Yara confirmed on May 21 that it has reached a deal with Mosaic for all June shipments of ammonia at $625/mt CFR. This price is an increase of $80/mt over the May Tampa price of $545/mt CFR. Industry sources had speculated that increased gas outages in Trinidad would likely drive June Tampa prices up from May levels.
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PotashCorp announces layoffs at Aurora
PCS Phosphate Company Inc. (PotashCorp-Aurora) announced on May 21 that it is reducing staffing levels at its phosphate facility in Aurora, N.C., by approximately 150 full-time positions, or about 15 percent of its current workforce.
The workforce reduction will take place in two phases, the company said. Employees will first be offered a voluntary separation package, and if target reductions are not met, involuntary separations will take place. The effective date of the layoffs will be June 30, 2012.
“This is a difficult day for our employees and our company,” said Steve Beckel, general manager of PotashCorp-Aurora. “As a company, we never take these decisions lightly. However, remaining competitive for the long term is in the best interests of both our community and our company.”
Following a review of key operating processes, changes were identified to lower operating costs while maintaining the operational capability of the facility. The company said these changes are necessary to maintain the facility’s long term competitiveness in a global marketplace.
“Many employees are being affected by this decision. We will work to help them make a successful transition,” said Beckel. “While it is regrettable that we must take these actions, PotashCorp-Aurora is committed to this community and North Carolina for the long term.”
Accident at Pascagoula claims life of Miss Phos employee
Mississippi Phosphates Corporation confirmed that an employee died during a maintenance procedure on May 21 at the company’s Gulf Coast fertilizer facility east of Pascagoula, Miss. Local press identified the man as Jeffrey Simpson, 39, of Pascagoula.
The company said in a statement that the accidental death occurred in a portion of the plant that “was not operational and there is no threat to employees or the public.” Mississippi Phosphates said it is currently in the investigation process, and will release more information as the investigation proceeds.
“We are cooperating with all responding and investigating governmental and regulatory agencies,” the company said. “At this point, our primary concern is with the family of the deceased and our other employees and their families.”
Mississippi Phosphates’ manufacturing facilities in Pascagoula consist of two sulfuric acid plants, a phosphoric acid plant, and a DAP granulation plant. DAP production capacity at the site is approximately 850,000 tons/year.
Koch looking at major N expansion
Koch Fertilizer said May 14 that it has retained Black & Veatch, a global engineering, consulting, and construction company, to help develop numerous projects to increase its North American production by more than 2 million tons annually through production enhancements and new capacity investments. Initial stages of these projects will focus on production enhancements within Koch Fertilizer’s nitrogen production facilities in Ft. Dodge, Iowa; Dodge City, Kan.; Beatrice, Neb.; Enid, Okla.; and Brandon, Manitoba.
“Undertaking these projects will allow us to better serve the needs of our customers. With crop production continuing to increase, the demand for fertilizer is also increasing,” said Steve Packebush, president of Koch Fertilizer.
Koch Fertilizer is also investing in its terminal distribution system. The business has several active projects, including adding an ammonia terminal in Conway, Kan., a dry and liquid fertilizer terminal in Stockton, Calif., and various other liquid and dry storage projects across the U.S. and Canada.
“Driven by rapid changes in technology and a shortened application period for fertilizer, we are proactively investing in our distribution network,” said Scott McGinn, senior vice president for North America. “We continue to focus on expanding our storage and distribution system to meet the supply demands of our customers and the market.”
Koch Fertilizer’s distribution system consists of more than 60 terminals within North America. A variety of products are moved through its distribution system, including ammonia, urea, liquid fertilizer, phosphate, potash, and sulfur-based products.
IPL-Dyno Nobel eyes new ammonia plant for U.S.; fertilizers a sore spot in first half, off 56 percent
Australian company Incitec Pivot Ltd. (IPL), the owner of Dyno Nobel North America, has commissioned an A$30 million feasibility study for a new anhydrous ammonia plant in the United States. IPL said the plant would leverage low-cost U.S. natural gas and backward integrate the entire ammonium nitrate production of the business.
A final investment decision is expected in the first quarter of 2013.
IPL told Green Markets that it is deferring to local authorities to reveal the location of the site. A company spokesman said more information could be released as early as next week, and that neither IPL nor Dyno Nobel owns the site. Dyno Nobel, which produces explosives and some fertilizers, currently has sites in St. Helens, Ore., Cheyenne, Wyo., Donora, Penn., and Louisiana, Mo.
“Importantly, the plant’s on a brownfield chemical complex site, and that site actually has several downstream plants operating today,” James Fazzino, IPL CEO, told analysts May 13. “And it used to be the site of an ammonia plant. And importantly, that means it’ll have a huge capital advantage in respect to infrastructure because that infrastructure already exists, and also importantly some of the licenses for the ammonia plant were already in place.”
