AMMONIA

U.S. Gulf/Tampa: Except for the explosion at Mosaic’s Faustina ammonia plant, the ammonia markets were fairly quiet, with no major changes to the market. The last done Tampa remained at $310/mt DEL.

Natural Gas: The Energy Information Administration said natural gas working inventories are expected to start this winter’s heating season at the highest levels since 1990. Inventories are expected to total 3,429 Bcf at the end of October, 298 Bcf above the five-year average.

High inventories have helped keep gas prices down. Spot Henry Hub prices, which averaged $13.44/mmBtu in December 2005, fell to an average of about $6.74/mmBtu in the second and third quarters. EIA said barring extreme weather for the rest of the year, it still expects Henry Hub spot prices to increase to an average of almost $10.00/mmBtu by January 2007, and then fall back to an average of $7/mmBtu by next summer.

Eastern Cornbelt: Frequent precipitation was delaying fall fertilizer movement in the region, and spot pricing changed little from last report. Anhydrous ammonia continued to be quoted at $340-$350/st FOB regional terminals, with few new sales to test the market.

Western Cornbelt: Sources estimated that fall fertilizer movement will begin in earnest later in October. New spot ammonia sales were few and far between last week, given that dealers were sitting on fall prepay and any attempt at gauging the spot market was, as one source said, a “shot in the dark.” That said, the dealer quotes that were reported ranged from $325-$345/st FOB, with the low quoted in Nebraska and the upper end in Iowa. Most tagged the “asking price” for spot ammonia in the $335-$345/st FOB range in the region last week.

Southern Plains: Anhydrous ammonia pricing was quoted at $315-$325/st FOB regional terminals. Delivered ammonia was $335-$345/st in the region, depending on location.

South Central: Anhydrous ammonia remained at a nominal $335-$350/st FOB regional terminal.

Black Sea: Sources in Asia report demand from the United States and Europe continues to push up the Yuzhnyy market. The latest fixtures are reportedly set at $240-$242/mt FOB. Adding to the grief of buyers are reports that supplies in Yuzhnyy remain tight and are expected to remain so for a while.

Middle East: Qafco/Qatar reportedly sold a cargo at $245/mt FOB. While this is said to be on the high side of previous deals, sources now say this is the only deal around. Other suppliers are reportedly fully booked. The word that supplies are this tight is not good news for India. A number of buyers are said to be looking for spot tons, but are being forced to look farther afield.

The Safco number four plant is still acting up, say sources. The best bet is that it will not be back up and running until some time early next year.

Even so, sources report that some last done business into India a while back had a netback of around $216/mt FOB. This confirms the multi-tier level Middle East producers have been using. Different netbacks are calculated from sales to different regions.

India: Demand remains strong, but buyers are being forced to look beyond their usual Middle East sources. Reportedly, PPL awarded its tender to MITCO at $285/mt CFR for only 7,000 mt. At the same time, IFFCO and FACT are looking, but no one in the Middle East seems able to help out.

South Asia: Reports are circulating that MITCO is now having some plant problems. Asian sources say the reports are more akin to rumors, but with the tightening situation in the Middle East even the rumor of a hiccup in a major regional producer can cause shudders among buyers. In Indonesia, the KPI plant will be coming down later this month for a four-week turn around. This closure is planned and should not create any major problems for KPI customers, said one Asian source.

UREA

U.S. Gulf: Granular urea numbers continued to erode last week, with sources citing the closing of the upriver markets to barge traffic. Most were putting the new granular range between $200-$203/st FOB, though some speculated that sub-$200/st might be available. Prills have been hard to find, and most said they would garner a $5-$10/st FOB premium.

Eastern Cornbelt: Granular urea was tagged at $250-$260/st FOB regional warehouses, with the lower numbers out of spot Illinois and Mississippi river locations

Western Cornbelt: Granular urea remained at $250-$255/st FOB most river terminals to dealers, with reference levels at higher numbers out of inland locations.

