All posts by webster@kennedyinfo.com

Sulfur

Market Watch, Sulfur, Tampa, U.S. Gulf

Tampa: Supply and demand for sulfur appeared to be in balance late last week, and there were no new factors that might affect the balance in the near future.

The U.S. Department of Energy said the refinery operating capacity rate increased 0.4 percent last week, from 92.2 percent to 92.6 percent. A year earlier, the rate was 90 percent. As reported last week, however, the basis for determining capacity has changed from the previous year. That, and the greater use of lower sulfur oil for refining, may account for the high capacity operating rate, but little has changed in the amount of sulfur produced.

U.S. Gulf: Prices were still in the $180-$185/mt range for prill exports.

Benelux: The current price range was $212-$220/mt FOB, although a new price should be posted soon.

Potash

Eastern Cornbelt, Market Watch, Potash Muriate, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: After a few weeks of price testing, the potash barge market was again quiet. Assuming someone wanted to buy potash right now, sources said they would be more apt to continue to test the market at $460/st or lower rather than pay any $20/st increase sought by producers.

Some very large buyers filled up at lower numbers a few weeks ago, though producers continue to argue that in general the industry ended the spring season on empty, and much more buying is needed.

“We’re seeing the occasional barge come into the U.S. that is disruptive, but it is what it is,” Intrepid Potash Inc. Executive Chairman Robert Jornayvaz told analysts Aug. 2. “It’s not as big as what we’ve seen in years past … It’s out there, it is having an impact.”

Jornayvaz said some of the downward price movement was premature, and that some of his North American competitors might have been too aggressive on price movement before the true extent of this year’s drought was known.

Jornayvaz also said he believes the worst is behind as far as price decreases. “I don’t see us going down much further, just given the discussions that we’re having and the needs that are out there,” he said.

Citing higher commodity prices and the need to grow corn, wheat, and soybeans, he expects growth in potash markets worldwide to kick in, and in a pretty dramatic fashion.

Intrepid Senior Vice President of Marketing and Sales Kevin Feist added that the company has studied the 1988 drought and found no cutbacks in potash. “In fact,” he said, “we saw slightly increased levels.”

Feist also referred to extremely strong commodity prices, which he said should drive world consumption.

Eastern Cornbelt: The potash market remained at $500-$510/st FOB regional warehouses in the Eastern Cornbelt.

Western Cornbelt: Potash was unchanged at $500-$510/st FOB regional warehouses, with most dealer quotes in the $500-$505/st FOB range in the Western Cornbelt in early August.

Southern Plains: Potash remained at $510-$520/st FOB Carlsbad, N.M., depending on grade. Out of regional warehouses in the Southern Plains, the potash market was steady at $500-$510/st FOB.

South Central: Potash was tagged at $500-$510/st FOB in the South Central region. Several sources quoted the common dealer level at the $505/st FOB mark in early August.

Southeast: Potash remained at $517-$520/st FOB in the Southeast, with rail-delivered tons pegged at the $530/st mark in the region, give or take.

Phosphates

Central Florida, Di-Ammonium Phosphate, Eastern Cornbelt, Market Watch, Mono-Ammonium Phosphate, Southeast, Southern Plains, U.S. Exports, U.S. Gulf, Western Cornbelt

Central Florida: Inventories remained low last week and that will continue despite the lack of domestic sales, primarily because of the export schedule. Domestic sales were not expected to increase until September at the earliest.

The DAP price range for Central Florida was unchanged last week at $490-$500/st FOB. CF’s posted price was $500/st FOB and Mosaic was also at the $500/st FOB mark, but producers were not making spot sales of prompt rail cars. Truck sales by traders accounted for the low end of the range.

MAP continued to sell at a $20/st premium to DAP in Central Florida. PCS Sales, which produces MAP at its White Springs facility in North Florida, was selling at prices comparable to the market.

U.S. Gulf: The drought continued to put stress on those who use the Mississippi River to move goods. Rain in the Ohio Valley the previous week briefly allowed some unloading on the Lower Mississippi and feeder waterways, as levels moved up six-to-seven feet for a few days. Those levels quickly retreated, however.

North of St. Louis, the lock system kept the river navigable, but the Lower Mississippi was difficult to maneuver, and many docks were unable to load or unload barges.

