AMMONIA

U.S. Gulf/Tampa: First half Tampa ammonia prices were settled last week at the $288/mt DEL mark. In other news, sources reported that PotashCorp sold a partial cargo of 11,000 mt into Port Comfort, Texas, at $293/mt DEL.

In the meantime, players said that the most recent NOLA benchmark of $270-$275/st FOB would be hard to repeat. Sources indicated that prices were moving up, with new quotes in the $280-$285/st FOB range.

Eastern Cornbelt: There were reports that some ammonia suppliers on the eastern leg were sold out in early August, although other terminals still had fall tons available. The market remained at $350-$365/st FOB in the region, with the low on a spot basis in Illinois and the higher numbers in Indiana. There has been some interest in urea and ammonia fill, with some dealers reporting that growers are already asking about locking in a spring 2007 ammonia price.

Western Cornbelt: Anhydrous ammonia was quoted at $345-$360/st FOB regional terminals, although there have been few new sales to test the market. One Iowa source said new product would likely be quoted at the upper end of that range to dealers, while others maintained that the common asking price last week was $350-$355/st FOB or less on a spot basis.

California: Anhydrous ammonia pricing was down from last report at $395-$400/st DEL in the state. Agrium’s postings for truck-delivered anhydrous ammonia dropped on Aug. 21 to $395/st in Central California and $400/st in northern California.

Pacific Northwest: Delivered ammonia remained at $335-$345/st in Montana and $345-$355/st in Washington and Idaho. One supplier was offering forward contract ammonia tons at the $360/st mark FOB Washington terminals for October and November, with 20-0-0 aqua ammonia listed at $94/st FOB for that period.

Western Canada: Anhydrous ammonia pricing as of Sept. 5 was pegged at $462-$497/mt DEL in the region, up nearly $20/mt from last report.

Asia: Sources report a tightening of the market that does not bode well for buyers. Talks between Taiwanese buyers and suppliers continue even as deadlines for committing to new tons draw near. Sources say TFC and CPDC will have to pay more for their cargoes despite their desires to hold the line.

One of the major influences in the Asian market is the growing Chinese demand for ammonia. Sources say tons that otherwise would have been used to ease price tensions in Taiwan and South Korea are now being snapped up at premium prices by the Chinese mainland.

India: PPL issued an inquiry for 20-25,000mt ammonia for arrival Paradeep port during Sept. 18-23.

UREA

U.S. Gulf: Price ideas were across the board last week, with sources reporting actual business within the $224-$230/st FOB range. Most called the market somewhere within the $226-$228/st FOB range. Sellers argued that significant amounts had been sold toward the higher end of the range, while buyers said that individual barges could be picked off from sellers unwilling to pay holding costs. Buyers also argued that neither inland prices nor demand has gone up enough to warrant higher barge prices.

Players were expecting a lot of tire kicking in San Francisco, with few predicting much actual activity at the conference. One seller noted that buyers have turned very conservative, with the end result being possible shortages next year.

Eastern Cornbelt: Granular urea was quoted at $255-$265/st FOB in the region, with the low out of river locations and the upper numbers inland. Agrium reposted granular urea on Sept. 5 at $275/st FOB Garrett, Ind., and $280/st FOB Saginaw, Mich. Rail-delivered urea postings from the company moved on that date to $265/st in Minnesota, Wisconsin, and the Dakotas, $280/st in Illinois, Indiana, and Ohio, and $285/st in Michigan.

Western Cornbelt: Granular urea was quoted at $255-$260/st FOB river terminals in the region, with inland postings as high as $285/st FOB.

California: Granular urea remained at $310-$320/st FOB and $320-$330/st DEL in the state. Sources said the market has remained buoyed by high freight costs from Canada.