Southern Plains: Granular urea pricing was down from last report at $240-$243/st FOB Inola and Enid, Okla. Sources said reference pricing from Koch moved to the low end of that range in early October.

South Central: Granular urea pricing was down from last report. Sources tagged the market at $245-$250/st FOB regional terminals, down roughly $5-$10/st from the previous week.

Southeast: Granular urea was tagged at $250-$255/st FOB port terminals, with the low at Wilmington, N.C., and the higher numbers reported at Norfolk, Va., and Savannah, Ga.

Black Sea: Even though MTC/India awarded more than 800,000 mt for the next three months and other buyers are actively taking material, the price out of Yuzhnyy did not move dramatically. About all that happened is a slight tightening of the market range with the removal of lower-end priced material.

As last week waned, sources reported companies such as Transammonia and Keytrade were actively securing tons at prices that ranged from $205/mt FOB to $210/mt FOB. All of this material is reportedly being picked up for India.

And yet once the producers asked $212/mt FOB late last week, buyers balked and walked away.

As a result of all the tons heading to India that are not from Yuzhnyy and no other major buyer on the horizon, industry sources pegged last week’s price at $205-$210/mt FOB, with plenty of opportunities for a crash.

Industry observers were fascinated by the turn of events. At almost any other time, said one source, the rapid booking of 800,000 mt would move the global market up. Yet the nearly 1 million tons being taken by MMTC and the 700,000 mt or so being taken by IPL/India seems to have only provided a floor rather than a healthy boost in pricing. For some, what is happening is no surprise.

Once India is covered there are no other major buyers that can affect the market, say sources. India is the major game in town, they say, and by being willing to take prills or granular, the buyers have pitted formerly divided producers against each other.

And the glut in global granular hasn’t hurt buyers.

Still, said one source, the price level has tightened as a result of the India purchases. Material for October and November is now clearly closer to $210/mt FOB than $200/mt FOB. However, said an observer, once the cargoes are loaded for India and the few Latin American buyers who slipped in, there will be few buyers around to take anything.

Even the official KIP is pegged at $203/mt FOB. One trader noted even the government doesn’t expect to see prices stay at the levels negotiated around the MMTC tender. Observers are speculating that the KIP will most likely be shattered as the first quarter of 2007 approaches because no one is ready to buy large quantities at that time. The only large buyer seen on the horizon is Pakistan, and they will be looking for only 100,000 mt.

Even as some people talk up the market by pointing out all the tons that could come from Yuzhnyy and other Black Sea ports, others point out that warehouses still have some unsold tons. Reportedly, there is at least one October or early November cargo still unspoken for in Yuzhnyy.

Another source noted that even though many are expecting to see lots of tons flow from the Black Sea to India, the offers in the tender and in the awards remain “OPEN.” With lots of granular available on the global market and with India’s willingness to take granular, the Black Sea suppliers do not have a lock on the deals.

And that doesn’t even take into account the Chinese urea, which is beginning to show a softening in pricing as well.

India: In a move that surprised many in the industry, MMTC went straight from receiving offers to issuing awards. When the phone calls were done, sources say about 880,000 mt was awarded for shipment between November and January.

The surprise for most was not the quantity, but the quickness with which the buyer moved. Even though industry conventional wisdom had been that MMTC would take about 500,000 mt by the time the tender closed, murmurs of almost 1 million tons began to circulate.

Results of the tender awards follow:

In addition, 175,000 mt was booked directly from Middle East suppliers for shipment November through January.

In accepting the deals as written, MMTC moved the markets up in the Black Sea and Middle East.

The final price paid comes in about $9/mt higher than IPL paid for its last order. Sources say MMTC had done its homework with their political masters, however, and is safe from accusations of being ineffective negotiators or worse. Observers note that the ministries responsible for agriculture made it very clear that urea was needed – and needed before the first quarter of the New Year got too old. The ministry predicted a 1.5 million mt shortfall unless IPL and MMTC were allowed to secure the tons quickly.