Vessels were being lightened to reduce the probability of running aground, and the time to move a barge to its destination was being extended by an extra week or more. Freight costs could become expensive before the river returns to normal.

Crop prices were all up last week in comparison to the previous week. The corn price for December was $8.2575/bushel, up from $7.9525/bushel a week earlier. December 2013 corn was $6.4625/bushel, increasing from $6.3125/bushel the previous reporting period. For November 2012, soybeans rose to $16.235/bushel from $16.1675/bushel the previous week, and beans for November 2013 increased to $12.825/bushel from $12.695/bushel a week earlier. Wheat for July 2013 rose to $8.55/bushel from $8.325/bushel the week before, and wheat for July 2014 was listed at $7.93/bushel last week, up from $7.905/bushel the previous week.

The low water levels continued to take a toll on NOLA DAP barge prices. Buyers who use docks on the Lower Mississippi were getting rid of their positions rather than having to pay for fleeting their loads. NOLA DAP barges in that situation were selling at about $5/st less than other offers being made.

Dealers were pleased they finished the season with virtually empty bins, but most have not restocked for the fall season. Part of the reason was uncertainty about what farmers in drought stricken areas would want for the fall. Despite a weakening trend in the NOLA DAP barge market, terminal prices were holding steady at around $540/st FOB, although business was slow.

The prompt NOLA DAP barge price range for the week drifted a bit to $500-$505/st FOB, which was down at the top of the range from the previous week’s $500-$510/st FOB. Prices were weaker at the end of the week. MAP was running $30/st FOB higher than DAP.

NOLA DAP barge prices were poised to fall below $500/st FOB, and that could affect consumers’ views of when to buy.

Eastern Cornbelt: Most sources quoted the DAP market at $545-$550/st FOB in the Eastern Cornbelt, with MAP $20/st higher. 10-34-0 was unchanged at $525/st FOB in the region.

Western Cornbelt: DAP was pegged at $540-$545/st FOB regional warehouses, with the low out of the St. Louis market. MAP was quoted at $560-$565/st FOB in the Western Cornbelt last week. 10-34-0 remained at $490-$525/st FOB in the region.

Southern Plains: DAP was pegged at $540-$545/st FOB Catoosa, Okla., with MAP roughly $20/st higher. The 10-34-0 market was pegged at $525-$535/st FOB in the Southern Plains region.

South

Ammonium Sulfate

Ammonium Sulfate, Eastern Cornbelt, Market Watch, Southeast, Southern Plains, Western Cornbelt

Eastern Cornbelt: Honeywell announced changes to its ammonium sulfate prices in the Midwest on Aug. 9, although the company was not accepting new orders.

On the heels of a fill program announced in late July that offered granular ammonium sulfate at $335/st FOB and $345/st rail-DEL in the region, Honeywell’s granular ammonium sulfate postings moved on Aug. 9 to $350/st FOB Illinois terminals at Danville and Mapleton, and Wisconsin terminals at Amherst Junction and Prairie du Chien.
Honeywell’s mid-grade postings moved on that date to $320/st FOB Danville and Byron, Ill. Rail-delivered postings in Illinois and Wisconsin moved on Aug. 9 to $360/st for granular and $330/st for mid-grade.

Western Cornbelt: Granular ammonium sulfate postings from Honeywell moved on Aug. 9 to $350/st FOB Dubuque, Iowa, St. Louis, Mo, and Roseport, Minn., and $355/st FOB Omaha, Neb., with mid-grade moving to $320/st FOB St. Paul, Minn., and $325/st FOB Omaha. Honeywell reposted its rail-delivered postings as well on Aug. 9. In Iowa and Minnesota east of Interstate 35, rail-delivered postings moved to $360/st for granular and $330/st for mid-grade, with $5/st increases for both products west of Interstate 35.

Southern Missouri sources continued to quote the granular ammonium sulfate market at $345/st FOB on the low end last week.

Ammonium thiosulfate was steady at $360-$375/st FOB in the Western Cornbelt.