Pacific Northwest: There were reports of tight urea supplies in parts of the region last week, and granular urea pricing was up slightly from last report. The regional market was quoted at $255/st FOB and $265-$275/st DEL in Idaho, Washington, and Oregon, with Montana pricing reported at the $253-$260/st DEL mark. Forward contract urea for October and November was available from one regional supplier at $270-$275/st DEL in Montana, $280/st DEL in Oregon, Washington, Idaho, and Utah, and $290/st DEL in Wyoming.

Agrium’s granular urea postings firmed on Sept. 5 to $280/st FOB Washington warehouse locations at Glade, Kennewick, Warden, and Wilson. Delivered urea postings from the company moved on that date to $257-$262/st in Montana and Wyoming, depending on location; $280/st in southern Idaho and Oregon’s Malheur County; $285/st in Washington, northern Idaho, Oregon excluding Malheur County, and northern Nevada; $287/st in northern Utah; $290/st in central Utah; and $295/st in southern Utah.

Western Canada: Granular urea was quoted at $335-$355/mt DEL, up $10/st from last report.

India: Last week IPL buyers combed the globe and nailed down great prices for almost 400,000 mt of urea.

The tally as of late last week is as follows:

The Toepfer/Bangladesh sale comes from Kafco and is granular; the rest are all prills. Sources say IPL will most likely return to the bargaining table this week for more granular purchases.

The Trammo cargoes include a liquidated long position from Yuzhnyy as well as a long from China. The China cargo is actually expected to be split into two separate shipments.

The netback on the CIS material is pegged at $210/mt FOB while the Middle East product shows a $10/mt increase. All this means, said one source, is that IPL indicated the price range it was willing to accept – the mid-to-low $240s/mt CFR – and that is where the sellers settled. This move represented an increase for the Middle East and a drop for the Yuzhnyy producers. The Chinese tons came in just slightly below where many had figured the market to be.

And this time, instead of waiting for the tender to fall, prices around the globe are showing a bearish tendency. Reportedly, once the results of these purchases hit the marketplace, Brazilian buyers stopped their talking and decided to see what they could do at the TFI conference in San Francisco. In fact, said one player, as far as urea is concerned, Brazil is the only serious game in town right now.

Recently IPL has taken to signing large contracts with regional buyers – mostly from the Middle East – and then calling a tender to confirm the prices just negotiated. Whether IPL will call another tender or not is still up in the air. One source said it would not hurt to do so even at the risk of giving a psychological boost in the market. One trader has regularly pointed out that after every IPL tender the price craters. This time the fall took place without the tender.

One European trader noted that IPL has played its cards beautifully. By showing it can take tons from Yuzhnyy, the Middle East, and China, IPL has made it clear it will only accept the offers that fit into its idea of a proper price.

Middle East: Producers are apparently happy with the deals cut with IPL. The prilled producers were able to move the market up even though it was not as much as they had been hoping for. Talk of $230/mt FOB material that circulated earlier this month and late last month was dismissed by many in the industry, and the IPL deal nailed it.

Prills are expected to maintain a slight premium over granular from this region as more and more granular urea becomes available. At the same time, sources say there is little room for additional price growth. With China entering the market in weeks and demand falling off, sources say there is little chance that prices will move up.

Besides the Chinese material stalking prices, sources report Yuzhnyy producers still have 80,000 mt of unsold September material and at least five long cargoes from Yuzhnyy and the Baltic looking for homes.

So for now, the price for prills is $225-$227/mt FOB – but for how long is up in the air.

Observers say buyers are automatically dropping at least $5/mt from prilled prices before they talk about granular, and aggressive buyers are shaving $10/mt off the prills.

For many on the buying side of the industry this formula makes sense. They argue granular urea reserves continue to build not only in the Middle East but around the globe. For now, sources say the IPL buyers are willing to discuss making “a few purchases,” but only at the right price. Reportedly, the current bids are at $215/mt FOB with offers at $218/mt FOB. With Kafco/Bangladesh material being offered at $220/mt FOB, the Middle East tons will have to be sold at the IPL bidding price to approximate parity.

