, Intrepid Potash announced that its West Mine in Carlsbad, N.M., would begin a 30-day shutdown on Oct. 12 to perform maintenance, repairs, and upgrades to the production shaft. This outage represented an extension of the budgeted 14-day outage in October. The facility is expected to return to normal production rates on or about Nov. 12, 2006. Intrepid said it had adequate finished red granular product inventory to cover both current orders and forecasted truck sales during the outage. Intrepid also said it has sufficient compactor feed to continue to run its compaction plant and produce product for customers during the shutdown.

South Central: Potash was unchanged at $188-$195/st FOB regional warehouses, depending on grade and location, with most locations at the $192-$195/st FOB range to dealers. The market for granular potash FOB Vicksburg was steady at $193/st to dealers.

Southeast: Dry potash pricing remained at $209-$220/st DEL in the region, depending on grade and location. One Carolina source said the market had technically firmed from $210/st to $217/st DEL, but the new levels remained untested.

SULFUR

West Coast: Although it was about as pleasant as swallowing a rattlesnake, refiners on the West Coast settled their fourth quarter contracts last week – and prices took a major tumble. Prices at the refineries in northern California fell to a negative number, to a loss of as much as $6/lt FOB. In the Los Angeles area, prices were still positive and were as high as $9/lt FOB. All prices in the sulfur index are now based entirely on FOB prices at the refinery. One source said that prices for the first quarter of next year will probably decline another $10/lt or more on the West Coast, and declines will also be seen for molten sulfur destined for Tampa.

One source involved in the West Coast negotiations said the price declines were “hard to swallow,” but necessary. Refiners there cannot continue operations without the priller operations, and the prillers cannot afford to take large losses to take the waste product off the refiners’ hands. If subsidizing the priller operations is what it will take to get rid of the stuff, refiners will – and did – do that.

World prices continue to be in a downward spiral, with combination blows of much higher ocean and rail freight rates and lower delivered prices. At a recent conference in Vienna, an oil industry speaker predicted an excess of 16 million lt of sulfur a year will be produced within the next few years, and he received nothing in the way of opposite opinions.

Alberta: Canada, which only a year ago was reaping benefits from its high sulfur output from refineries, has found its fortunes reversed, and that situation will likely worsen. Prices for sulfur in Alberta were $10/lt to the negative, and even worse in areas farther north in that province. If it begins selling sulfur for less than $0/lt into the U.S., it could be faced with dumping charges, which U.S. producers might be happy to do to reduce the flow into this country and help move some of its own waste product.

U.S. Gulf: The phosphate industry is the biggest customer for sulfur producers, and recent estimates issued by the biggest player, Mosaic, were for significantly less production in 2007 – and that will just add to the glut. More molten sulfur will be turned into prill along the Gulf Coast next year, in hopes it can be sold for export. However, even that may not be enough, especially considering the sad shape of the world market. Blocking and storage in significant quantities could very well begin before the end of next year on the Gulf Coast.