Southern Plains: Effective Aug. 6, American Plant Food’s (APF) granular ammonium sulfate postings firmed $20/st from July 16 pricing levels, moving to $315/st FOB Freeport, Texas, $325/st FOB Galena Park, Texas, $340/st FOB Fort Worth, Texas, $345/st FOB Mermentau, La., and $350/st FOB Littlefield, Texas. Coarse grade postings moved to $300/st FOB Freeport, $310/st FOB Galena Park, $325/st FOB Fort Worth, and $335/st FOB Littlefield, while standard grade ammonium sulfate firmed to $295/st FOB Freeport and $330/st FOB Littlefield. APF’s N-Pac Compacted posting moved on Aug. 6 to $330/st FOB Galena Park.

Ammonium sulfate postings FOB Plainview, Texas, also firmed on Aug. 6, moving to $350/st for granular, $335/st for coarse, and $330/st for standard.

South Central: Granular ammonium sulfate was pegged at $350/st FOB in Louisiana and Mississippi, and $365-$370/st FOB in Tennessee and Arkansas. The ammonium thiosulfate market was quoted at $335-$360/st FOB in the South Central region, with the lower numbers reported in Louisiana and Mississippi.

Southeast: DSM was out with a summer fill program for ammonium sulfate, with granular tons offered at $300/st FOB Augusta, Ga., $305/st DEL in the Carolinas, $315/st DEL in Georgia and Alabama, and $320/st DEL in Florida. DSM’s standard grade ammonium sulfate price was $200/st FOB Augusta.

Ammonium Nitrate

Ammonium Nitrate, Market Watch, Southeast, Southern Plains, U.S. Gulf, Western Cornbelt

U.S. Gulf: Price ideas remained flat within the $335-$345/st FOB range, though more sources were talking the lower end of the range rather than the higher.

Western Cornbelt: Ammonium nitrate remained at $435-$450/st FOB in the Western Cornbelt.

Southern Plains: Ammonium nitrate was pegged at $400-$410/st FOB the Tulsa market.

South Central: The ammonium nitrate market was up slightly from last report at $385-$400/st FOB, with the low out of Memphis and the upper end quoted in the Arkansas market.

Nitrogen Solutions

Eastern Cornbelt, Market Watch, Southeast, Southern Plains, U.S. Gulf, UAN, Western Cornbelt

U.S. Gulf: Most sources last week said the big run-up in UAN barge prices has stalled. Some suggested that when urea prices started to falter, UAN buyers became concerned.

The $320/st ($10.00/unit) level was reported to be meeting more resistance now. Sources called the last round of business $315-$320/st ($9.84-$10.00/unit) FOB.

Eastern Cornbelt: UAN was steady at $11.25-$11.72/unit FOB in the Eastern Cornbelt.

Western Cornbelt: The UAN-32 market in the Western Cornbelt was quoted at $360-$368/st ($11.25-$11.50/unit) FOB regional terminals, with the low in Missouri and the upper end reported in the Iowa market.

Southern Plains: Sources quoted the UAN-32 market at $335-$350/st ($10.47-$10.94/unit) FOB regional terminals in the Southern Plains, although there were reports of higher postings in effect for forward tons.

South Central: Sources tagged the UAN-32 market at $340-$360/st ($10.63-$11.25/unit) FOB in the South Central region, with the low reported in the Kentucky market on a spot basis. Most regional terminals had reportedly firmed to the upper end of the range in early August.

Southeast: Sources pegged the UAN-32 market at $340/st ($10.63/unit) FOB port terminals in the Southeast, with UAN-30 quoted at the $320/st ($10.67/unit) FOB level. UAN-32 pricing out of inland Georgia terminals remained at the $335 ($10.47/unit) FOB level on the low end.

Urea

Bangladesh, Black Sea, China, Eastern Cornbelt, India, Indonesia, Market Watch, Middle East, Pakistan, Southeast, Southern Plains, U.S. Gulf, Urea, Western Cornbelt

U.S. Gulf: Granular barge trades weakened overall last week, though sources reported some uptick as the week ended. The price range was put between $425-$440/st FOB for granular. The last heard on prills stood at $445/st FOB.

Concerns were mixed over the low river situation. While some were fearful of a backup in tons at NOLA, others said barges are moving upriver for now – albeit more slowly and with lighter-than-normal loads.