For now, say sources, the market remains in the $215-$220/mt FOB range until IPL or another major buyer breaks the logjam. But, say sources, there are no other major buyers on the horizon.

To add to the Middle East granular producers’ woes are all the extra tons that are being produced from Libya to China down to Australia. There is a growing volume of granular urea being made available for the international market, and many sources in the industry are hard pressed to find any argument for increasing the price.

Black Sea: The IPL/India purchases have pushed the netbacks from Yuzhnyy to the $210/mt FOB level, say sources. As a result of the IPL business, other major buyers – notably Brazil – have backed away from their current round of talks. Sources say these buyers will most likely be trying to cut deals at the TFI meeting in San Francisco and will be expecting significant price reductions.

One source noted that a recent offer of $235/mt CFR carried a netback to Yuzhnyy at $210/mt FOB, but if applied to the Baltic ports it would show sub-$200/mt FOB. And, said one source, that $210/mt FOB is being generous.

While $210/mt FOB is pretty much agreed to be the new low, sources say some of the higher priced material is still floating around. Best guesses on the market from the area are now pegged at $210-$215/mt FOB.

Reportedly, producers have at least 80,000 mt of September material still unsold with the clock ticking. At the same time, about five cargoes have been booked as long positions, with no homes yet found. Once the positions are called, the traders holding these cargoes will have to liquidate.

It is with these factors in mind that Brazilian buyers were moved to sit back.

Sources expect to see Yuzhnyy material being offered heavily in the upcoming Ecuador and Turkey tenders. Although the two tenders don’t even add up to 40,000 mt, sources say any business at this point will be helpful to the producers.

China: Chinese tons dominated the BCIC/Bangladesh tender and played a major moderating role in the IPL/Indian purchase of last week. Sources say more tons are expected to be offered.

The netback from the IPL deal is estimated at $220/mt FOB, which is only slightly lower than expectations earlier this month. Sources have said that with no domestic market and producers under the gun to keep production going, the price at the port for exported material could only go down.

Even with the tons sold to IPL and BCIC – assuming this latter deal goes through – sources say there will still be plenty of Chinese tons to go around. Traders looking to take advantage of this potential surplus remain hesitant, however. One trader noted that Chinese producers have been known to pull their tons away if the market goes up, thus allowing them to sell those tons to another buyer for the higher price. At the same time, if the market slides, the producer will want to adhere to the letter of the contract and will refuse to renegotiate the price based on current market conditions.

Chinese sales teams are expected to fan out among the delegates at the TFI conference looking for opportunities to move large quantities as soon as possible.

One source in Europe said he would not be surprised to see the Brazilians talking to the Chinese, if for no other reason than to serve notice on the Yuzhnyy and Middle East suppliers that there is an alternative.

Latin America: As soon as the IPL/India deals became known, Brazilian buyers pushed their chairs away from the negotiating tables and packed their bags for San Francisco. Reportedly, the buyers are willing to talk further at the TFI gathering in California, but only if the price comes down.

A recent rejected bid had a Yuzhnyy netback of $210/mt FOB and a Baltic equivalent of sub $200/mt FOB. That was before the IPL business, however.

Now with Yuzhnyy firmly at $210/mt FOB, there appears to be little incentive for the Brazilians to add anything to the table.

At the same time, Ecuador is calling a tender for 25,000 mt. Sources say suppliers will be anxious to get something on their books. One trader expected to see blood knee-deep once the offers are opened.

Bangladesh: The BCIC tender closed Sept. 5 and, as expected, was dominated by Chinese material.

Summit came in low for the prills, with 100,000 mt broken into four lots and prices ranging from $263.68/mt CFR bagged to $266.32/mt CFR.

On the granular side there was a bit more competition.

Just how soon BCIC will announce and award a winner on this tender is still up in the air. No winner for the August tender has officially been named, even though Liven came in with the lowest offers for both flavors of urea.