Even after the tender offers were awarded, MMTC went back for more. One Asian trader said the buyer asked for extra tons at the same price. Eventually some folks came through, including Middle East producers.

The real issue now will be port congestion. Sources say that with so many ships of different sizes heading for a limited number of ports on the East and West Coasts, the logistics of keeping all the orders straight and handling the line-up in an orderly manner will be a handful.

Middle East: The producers finally got what they were hoping for: $230/mt FOB and up for prills, and a solid anchor in the upper $220s/mt FOB for granular.

Sources report that of the 880,000 mt being taken by MMTC/India, about 175,000 mt are coming from this region. For some that sounds like a lot, but as one observer noted, the way things have been going around this tender, anything is possible.

Even though producers are claiming they are sold out with nothing to sell for October or early November, at least one trader reported being approached by more than one producer offering tons for sale to places other than India. The traders demurred – not because the offering price was too high, but because the only buyers other than India were either not interested or were a bit dodgy on payments.

Offers into India for granular were often marked at $3/mt lower than the prilled material, and this number carried into the Middle East market as well. With prills going at $231/mt FOB in the tender, the granular product went for $227-$228/mt FOB.

With these purchases sources say the producers are in good shape, but still not so flush that they can ignore the rest of the global market.

Granular producers in the region are especially facing potentially dangerous times.

A drought in Australia has reduced the need for imports. At the same time, U.S. producers are showing no sign of shutting down. With reports last week that a mild winter is predicted and with the hurricane season winding down, mainstream media outlets are reporting expectations of a continued soft natural gas market. With lower gas prices the American producers can keep operating, thus lowering the need for imported urea from the Middle East.

The results of the ASSC/Iran tender showed a serious lack of interest from a number of sources.

The buyer was looking for 300,000 mt of material, but got significantly fewer tons offered. One source noted the short steaming time from Middle East suppliers to the Iranian ports means the buyer will have the urea on hand before the paperwork for the shipment is completed. He adds that political issues in Iran often delay payments to suppliers. The combination of the two makes any deals with Iran questionable for traders who depend on close margins to survive.

That notwithstanding, offers into Iran showed firm prices from the Black Sea and Middle East.

Keytrade reportedly offered two cargoes at $265/mt CFR, while Transammonia came in for 30-33,000 mt at $276. Mekatrade offered a similar size at $273/mt CFR, with backing from Eurochem. Helm’s offer was for one cargo at $282/mt CFR. Sabic offered 25,000 mt of bagged product at $261/mt FOB. Once the price of bags was deducted, said one trader, that puts the granular at $251/mt FOB, which represents a $20 increase over what MTC paid in its tender.

In another tender, ASSC was looking for 30,000 mt of prompt material. Here offers came in from companies offering material by sea and land. Unifert was asking $213.50/mt FOB boarder for 10,000 mt delivered in 10kg bags. Freedom Sky offered a similar quantity, also in bags, for $201.25/mt FOB boarder. Mekatrade and Keytrade also came in with one cargo each at $266.85/mt CFR and $279/mt CFR, respectively.

What the industry noted was that the offers made to ASSC were nowhere close to what the buyer was asking.

Reportedly, Transammonia snapped up most, if not all, of the production from Egypt for the next couple of months.

Libya will be supplying some tons to India through Toepfer. But because of port logistics, other possible sales are lost. Sources say eventually the tonnage will be picked up by other buyers, but for now just a few tons will be getting out.

China: Sources expect to see a great deal of Chinese tons heading to India. Beyond the Indian purchases, sources are hard pressed to find any other large buyers for the product. Reportedly, the price is beginning to slip, even with the offers into Bangladesh for the BCIC tender. Still, sources say the price for granular and prills is pegged in the mid-$220s/mt FOB bagged.

Bangladesh: BCIC closed its tender last week, along with a make-up tender.

All told, the company called for offers on 200,000 mt of prills and 100,000 mt of granular. Offers came from the usual companies, as well as some non-traditional firms. Observers in the industry discounted the non-traditional offers immediately, and called the market into Bangladesh in the mid-$260s to low $270s/mt CFR bagged.