Eastern Cornbelt: Granular urea continued to be quoted in the $490-$500/st range FOB regional terminals in the region.

Western Cornbelt: Granular urea pricing remained in the $495-$500/st range FOB most regional terminals in the Western Cornbelt, with the low reported in southern Missouri.

Southern Plains: Sources quoted the urea market at $490-$500/st FOB the Tulsa market last week, with most dealer quotes pegged at the $495/st FOB level.

South Central: The granular urea market was quoted at $500-$505/st FOB in Louisiana and Mississippi, with the upper end of the range at $515-$520/st FOB out of terminals in Tennessee and Arkansas.

Southeast: The granular urea market was pegged at $555/st FOB port terminals in the Southeast, where available, with numerous locations out of product in early August.

Extreme to exceptional drought conditions persisted in eastern Alabama, western South Carolina, and across a wide swath of central Georgia, according to the Aug. 7 U.S. Drought Monitor. The rest of the Southeast region remained relatively drought-free, however.

Pakistan: On the heels of a series of tenders that netted 300,000 mt of imported urea, sources said that TCP would be stepping out of the urea import business. The only remaining urea import expected was the tonnage – as of yet undetermined – from Iran under a barter agreement approved by the government late last month.

New figures put together for the country last week, however, showed that Pakistan still needs about 600,000 mt of urea for the 2012 Karif season. The cause of the shortage remains the same: inadequate natural gas supplies for the domestic urea producers.

When the first round of import tenders was called in May, the Pakistani urea producers complained to anyone in the government who would listen that if the natural gas supplies were restored to the producers, they could fulfill the country’s urea needs more cheaply than imports.

The complaints fell on deaf ears. Now the complaints are being renewed as the Economic Coordination Committee (ECC) of the government cabinet approved the importation of an additional 300,000 mt.

When the ECC met early last week, proponents of more imports suggested TCP should be allowed to import 600,000 mt. That number was cut in half. Some argued that the reduced number was more practical because of lower-than-expected monsoon rains.

As of press time, TCP has not called a tender for the 300,000 mt. Sources say the company may first be trying to work with Saudi Arabia for another government-to-government deal. Similar arrangements in the past freed up Pakistan’s limited foreign reserves by drawing on loans and grants from the Saudis. In return, the money lent to Pakistan is used to purchase Sabic material.

At the same time, Pakistan’s government wants to move ahead with a barter deal with Iran. Under the arrangement, Pakistan is slated to send Iran about 1 million mt of wheat at the prevailing international market price. In return, Pakistan will receive iron ore and fertilizers, including urea.

The two governments have been working on the deal since February. The delay came largely from Iran. It insisted that the Pakistan wheat be free of a fungal di

Ammonia

Ammonia, Eastern Cornbelt, Market Watch, Southeast, Southern Plains, Western Cornbelt

Eastern Cornbelt: Ammonia pricing remained at $770/st FOB in the Illinois market. Parts of Indiana collected more than two inches of rain in early August, but the effects of that moisture were not yet evident in the weekly drought map. Drought conditions in Indiana ranged from severe to exceptional, according to the Aug. 7 U.S. Drought Monitor, with the worst conditions reported in southwestern areas of the state. Most of Illinois fell in the extreme drought category last week, with exceptional drought darkening the southern counties. Ohio remained the most verdant in the region, with most of the state experiencing moderate drought last week.

USDA said just 4-7 percent of the corn crop in Illinois and Indiana was good last week, with 73-74 percent of the acreage rated as poor or very poor. Ohio’s corn was 14 percent good or excellent and 52 percent poor or very poor. Some 53-57 percent of the soybeans in Illinois and Indiana fell in the poor/very poor categories last week, along with 42 percent of Ohio’s soybean crop. Good or excellent ratings were assigned to 19 percent of Ohio’s soybeans last week, compared with 15 percent in Indiana and 10 percent in Illinois.

Nationally, USDA placed 23 percent of the corn and 29 percent of the soybeans in the good or excellent categories last week, with poor or very poor ratings assigned to 50 percent of the corn crop and 28 percent of the soybeans.

Western Cornbelt: Anhydrous ammonia remained at $700-$750/st FOB in the region, with the low in Nebraska.