So far, money has only been allocated from the government to cover the results of the July tender.

NITROGEN SOLUTIONS

U.S. Gulf: Most players were putting prompt barge business within the $158-$162/st ($4.94-$5.06/unit) FOB range, with some saying quotes are now $165/st FOB.

Eastern Cornbelt: UAN-28 was steady at $163-$175/st ($5.82-$6.25/unit) FOB regional terminals, with the low reported on a spot basis out of river locations in Illinois and Indiana. Dealer postings were reported as high as $183-$185/st ($6.54-$6.61/unit) FOB inland.

Western Cornbelt: UAN was unchanged at $5.90-$6.25/unit FOB regional terminals, with most dealer quotes on the upper Mississippi River tagged at the $6.00/unit FOB mark.

California: Nitrogen solutions pricing was up slightly from last report. UAN-32 was quoted at $205-$215/st ($6.41-$6.72/unit) FOB and $220-$225/st ($6.88-$7.03/unit) DEL in the state.

Pacific Northwest: UAN-32 remained at $205-$215/st ($6.41-$6.72/unit) DEL in the region, with sources quoting the upper end of the range as the more common dealer level last week.

Western Canada: UAN-28 pricing was up slightly at $213-$222/mt ($7.61-$7.93/unit) DEL in the region.

AMMONIUM NITRATE

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

California: No market was reported for ammonium nitrate in the state. CAN-17 was pegged at $205-$210/st FOB.

Pacific Northwest: CAN-17 remained at $215-$220/st DEL in the region. Ammonium nitrate was steady as well at $270-$275/st rail-DEL in Idaho and Washington.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate remained at $150-$155/st FOB in the region.

Western Cornbelt: Granular ammonium sulfate was $150-$155/st FOB.

California: Ammonium sulfate was quoted at $175-$185/st rail-DEL, with the low for standard or coarse and the higher numbers for granular sulfate. Dealer pricing out of regional warehouses was pegged at $180-$190/st FOB, with the low again for standard or soluble and the high for granular. One source said sulfate movement for rice topdressing was down significantly in the state, resulting in heavy carryover.

Pacific Northwest: Granular ammonium sulfate was $170-$180/st DEL in the region, with the upper end for truck-DEL tons. There were reports of railed material coming in at even lower numbers for multiple railcars on a spot basis, but sources were doubtful that these numbers accurately reflected the regional market last week.

Western Canada: Granular ammonium sulfate remained at $270/mt DEL.

PHOSPHATES

Central Florida: Ernesto dropped a lot of water, but did little damage to the phosphate industry in either North Carolina or Florida.

After CSX Transportation put its new higher rates into effect on Sept. 1, phosphate sales out of Central Florida dwindled significantly, with both traders and producers reporting little in the way of new sales. CSX added its seasonal adjustment of $250 per car, or $2.50/st. In addition, the railroad hiked its fuel surcharge from 19.2 to 20.8 percent.

The fall season has begun in some parts of the country, and eventually that will mean increased sales – but not yet. Traders said dealers were continuing to wait until their existing supplies were gone or nearly gone before they planned to reorder.

The Central Florida DAP range was unchanged at $223-$226/st FOB last week. Mosaic’s posted price was $228/st FOB, but was selling as low as $226/st FOB, and CF’s posted price was said to be $227/st FOB with sales at $223/st FOB. Prices do not include discounts; however, some large buyers can obtain a lower price without a discount from some producers. CF was said to be selling DAP as low as $223/st FOB. 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’ prices were unchanged at $255/st FOB for DAP and $261/st FOB for MAP, but sales improved slightly compared to the previous week.