The make-up tender was called because offers made in the September tender expired before BCIC could make an award. The results of that tender are as follows:

Results in the granular tender for 100,000 mt are as follows:

In the second prilled tender, also for 100,000 mt, the results are as follows:

Sources say Bangladesh needs all 300,000 mt they have requested. The application season is rapidly approaching, and so far, say observers, the country is short of urea. More than one trader has been critical of the way BCIC has handled the tenders in the past. The major complaint is that the awarding process is too slow and bureaucratic. By the time BCIC finally gets the funds from the government and is ready to make an award, the market has shifted in a way that often makes the deals unworkable.

On top of that, BCIC has been known to make awards and then walk away from the deal if the market moves down, thus leaving the trader with expensive tons and no home. Most of the material offered – if not all – is from China. Sources say the bagged Chinese product is perfect for the Bangladesh market, and steaming times are short.

Vietnam: Sources are now reporting that buyers are looking at the upper $230s/mt CFR bagged for imported material. This is on the heels of $241/mt CFR for 10,000 mt Yara recently sold. Part of the demand to lower prices is a realization from buyers that the global market is soft – especially in granular. And part is because the domestic producers – notably Phu My – are again lowering their prices in what appears to international traders as an effort to scare away imports.

NITROGEN SOLUTIONS

Eastern Cornbelt: UAN-28 was unchanged at $160-$168/st ($5.71-$6.00/unit) FOB regional terminals.

Western Cornbelt: UAN-32 was quoted at $179-$185/st ($5.59-$5.78/unit) FOB regional terminals to dealers, down slightly from last report, with reference pricing quoted at the $190-$192/st ($5.94-$6.00/unit) FOB range.

Southern Plains: UAN-28 pricing was down from last report, with the low end quoted by several sources at $135-$140/st ($4.82-$5.00/unit) FOB regional production points, and the upper end at roughly $5.70/unit FOB Kansas terminals after discounts from reference levels at the $6.00/unit mark.

South Central: UAN-32 was quoted at $175-$180/st ($5.47-$5.63/unit) FOB regional terminals to dealers.

Southeast: The UAN-30 truck market was commonly quoted at $175/st ($5.83/unit) FOB port terminals to dealers. Sources quoted the UAN vessel market at $180/mt C&F.

AMMONIUM NITRATE

Western Cornbelt: Ammonium nitrate was unchanged at $245-$250/st FOB in the region; the dealer market FOB St. Joseph, Mo., was pegged at the $248/st level.

Southern Plains: Ammonium nitrate remained at $245/st FOB the port of Catoosa, Okla.

South Central: Ammonium nitrate was $235-$240/st FOB in the region.

Southeast: No current prices were reported for ammonium nitrate in the region. One source said an ammonium nitrate vessel was coming into the Wilmington market in early November, and was not yet priced.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate remained at $155-$157/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate was quoted at $155-$160/st FOB, with the upper end to dealers FOB Omaha, Neb.

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

South Central: Granular ammonium sulfate was $170-$180/st FOB in the region, with the upper end to dealers FOB Vicksburg.

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. Standard grade sulfate was posted at $135/st FOB Augusta.

PHOSPHATE

Central Florida: New DAP sales out of Central Florida last week slowed to a trickle as the fall season, which has been not much more than a ripple, was beginning to come to a close. One of the areas served by railcars from Florida – the Northeast – has been abnormally wet this season, which has made it difficult for farmers to get into the fields. In that same area, dairy farmers were taking a beating, with milk prices down about $4 per 100 gallons. As a result, dairy farmers were cutting back or eliminating the use of most fertilizers, especially DAP, in order to save money, and were planning to mine the soil. Some hope still exists for the portions of the Cornbelt fed by Central Florida rail, assuming farmers place phosphates on their fields in November to prepare for spring planting.

