Ameropa came in with the lowest price in the first of three Trading Corp, of Pakistan urea tenders that indicates a Chinese netback in the mid-$270s/mt FOB. All told, 700,000 mt were offered in the 50,000 mt tender by 14 trading houses, indicating there appears to be plenty of urea available.

The Ameropa price of $294.71/mt CFR was closely followed by three other offers under $300/mt CFR. The highest offer came from Keytrade at $309.94/mt CFR, for a China netback of about $280/mt FOB.

The low price is only $6/mt higher than the last tender price for India’s west coast. Sources have said a price difference of $5-$10/mt between the Indian and Pakistan price is not unusual.

For Pakistan, the price is considered a win. The last TCP tender came in at $318/mt CFR.

While the availability of material does not seem to be the issue, the price for the product does. Traders say the $276/mt FOB netback from China on the Ameropa offer may not be available much longer. Chinese producers have been pushing for higher prices in recent weeks.

Additional tenders close Aug. 18 and 20.

On Aug. 21, 2015 a planned shutdown of operations will occur at the PCS Nitrogen facility near Lima, Ohio. The shutdown, which has been scheduled to complete capital improvements and plant maintenance, is expected to last approximately 7 weeks.  
 
The company says the project will be one of the most comprehensive in the history of the Lima operation. The company has invested over $350 million dollars in capital and maintenance spending over the past two years with this outage being the second of two planned outages. During the shutdown period the company estimates approximately 1,200 additional contract personnel will be on site to assist in completing the capital projects and maintenance activities. This project is estimated to result in additional local spending of approximately $6 million dollars.
 
The company typically plans such shutdowns every four to five years for the execution of inspections and repairs as part of their dedication to the safety of personnel and communities, protection of the environment and to maintain continuous reliable operation of the plant.  
 
PCS Nitrogen’s management would like to make local residents aware that an elevated noise level occurs during both the shutdown and startup of the facility. Accordingly, a higher noise level will be experienced for a period of time during the beginning of October when the site resumes operations. Increased traffic can also be expected along Buckeye and Fort Amanda Roads during this shutdown.
 
PCS Nitrogen Ohio LP (PotashCorp Lima) makes nitrogen products for agricultural and industrial uses. It employs more than 150 people.

An explosion – causes as of yet unknown – devastated the major northern Chinese port of Tianjin on Aug. 12. While largely a container port, sources say the closure will impact bulk shipments of urea to India under the terms of the MMTC tender that closed late last month.
  
The explosion took place just before midnight local time Wednesday night at a warehouse in the industrial park included in the Tianjin port authority borders. The blast was so great it affected an area greater than 10 kilometers (about 6 miles) with severe damage reported as far away as 3 kilometers (about 2 miles) away. The warehouse was not a port-side property.
  
More than 700 people were reported injured and 50 dead as night fell in the area Thursday.

The Chinese government is only saying the explosion took place in a warehouse that stored "dangerous goods." As first responders began searching the rubble, reports surfaced that the facility held large quantities of sodium cyanide. Clean-up crews, aided by Chinese army chemical specialists, started removing more than 700 tons of the toxic chemicals as soon as they could access the site.

Air samples showed high levels of sulfur dioxide and sodium cyanide. Other toxic chemicals including toluene di-isocyanate and calcium carbide are also being detected in the blast zone.
  
Initial reports were that the explosion did not impact general port operations. However, later reports were that port operations had been suspended until further notice.
  
About 150,000 mt of urea bound for India is affected by the closing of the port. Sources say a full panama and three half cargoes were slated to be loaded and dispatched over the weekend. It was unclear if any of the vessels were at quayside at the time of the explosion or were slated to enter the port late last week.
  
The investigation into the explosion began immediately with the detention of the owners where the blast occurred.

Large portions of the industrial park affected by the blast were still smoldering 24 hours after the blast. Special teams from the Chinese military are helping with search and rescue operations as well as the investigation into the cause of the blast.