U.S. Gulf: The combination of the slow start to the fall season and the closing of the Arkansas River helped push the price of NOLA DAP barges down last week. Traders whose barges were stuck on the wrong side of the lock near Little Rock, which was closed for maintenance by the U.S. Army Corps of Engineers on Sept. 4, were eager to sell and dropped their prices. That was cheaper than having to pay demurrage for that period of inactivity. That was good for buyers, but not for sellers. The lock will reopen on Sept. 14. Sales were made as low as $221/st FOB, which was the lowest price for some time. The depressed barge market, say some, will only last until the fall season gets into high gear, which should be near the end of September or early October.

Despite – or perhaps because of – the lower prices, more barges were traded last week than during the past two weeks combined. In addition to the $221/st FOB sale, several were made at $222/st FOB, even more at $224-$225/st FOB, and one at $227/st FOB. In reality, the sale of the $227/st FOB had about the same delivered price as the $224/st FOB barges due to lower freight costs. Freight continues to be the biggest variable in barge sales on the river.

Warehouse sales on the Arkansas River system were booming last week, and traders with DAP and other phosphates in stock will do well. Most of that activity was due to the winter wheat crop. Rain finally reached Oklahoma and northern Texas, and that was given as the primary reason for increased sales. Areas farther north should begin to see demand within the next couple of weeks. Information from traders and producers indicated that phosphate supplies in the upriver areas were especially low, and with the river closing on Oct. 15, may not be enough to meet demand there.

Sales last week pushed the NOLA DAP barge price range down from $225-$231/st FOB the previous week to $221-$227/st FOB. The lowest prices were obtained from traders who were selling Miss Phos barges, but freight can make a difference.

Eastern Cornbelt: Dealers reported some inquiries from farmers about fall phosphate and potash applications, with reports that expectations are high for an increase in corn acreage in 2007. DAP and MAP were steady at $260-$270/st FOB regional warehouses, with the low out of river locations and the upper numbers inland. The dealer market FOB Cincinnati, Ohio, was quoted at $260/st for MAP and $263/st for DAP. One Indiana dealer reported booking some DAP fill earlier at the $259/st DEL level. 10-34-0 remained at $250-$260/st FOB in the region.

Western Cornbelt: DAP was quoted in the $257-$265/st FOB range, with the low out of spot Mississippi River warehouses in the region. The market FOB Dubuque, Iowa, was pegged at the $263/st FOB mark, while inland pricing was reported at higher levels to dealers.

MAP was priced the same as DAP, with reference levels either at the same number or up to $4/st higher than DAP, depending on location. TSP was quoted at $235/st FOB out of spot warehouse locations on the upper Mississippi last week. 10-34-0 was $250-$255/st FOB in Nebraska, with the low for prompt tons. The 10-34-0 market in Iowa was pegged at $260-$265/st.

California: MAP remained at $315-$320/st FOB warehouse or DEL, with the low for railcars and the high for trucked tons. DAP was $5/st higher than MAP. 10-34-0 was steady $248-$253/st FOB, and 16-20-0 was $235-$240/st FOB in the state.

Ortho-phosphoric acid was pegged at $5.40-$5.50/unit DEL, with super-phosphoric acid at $5.50-$5.60/unit DEL in the state.

Pacific Northwest: Sources reported slightly higher phosphate prices after a fill program ended Sept. 1. MAP was quoted at $300-$310/st FOB or DEL in the region, with the low in Montana. DAP was $5-$7/st higher than MAP. 16-20-0 remained at $235-$240/st DEL in the region. 10-34-0 was $240-$245/st FOB and $250-$260/st DEL in the region.

Super-phosphoric acid was $5.50-$5.60/unit DEL, and ortho-phosphoric was $5.40-$5.50/unit DEL in the region.

Western Canada: MAP was unchanged at $390-$415/mt DEL in the region.

U.S. Export: The export DAP market took a break last week, with no new sales reported by PhosChem or anyone else. Still, PhosChem was planning to load another six panamax vessels for India this month and one of the same size for China. Higher ocean freight rates have taken a bite out of FOB prices during the past several weeks.