Midweek rains were reported in eastern Nebraska and western and central Iowa, but exceptional drought conditions expanded in the region last week to include most of southern Missouri and western Kansas. Most of Nebraska was in an extreme drought, although a patch of exceptional drought was present in the center of the state. Most of Iowa was also labeled as an extreme drought area last week, with lesser but still severe drought conditions reported on the northern and south-central edges of the state.

As of Aug. 5, 84 percent of Missouri’s corn was rated as poor or very poor, along with 74 percent of the state’s soybeans. In Iowa, 49 percent of the corn and 37 percent of the soybeans fell in the poor or very poor categories last week, while Nebraska’s corn and soybean crops were rated at 37 percent poor or very poor.

Southern Plains: Anhydrous ammonia pricing was up from last report. Sources pegged the market at $680-$710/st FOB in the region, with the low reported out of regional production points and the upper end out of pipeline terminals in Kansas.

Drought continued to impact crop conditions and fertilizer movement in the Southern Plains. Drought conditions ranging from extreme to exceptional were reported in eastern Colorado, western Kansas, and western Oklahoma. Patches of extreme drought were also reported in eastern New Mexico and northern Texas, but Kansas farms were suffering the most, with most of the state classified as an extreme drought area in early August.

A Kansas source said growers in his location would begin fertilizing winter wheat ground “if we ever catch a rain,” but movement in early August was at a standstill. One contact said wheat growers will start applying preplant fertilizers by Labor Day regardless of rainfall, unless field conditions are simply too hard. “If we get any rain, we will have a huge fall,” said another source.

South Central: No current pricing was reported for anhydrous ammonia in the South Central region. Sources said the Memphis market was out of tons in early August because of low river levels that were preventing barge unloading at the port. “We’re just lucky it’s not March,” said one contact.

Louisiana and Mi

Downtime impacts LSB 2Q; more nitrogen expansion plans in motion, on drawing board

Featured, News, UAN

Unplanned downtime at its El Dorado and Pryor facilities impacted LSB Industries Inc.’s net income for the second quarter ending June 30, 2012. LSB net income was $26 million ($1.11 per diluted share) on sales of $209.3 million, down from the year-ago $28.6 million ($1.22 per share) on sales of $235.6 million. Operating income was $42.3 million, down from $48.3 million. The year-ago quarter included an $8.6 million insurance recovery.

Operating income was off 1.9 percent from LSB’s Climate Control segment, which saw a 12.5 percent drop in sales.

“We were disappointed that net income and earnings per share for the second quarter were lower than last year’s second quarter, although we feel the results were remarkable considering the explosion and downtime at our El Dorado Facility and the repairs that were underway at the Pryor Facility,” said Jack Golsen, LSB chairman and CEO.

The LSB Chemical segment saw operating income drop to $39.1 million on sales of $138.1 million during the quarter, compared to the year-ago $42.7 million on sales of $155.6 million. Gross profit was $43.5 million, down from $47.6 million.

LSB estimates that the Pryor, Okla., complex lost approximately 70,000 st of potential UAN sales due to the unplanned downtime of its urea reactor. After going offline Feb.
27, the unit was unable to produce UAN through the end of the second quarter. This was partially offset by continued ammonia production and sales of ammonia into the agricultural markets. LSB estimates the Pryor incident shaved about $10 million off Chemical operating profits during the quarter. Pryor operating income dropped to $13 million from the year-ago $23 million. Although the urea reactor returned to production in July, due to continued problems at the main ammonia converter at Pryor, LSB plans to replace the converter and make modifications in early 2013. The Pryor facility will take a turnaround late in the fourth quarter that will lead up to the addition of one new Kellogg ammonia converter, which will take the place of six existing smaller converters. Catalysts will also be replaced, and a new chiller will be added to lower the high temperatures that reduce capacity in hot weather. Once complete, it is hoped that production can increase up to 700 st/d. To date, 600 st/d has been achieved.

Also at Pryor, two long-idled smaller ammonia plants are expected to return to production by the end of the year. They will produce a combined 60,000 st/y and cost between $6-$7 million.