Industry sources tell Green Markets that Louisiana is a likely site for the plant, due in part to its long history as a home for the nitrogen industry.
IPL last week released results for the first-half ending March 31, 2012. While the company’s Explosives unit saw a 21 percent increase in operating earnings (EBIT), the Fertilizer segment results were off 56 percent. Fertilizer EBIT was $60.9 million on sales of $707 million, down from the year-ago $138.6 million on sales of $652.9 million. Total volumes, however, were up 16 percent, at 1.29 million mt from 1.11 million mt. IPL said distribution and trading margins were $50 million lower due to falling global prices. In addition, repair costs at the Mt. Isa phosphate plant were $22 million. IPL said it had too much urea on hand at the wrong time, and it was also impacted by wet weather. It also said it bought DAP too early, just in time for prices to decline after Christmas.
“… It is very clear,” said Fazzino. “We’re an explosives business with a fertilizer arm, rather than a fertilizers business with an explosives business.” He said in maybe three or four years the vast majority of earnings will be from explosives; however, he stressed that while the fertilizer business has inherent volatility and creates noise in the results, that it is a quality business in terms of its market position and has great assets.
IPL noted that it restructured the fertilizer business two months ago by merging its domestic and international operations, and that the change is expected to dampen volatility in the business in the future.
Higher urea prices in the U.S. and lower gas prices were a positive at the St. Helens, Ore., plant, where the facility pulled in an additional $10 million in the first half. The plant, which also produces DEF (diesel exhaust fluid), is benefiting from that growing market. The facility is due to take a planned one-month turnaround in September.
Explosives EBIT was $177.5 million on sales of $842.4 million, up from the year-ago $146.9 million on sales of $771.5 million.
The Moranbah, Queensland, project is expected to commence producing ammonium nitrate in July, and is expected to produce 50,000 mt for the remainder of the year. The project is expected to cost over the budgeted $935 million, but the company said the overspend will not be material. Once up and running, IPL expects Moranbah to generate $165 million in earnings for the 2015 financial year, with it stair-stepping up to full production of 330,000 mt/y by that time. The production is all fully booked. IPL w
Explosion damages El Dorado nitrogen complex; all plants offline for now
An explosion ripped through LSB Industries Inc.’s El Dorado Chemical Co. nitrogen complex in El Dorado, Ark., early May 15, damaging much of the facility – some of it significantly. LSB said that fortunately none of its employees or anyone in the El Dorado community was injured, and it believes there was no environmental release.
LSB said the most significant damage was to the DSN (direct strong nitric acid) concentrated nitric acid plant and surrounding equipment after a reactor exploded. There are four nitric acid plants at the facility, with a combined capacity of about 493,000 st/y, according to the International Fertilizer Development Center. The DSN unit comprises about 20 percent of El Dorado’s acid production. The other three nitric acid plants also suffered some damage, as did the control room and a sulfuric acid plant.
LSB said sulfuric acid volumes are a minor component of the facility.
Company-wide, LSB nitric acid capacity is listed as approximately 1.2 million st, with El Dorado representing about 41 percent of company capacity. El Dorado can also upgrade acid to other products, particularly ammonium nitrate. Site capacity is listed at 602,000 st/y, just less than half of LSB’s 1.3 million st/y capacity.
LSB said that due to the control room damage it is still unknown when any of the nitric acid plants could return to production. The room serves all the units. In addition, the company said it cannot give a timeframe as to when it will be able to complete its investigation. For now, the entire facility remains offline, without an estimate of when it will return.
The company buys anhydrous ammonia for its production at El Dorado, as does the facility it operates in Baytown, Texas. Higher margin LSB units at Cherokee, Ala., and Pryor, Okla., use natural gas.
In the first quarter, El Dorado represented some 44 percent of revenues for LSB’s Chemical segment and 29 percent of operating income. However, the company noted that the income percentage was up due to outages at the company’s more profitable Pryor, Okla., nitrogen unit. The UAN unit at Pryor is expected to remain offline for repairs through most of the second quarter.
LSB has notified its insurer of this event. The company’s insurance policy, which provides replacement cost coverage, has a $1 million deductible for property damage. LSB’s business interruption insurance covering certain lost profits and extra expense has a 30-day waiting period. The company said it will issue further communication about this event as warranted.
Ammonia
U.S. Gulf/Tampa: The market remained quiet last week except for continued speculation that prices would be up in June, due in part to Trinidad gas curtailments. Add Koch to the list of Trinidad producers – PotashCorp, Yara, CF (see front page) – that are looking to take advantage of low-cost North American natural gas. And a Trinidad ammonia buyer, Mosaic, is looking to build a plant too.