An explosion last week at Mosaic’s Faustina processing plant could force that company to ship phosphate from Central Florida across the Gulf to the river, if the plant cannot reopen relatively quickly. Otherwise, Miss Phos will be the major beneficiary.

The Central Florida DAP price range was unchanged last week at $218-$221/st FOB. Customers who place large orders get the lowest prices. Mosaic’s posted price was $228/st FOB, but was selling as low as $221/st FOB; CF’s posted price was said to be $227/st FOB, with sales in the same range as Mosaic’s. 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 were $255/st FOB for DAP or MAP.

U.S. Gulf: There was a flurry of activity last week in the upriver areas, as needed rain fell in the area and farmers went back to work on their fields, according to numerous sources. Other areas that were more active included the middle Mississippi region and areas around St. Louis, the Illinois River, and along the Arkansas River, where many terminals ran out of phosphates last week. Those benefiting most from the surge in upriver business were those with barges in place and within a day or two of their ultimate destinations – and those also brought the highest prices. Normally the river would be closed by Oct. 15, but the U.S. Coast Guard postponed the date until conditions change. However, barges still in the New Orleans area would not likely be able to make it upriver north of St. Louis before the river closes, which was a real boon to those with floaters in place. The difference in price between an in-place barge upriver and those in New Orleans was as much as $5/st FOB last week.

A few weeks ago barges were easy to find, although priced somewhat higher than last week, but that situation has changed. Most of the floaters were snapped up last week, so few remain.

Last week Mosaic’s Faustina processing plant had an explosion at the ammonia plant, and the entire facility was shut down until an inspection could determine the extent of the damage. As of late last week, it was still closed. If the plant will be down for much longer than a week, it could force barge prices to increase. A prolonged outage would not likely continue to make prices go up, because phosphate sales tend to drop off in November and December anyway. Some traders with barges available last week stopped giving out prices, and planned to wait to see the extent of damage to the plant and how long it will be before it restarts so they can determine the impact on the market.

The NOLA DAP barge price range last week fell another couple of dollars on the low end of the range, from $217-$220/st FOB the previous week to $215-$220/st FOB.

Eastern Cornbelt: DAP was steady at $255-$265/st FOB regional warehouses, with the low on the river and the upper numbers inland. MAP was quoted in roughly the same range as DAP, and TSP remained at $235-$245/st FOB, with upper numbers again out of inland warehouses and the low on the river system. 10-34-0 remained at $250-$260/st FOB in the region.

Western Cornbelt: DAP and MAP were unchanged at $255-$260/st FOB river terminals, and up to $265/st FOB inland. TSP remained at $235-$245/st FOB in the region, and 10-34-0 was quoted at $250-$255/st FOB in Nebraska and $255-$260/st FOB in Iowa.

Southern Plains: DAP was pegged at $255-$260/st FOB Catoosa, with MAP in roughly the same range. 10-34-0 remained at $245-$255/st FOB in the region, with the upper end out of Kansas shipping points to dealers. Delivered 10-34-0 was quoted in a broad range at $255-$275/st in the region.

South Central: Several sources reported brisk phosphate and potash movement out of warehouses for post-harvest applications on corn and cotton ground. DAP and MAP pricing was down slightly from last report. The market was quoted at $253-$260/st FOB most regional warehouses to dealers, while pricing out of production points was reported in the mid- to upper-$240s/st FOB in Louisiana and eastern Texas. In Vicksburg the phosphate market was pegged at $255-$260/st FOB, with the high to dealers and the low to national accounts. The warehouse market for TSP remained at $220-$225/st FOB in the region.

Southeast: Delivered DAP in North Carolina was pegged in the mid-$250s/st last week, down roughly $10/st from last report.

U.S.Export: Export phosphate sales were absent again last week as the international market appeared to have slowed. Recent sales into Uruguay have pretty much come to an end, and were not expected to resume until sometime after the beginning of next year. Those sales were said to have been in the range of $253-$257/mt FOB, which set the current week’s range. The previous range, based on sales from almost a month ago, were $259-$263/mt FOB.