CF will join PhosChem in October, and the impact of that will most likely be felt by traders who were using CF product to sell abroad.

The export DAP price range was unchanged last week at $259-$263/mt FOB.

POTASH

Eastern Cornbelt: Potash was $195-$200/st FOB regional warehouses, with most quotes for red granular product in the $195-$198/st FOB range. Rail-DEL red granular potash was also quoted at the $198/st mark in central Indiana. Potash barges were quoted in a range of $180-$185/st on the river system, with the low for Russian product.

Western Cornbelt: Potash remained at $193-$198/st FOB regional warehouses.

California: Potash was steady at $227-$233/st FOB in California, and potassium nitrate was unchanged at $485/st FOB for bulk and $540/st FOB for 50-pound bags. Sulfate of potash (SOP) pricing was steady as well at $343-$348/st FOB for granular and $331-$336/st FOB on standard/soluble.

Agrium’s fuel surcharge moved on Aug. 29 to 25 percent in California and Nevada.

Pacific Northwest: Potash remained at $210-$230/st DEL, depending on grade and location, with the low reported in Idaho on a spot basis.

Western Canada: Coarse potash was quoted at $242-$257/mt FOB, with the low at plant sites and the higher end out of regional warehouses. Granular potash was pegged at $245/mt FOB the mine.

India: New contracts have been signed for MOP. After the conclusion of IPL with BPC, the following fresh MOP contracts were signed in India: Zuari has contracted 250,000 mt ex Israel from ICL and 200,000 mt ex Jordan with APC $220.00/mt CFR WCI/ECI, including 180 days terms for shipment August 2006 through March 2007; and Kali und Salz has sold 135,000 mt plus 40,000 mt sellers option, with IPL at $220.00/mt CFR WCI/ECI, including 180 days terms for the same period.

SULFUR

Tampa: The weather in the Gulf of Mexico has not been a problem so far this hurricane season and refineries were humming along, so sulfur supplies were adequate. Meanwhile, the world market continues in the doldrums, with high ocean freights hurting netbacks to sulfur producers. Those factors continue to support a reduction in sulfur prices for the fourth quarter of between $3 and $5/lt, say some sources. It is likely that discussions of new prices on some level will take place at the TFI conference in San Francisco this week.

Conoco’s Lake Charles refinery was taken down last week for seven to 14 days due to a minor problem. That was not expected to affect sulfur supplies significantly.

Comments last week about the requirement to wash sulfur cars raised the question of what governmental agency ordered that change – it was the Federal Rail Administration. Questions were also asked about how much rail fuel surcharges have gone up. At the beginning of the year the surcharge was about 10 percent, but it has risen to about 20 percent for Class 1 railroads. During the past two years, the rental cost for sulfur railcars has risen about $200/mo., to $750/mo. The price for rail-hauled sulfur is generally about $6-$7/lt higher than the vessel-delivered Tampa price.

MARKET NOTES

India: The government has decided to reintroduce total sale and distribution controls on urea and is planning to put the new system in place by December. The objective is to ensure availability of urea at the right place at the right time. The move follows several complaints of non-availability of fertilizers in far-flung areas and an inquiry into the actual distribution during the last few crop seasons. While distribution of urea was under control some years ago, the previous government had decontrolled 50 percent of the distribution during its regime. Under distribution controls, the government decides how much fertilizer goes into each district of the various states. Under partial control, the government decides on the destination of 50 percent of the production while the companies are free to decide on the rest. Moreover, the Ministry of Fertilizers, Chemicals & Petrochemicals currently monitors only state-level availability, with district-level monitoring left to the respective state governments. It has been found that the state governments have not been doing the necessary monitoring, officials said. The controlled portion comes under the purview of the Essential Commodities Act, for which the actual freight cost is factored in to the subsidy payout, while an average rate is worked into the subsidy amount for the decontrolled part.