U.S. anhydrous ammonia imports were down 24 percent in March, according to the U.S. Department of Commerce, to 576,085 st from the year-ago 753,543 st. July-March imports were off 7 percent, to 5.42 million st from 5.81 million st.
Eastern Cornbelt: The anhydrous ammonia market ranged from $690-$730/st FOB Illinois terminals, depending on location, with the low quoted out of the E. Dubuque market. Some terminals remained out of tons last week. Ammonia pricing in the Indiana market was quoted at $740-$750/st FOB and $740-$755/st DEL from Oklahoma production points.
Wet conditions in Illinois slowed the corn sidedressing pace at mid-month, but sources in southern Indiana said some growers there are already nearly finished with sidedress applications of UAN and ammonia on corn.
Western Cornbelt: The anhydrous ammonia market remained at $640-$690/st FOB regional terminals for prompt tons, with the low quoted out of Nebraska terminals on a spot basis.
Several sources talked of brisk sidedress movement on corn last week. Sidedress activity was underway in all three states by mid-May, and even winding down in parts of southern Missouri. Sources reported extremely dry conditions in western Nebraska and southern Missouri, however.
Southern Plains: The anhydrous ammonia market in the Southern Plains region remained at $570-$600/st FOB regional production points, depending on location, with the lower numbers quoted in western Oklahoma and Texas. Kansas sources pegged the pipeline terminal market at $590-$605/st FOB Conway, Kan.
Sources reported minimal ammonia movement in the region, but tons were reportedly being pulled from regional production points for sidedress demand in the Eastern Cornbelt.
South Central: Demand for anhydrous ammonia was over in the South Central region. Sources quoted the prompt market at $690/st FOB Memphis, Tenn.
Urea
U.S. Gulf: As the industry moves from spring toward summer, NOLA urea prices were steadily declining, with each week seeing lower pricing.
While upriver barges last week were called $670-$700/st FOB, NOLA prompt was giving way to lower numbers. Most said barges that were loaded and ready to go traded at a premium of $660-$675/st FOB, with the higher end at the beginning of the week. Those that were soon to load, within a week or so, were down to $630/st FOB.
End of May was called anywhere from $575-$640/st FOB. In reality, however, sources said buyers only want material that is loaded or ready to load. They do not want forward product or are afraid of the risk, as they fear rapid price erosion.
June, depending on time of the month, was called anywhere from $485-$550/st FOB.
CF last week acknowledged to analysts that urea prices are coming off from the high $600s/st FOB, but the company does not believe it will get into the $350/st FOB marginal producer level.
July-March urea imports were off 9 percent, to 4.89 million from the year-ago 5.36 million st. March was up 4 percent, to 717,215 st from 692,273 st.
Eastern Cornbelt: Urea prices continued to slide in the Eastern Cornbelt region, with sources quoting the regional market at $730-$740/st FOB at mid-month. An Illinois contact also quoted rail-delivered tons at the $740/st level for June delivery.
Western Cornbelt: With demand tapering off quickly, urea prices were sliding in the Western Cornbelt. Sources pegged the regional market at $730-$740/st FOB last week, depending on location.
Southern Plains: With demand ebbing and inventories improving, granular urea pricing to the dealer had reportedly slipped to $700-$710/st FOB the Tulsa, Okla., market at mid-month.
South Central: The urea market in the South Central region had reportedly slipped to $725-$730/st FOB regional terminals as the week progressed, down from $740-$765/st FOB earlier in May. “This is the time where I’m really fearful of the risk,” said one source. “From this time forward, it’s going to get tough because now is the time it’s fixing to drop, seriously.”
Sources talked of a slow pace in the region in mid-May, with cooler weather and dry conditions slowing rice development and topdress activity.
“Corn was fast, and rice is slow,” observed one contact, who said growers haven’t yet hit the big run on urea and ammonium sulfate for the first application on rice. An Arkansas source said it would be another week before urea movement picks up on rice in that location, while Louisiana sources said growers were just beginning to put down some urea on rice last week.
Southeast: The granular urea market had reportedly drifted to the $710/st level or lower FOB most port terminals in the Southeast, with little demand. Most of the spring fertilizer work was finished n the region, though one North Carolina source said his trade area will likely see another three weeks of moderate to good sales, depending on weather.
India: The STC talks closed Tuesday. In the end, STC scaled back its purchases to 690,000 mt.
Sources say the decision came when 10 companies stepped forward and accepted the counter bid. In many cases the price difference was more than $15/mt.
Observers noted that the willingness of the companies to accept the $535-$540/mt CFR price told STC that the traders and producers saw a downward shift occurring in the market.
Awards to specific companies, as supplied by various sources, vary in exact quantities. What everyone agreed on, however, is the final take of 690,000 mt.