POTASH

Eastern Cornbelt: Potash remained at $195-$200/st FOB regional warehouses, depending on grade and location, with postings now at $204-$208/st FOB and $210/st rail-DEL in the region.

Effective Oct. 10, Agrium’s fuel surcharge rates moved to 23 percent in the Central Atlantic region, including Indiana and Ohio.

Western Cornbelt: Potash remained at $193-$198/st FOB regional warehouses, with new regional postings at $208/st FOB and $212/st rail-DEL.

Agrium’s Oct. 10 fuel surcharge rates included 17.5 percent in Iowa, Nebraska, Missouri, the Dakotas, Minnesota, and Wisconsin.

Southern Plains: Potash postings remained at $192-$198/st FOB Carlsbad, N.M., depending on grade. Warehouse pricing was tagged at $197-$202/st FOB in the region, with delivered potash at $208/st on the upper end.

Agrium’s Oct. 10 fuel surcharge rates included 17.5 percent in Kansas, Oklahoma, Texas, and New Mexico, and 19 percent in Colorado.

South Central: Potash pricing was down from last report at $188-$195/st FOB regional warehouses, depending on grade and location. The market for granular potash FOB Vicksburg was quoted at $193/st to dealers. Another vessel of Russian potash was reportedly slated for arrival at the Gulf at mid-month.

Southeast: Dry potash pricing remained at $209-$220/st DEL in the region, depending on grade and location, for the last done business. Several sources said they filled before the Oct. 1 pricing increase from several domestic producers, so the new postings remained untested.

SULFUR

Tampa: Although fourth quarter sulfur prices for Central Florida phosphate producers were settled a couple of weeks ago at $5/lt down, customers and sulfur producers on the West Coast will not sit down and begin discussions until the beginning of November. Once the new prices are set, they will be retroactive. Nevertheless, the price was expected to be less than for the third quarter.

A source said some sulfur producers were beginning to take a loss on the sulfur sales because of the high cost of transportation. That was said to be especially true for Canadian sulfur producers in the more remote locations. Meanwhile, rail rates were expected to increase about 8 to 10 percent for next year. While fuel surcharges were beginning to come down for some railways, but not all, the basic rates were said to have been increased – or will be, so the result will be still higher prices.

Most in the sulfur industry were busy last week firming up supply agreements for next year, but little else was in the works.

MARKET NOTES

Edmonton, Alberta: The driver of an anhydrous ammonia truck was killed Oct. 7 near Girouxville, northwest of Edmonton, when his truck overturned in a one-vehicle accident, according to the Edmonton Journal. No others were injured, though all of the ammonia leaked from the tank. Six local farm families were evacuated, and local authorities credited the direction of the wind with keeping the fumes away from the nearby village of Girouxville. Authorities were not immediately sure if the accident or the leak killed the driver, 64-year-old Richard Thibault.

Columbus, Ohio: Hexion Specialty Chemicals said Oct. 2 that it has lifted its force majeure status for formaldehyde and formaldehyde-derived products in North America. As a result, Hexion is eliminating allocation restrictions it had placed on the products. The force majeure, announced Aug. 24, came after the company itself was placed on allocation for its methanol raw material.

Russia: Potash producer JSC Uralkali is not going to proceed with a public offering on the London Stock Exchange as earlier indicated, according to reports last week. Reportedly the company, which was prepared to offer up to 29 percent in the IPO, felt the market was not recognizing the company’s true value.

Israel: Haifa Chemicals reports that as of early October it has increased its greenhouse grade calcium nitrate by up to 50,000 mt/y. This comes in addition to Haifa’s calcium nitrate agri-grade, available to the international marketplace for several years now. Haifa says it can now supply the entire array of chloride-free and fully soluble products, containing macro-nutrients (nitrogen, phosphorus, and potassium), secondary nutrients (calcium and magnesium) and all micro-nutrients. They also can be used in most advanced crop nutrition systems, including Nutrigation^TM, foliar feeding, and soil applications.