CF Industries Holdings Inc. and CHS Inc. announced today that they have agreed to enter into a strategic venture. CHS, the nation’s leading farmer-owned cooperative, will make an equity investment in a wholly-owned CF subsidiary and also enter into a supply agreement. Under the supply agreement, CHS will be entitled to purchase annually up to a total of 1.7 million tons of UAN and urea at market prices. CHS will purchase a minority equity interest in CF Industries Nitrogen LLC for $2.8 billion and be entitled to semi-annual profit distributions from CF Nitrogen.

"Entering nitrogen fertilizer manufacturing through the purchase of a minority ownership in CF Nitrogen is the single largest investment in CHS history," said Carl Casale, CHS president and CEO. "This positions CHS and our owners for long-term dependable fertilizer supply, supply chain efficiency and economic value. In addition, the ability to source product from CF Nitrogen production facilities under our supply agreement benefits our owners and customers through strategically positioned access to essential fertilizer products."

Once the capacity expansion projects are completed at Donaldsonville and Port Neal, CF will have total production of 18.9 million product tons, not including the new capacity from the business combination with OCI NV. Of that total 18.9 million tons, CHS will have the right to purchase up to 1.7 million tons, or about 8.9 percent of CF Industries’ total production capacity. CHS, a major CF customer and industry leader, is making a $2.8 billion investment for approximately 8.9 percent of CF’s total system capacity.

CF Nitrogen will sell annually to CHS up to 1.1 million tons of granular urea and 580,000 tons of UAN, at market prices. The 1.7 million tons available under the supply agreement have an average gross margin that reflects the average gross margin across the entire CF system.

CHS’s semi-annual profit distributions from CF Nitrogen will be based generally on the volume of granular urea and UAN purchased by CHS pursuant to the supply agreement.

The transaction is expected to close Feb. 1, 2016, or earlier by mutual consent, subject to satisfaction of certain conditions.

Casale also announced today that the company has made a separate decision against moving forward with construction of a proposed fertilizer plant at Spiritwood, N.D.

"Our long-term goal has always been to add value for CHS owners through investment in the nitrogen fertilizer manufacturing space. To that end, we’ve continued to look at a variety of options, including the Spiritwood project," he said. "Ultimately, we determined that the construction cost, water supply challenges, overall risk profile and time required for the Spiritwood project had changed significantly since it was first considered. As a result, we concluded we couldn’t achieve the level of returns needed to justify the increased costs and risks.

"We deeply appreciate the tremendous support and assistance from the Jamestown and Spiritwood communities, North Dakota’s governor, elected officials and state agencies and organizations like the North Dakota Farmers Union; and other government leaders who have supported us through our due diligence process."

Casale noted that CHS has been a committed North Dakota business and neighbor since its 1931 founding and looks forward to a bright future that includes other investments in the state.

This week China announced that it would set the official value of the Yuan (CNY) lower and it has now declined ~2.8% vs. US Dollars (USD). On the surface this would lower the position of urea and phosphate producers on the global cost curve structure. Fertilizer is traded in USD so it is obvious to say that increasing exports boosts producer cash positions. However, the reintroduction of a 13 percent Chinese VAT tax on September 1st is a headwind to higher export levels as well as producer costs which adds turbulence into evaluating the impact.

For example; current urea prices in China are $270-$275 mt and the VAT would generally add ~$3.50-$5.50/mt in cost; implying that the cost structure would likely stay close to the same for the producer after the devaluation and VAT implication. Potash prices could face headwinds as imports are also subject to the VAT raising costs to farmers. The devaluation adds headwinds into benchmark price negotiations which are widely watched by the market. The real concern then is how producers (both urea and phosphate) and importers (potash) will behave going forward. The move to devalue signals heightened macro-concerns with China and the potential for more devaluations going forward. So while the VAT tax might off-set some downward pressure (nitrogen/phosphate) it still signals heightened risk and uncertainty to these markets.