The company estimates downtime at the El Dorado, Ark., facility cut about $7 million from Chemical income. The plant was shut down May 15 when a reactor in its 98 percent concentrated nitric acid (DSN) plant exploded, destroying the plant and damaging three regular concentration nitric acid plants, as well as a sulfuric acid plant. Currently, LSB said two of the three remaining nitric acid plants are back in production, and a third is expected back up by the end of August. Sulfuric acid production should restart in the fourth quarter.

The DSN plant is not being repaired, but is being replaced by a new 65 percent concentrated nitric acid plant and a separate nitric acid concentration plant. The new facility is expected to take about two years to construct and cost over $100 million. LSB expects insurance to cover most of this amount, as it has a $1 million deductible. LSB said that the new production, which will represent about 20 percent of nitric acid production at El Dorado, will be dedicated to one large customer. LSB said it has been able to supply customers in the meantime by squeezing its other operations and sourcing product elsewhere.

The company has not yet pulled the trigger on plans to build an anhydrous ammonia plant at El Dorado that would supply its existing facility, thereby switching its current feedstock to natural gas rather tha

CF reports record 2Q earnings, beefs up N expansion, Canadian marketing plans

Featured, News

Guided by its nitrogen business, CF Industries Holdings Inc. reported record quarterly net earnings attributable to common stockholders of $606.3 million ($9.31 per diluted share), compared to the year-ago earnings of $487.4 million ($6.75 per share). Earnings were up 24 percent over the year-ago period. Second-quarter results included a $77.6 million non-cash pre-tax mark-to-market gain on natural gas derivatives, and $15.2 million of accelerated amortization of capitalized financing fees related to the termination of a prior credit facility. These impacted EPS by a plus $0.74 and a negative $0.14, respectively.

“A very favorable industry environment and excellent execution enabled us to realize the highest EBITDA, earnings, and earnings per share for any quarter,” said CF Chairman, President, and CEO Stephen Wilson. “Additionally, the first half of 2012 was the strongest in CF Industries’ history. The company successfully capitalized on robust crop nutrient demand and a favorable pricing environment to set first-half records for shipment, revenues, and profitability.”

Second-quarter EBITDA was $1.05 billion, up from the year-ago $889.2 million.

CF announced it has increased its plans to expand existing nitrogen plants to a $2 billion investment, up from an earlier $1-$1.5 billion. “We now anticipate spending approximately $2 billion between 2013 and 2016 on capacity expansion and product upgrade projects,” Wilson told analysts. “These projects, if all are approved and executed, could provide us with approximately 1 million additional gross tons of ammonia and 3.5 million tons of combined UAN and urea capacity. We expect that the bulk of these investments will be made from 2014 through 2016, and that meaningful amounts of additional ammonia capacity could come onstream beginning in 2015.

“The nature of these brownfield investments should enable us to bring additional product to market well before a greenfield complex could be permitted and constructed,” added Wilson. “We expect to announce some specifics of this program before year-end.”

While CF has looked at offshore nitrogen opportunities in the past, Wilson says North America is now its best strategy. “On a risk-adjusted basis, it’s hard for any offshore opportunity to come even close to the kind of brownfield opportunities that we have in front of us today.”

As for its additional tonnage from acquiring complete ownership of nitrogen producer Canadian Fertilizers Ltd. (GM Aug. 1, p. 1), which owns a major plant in Medicine Hat, Alberta, Wilson indicated the company expects to grow its presence within the Canadian market. “We’re going to be setting up a sales operation in that region and we look forward to developing relationships with customers who are interested in taking the product. And, we’ll be open for business and have the order book in hand.”

While second-quarter earnings were up, sales were off 4 percent, to $1.7 billion from the year-ago $1.8 billion, primarily due to lower phosphate volumes and prices.
Higher nitrogen prices partially offset the phosphate decline. Overall, total volumes decreased to 4.3 million tons from the year-ago 4 million, largely due to the early
application season, which pulled some spring demand into the first quarter. CF said lower phosphate prices resulted from lower global demand compared to last year, while higher nitrogen prices reflected strong spring demand and tight inventory levels throughout the North American distribution chain.

Second-quarter nitrogen gross margins were $992.9 million on sales of $1.5 billion, up from the year-ago $782.6 million on sales of $1.5 billion. Tons sold were down, at 3.53 million st from 3.77 million st. Volumes for all major nitrogens were down, but all product prices were up, except am