Sociedad Química y Minera de Chile SA said Aug. 11 that it believes scheduled shipments will not be impacted by a disruption in rail service due to recent storms. SQM said it performed an inspection of the railway line that runs between Coya Sur and Tocopilla, following the storms that affected the area over the weekend. Preliminary findings indicate that some areas have been damaged, which is why the train is not currently operating. SQM said detailed studies will be carried out to determine the next steps. SQM operations in María Elena, the Salar de Atacama, and the Salar del Carmen were temporarily suspended as a preventative measure, for safety purposes due to the weekend storm. These facilities are currently operating normally. There was no damage to the Port of Tocopilla, though operations were initially suspended until improved weather conditions enable operations to be carried out safely. SQM said it provided support to its workers and their families who have been affected by the storms. It also offered to help local authorities with clean-up and reconstruction efforts, especially in the city of Tocopilla.

OCI Partners LP reported second-quarter net income of $13.5 million on revenues of $79.6 million, down from the year-ago $40.9 million and $113.4 million. OCI announced April 23 that it had completed a debottlenecking and turnaround project; this down time impacted second-quarter production. The company said the results reflect only one full month at or above design capacity.

A $101.8 million asset impairment charge at its Pasadena, Texas, facility, weighed down Rentech Nitrogen Partners LP’s (RNP) second-quarter results. RNP reported a second-quarter loss of $66.2 million ($1.70 per diluted unit) on sales of $109.8 million, compared to a year-ago loss of $8.9 million ($0.23 per unit) and $113.6 million.

Despite the loss, Rentech said it expects the Pasadena facility to post EBITDA of around $10 million for the year. The Pasadena facility is not a part of the RNP sale to CVR Partners LP announced Aug. 10. Pasadena had a second-quarter operating loss of $58.3 million on sales of $37.8 million from a year-ago loss of $2 million on sales of $40 million.

The East Dubuque, Iowa, facility had second-quarter net income of $41.2 million on sales of $72.1 million, up from the year-ago $31.6 million and $73.9 million, respectively.

LSB Industries Inc. has again moved up its cost projections for its major expansion at the El Dorado, Ark., complex. LSB now says cost will be $660-$680 million, up from the July 14 estimate of $560-$575 million. LSB attributes the increase to the work performed by a previous subcontractor. LSB has also pushed back the production date of the 375,000 st/y ammonia plant to second-quarter 2016 from first-quarter 2016. As it relates to the new nitric acid plant and concentrator, the concentrator went into production in June 2015 and the nitric acid plant is expected to be mechanically complete in September 2015, with production beginning mid-fourth quarter 2015.

Northern Plains Nitrogen, Grand Forks, N.D., said Aug. 11, that it cleared its final permitting hurdle for its proposed nitrogen fertilizer facility in Grand Forks. A "Permit to Construct" was issued by the North Dakota Department of Health, Division of Air Quality based on analysis of the facility’s impact on air quality.
 
The permit was issued following a 30-day public comment period that drew only positive feedback, including an endorsement from the Grand Forks Region Economic Development. The EDC wrote, "NPN and the City of Grand Forks are working closely to ensure this plant technically meets or exceeds expectations for the safety and benefit of the region. The EDC supports projects that will enhance our region’s economy, generate new wealth and create new jobs. NPN’s project meets these goals, not only for our region but our state."
 
Calvin Coey, NPN project manager, said all necessary permits have now been approved. "We’re pleased to have the support and approval from the City of Grand Forks and now the State of North Dakota. As NPN continues to develop, we will continue to work closely with our neighbors to ensure a cohesive and mutually beneficial relationship," said Coey.
 
NPN is proposing a 2,400 st/d ammonia plant in an industrial area in the northwest quadrant of Grand Forks. It has been approved for the necessary rezoning and the preliminary plat showing how the 320-acre site will be used. NPN has also received approval from the City of Grand Forks to take an innovative approach to ensure an adequate supply of process and cooling water for its facility. The plant will meet a substantial share of its water needs by re-using "gray" water (wastewater from the adjacent Grand Forks city sewage lagoons).
 
Despite the permit, the facility’s developers continue to seek financing, which they say would allow construction to start in the next one-to-two years.