All posts by webster@kennedyinfo.com

Ammonium Sulfate

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

Eastern Cornbelt: Ammonium sulfate remained in tight supply at $425-$445/st FOB in the region, but tons were reportedly tough to come by. Delivered granular sulfate from DSM was quoted at the $432.25/st level in the Midwest.

Ammonium thiosulfate was steady at $375-$380/st FOB in the Eastern Cornbelt.

Western Cornbelt: Granular ammonium sulfate pricing was steady at $425-$445/st FOB in the region, with the upper end reflecting dealer reference levels. One Missouri contact quoted the dealer market solidly at the $440/st FOB mark in his trade area in late April.

The ammonium thiosulfate market was pegged at $380-$385/st FOB in the Western Cornbelt region.

Southern Plains: Effective April 16, American Plant Food Corp.’s granular ammonium sulfate postings in Texas firmed $10-$15/st from April 2 reference prices and $35/st from March 1 postings, moving to $360/st FOB Freeport, $370/st FOB Galena Park, $385/st FOB Fort Worth, and $395/st FOB Littlefield. Coarse ammonium sulfate postings moved to $345/st FOB Freeport, $355/st FOB Galena Park, $370/st FOB Fort Worth, and $385/st FOB Littlefield, and standard grade postings firmed to $340/st FOB Freeport and $380/st FOB Littlefield. APF’s N-Pac Compacted posting firmed on April 16 to $375/st FOB Galena Park.

Ammonium thiosulfate was pegged at $310-$330/st FOB in the Southern Plains region in late April, with the low out of production points.

South Central: The granular ammonium sulfate market had firmed to $385-$390/st FOB in the South Central region. Effective April 16, APF’s granular ammonium sulfate postings FOB Mermentau, La., firmed $15/st to $390/st.

Southeast: Ammonium sulfate prices in the Southeast were up $30/st from last report. DSM was pricing granular ammonium sulfate at $375/st FOB Augusta, Ga., $380/st DEL in Virginia and the Carolinas, $390/st DEL in Georgia and Alabama, and $400/st DEL in Florida. In the Northeast U.S., DSM was offering granular ammonium sulfate at $413.25/st rail-DEL after discounts. DSM’s standard grade ammonium sulfate prices in the Southeast region included $242/st FOB Augusta and $260/st DEL in Florida.

Sources said Honeywell was not taking any new ammonium sulfate orders for the month of April, and offering limited tons for May. One source said he was quoted May granular ammonium sulfate at $360/st FOB Hopewell, Va., but with no guarantee the order could be filled due to limited supply.

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: Prices for phosphate on the river and on the export market have been rising for the past several weeks, and producers in Central Florida reacted by increasing their prices as well.

Mosaic pushed its price up by $10/st FOB and made new, prompt railcar sales, while CF Industries hiked its list price by $20/st FOB.

However, that was not welcome news for traders who normally buy from Central Florida. “They’ve killed it,” said one “They killed the market (by increasing prices).”
Not that long ago, the Central Florida DAP price was far above the NOLA DAP barge price. Late last week, Central Florida’s DAP price was trailing NOLA by as much as $25/st FOB, even after the price hikes.

The alternative for traders was to buy from river terminals, where prices were still more appealing, considering the difference in the cost of transportation.

The Central Florida DAP price range increased last week to $470-$480/st FOB from the previous week’s range of $460-$465/st FOB. CF Industries posted its list price at the $480/st FOB mark, and Mosaic increased its list price to $470/st FOB. MAP continued to sell at a $20/st premium to DAP in Central Florida, about the same difference as from traders, but MAP was virtually unavailable in Central Florida. PCS Sales, which produces MAP at its White Springs facility in North Florida, was selling at prices comparable to the market.

Phosphate producers settled on new prices for second-quarter molten sulfur delivered to Tampa. The price rose $8/lt, from $172/lt to $180/lt. Higher prices on the world market were the driving force in the settlement.

U.S. Gulf: In some areas of the Cornbelt, farmers were still busy preparing fields for spring planting in late April. As a result, those dealers and traders who still need to fill those needs were rushing to get what they could to meet the demand. One source said NPK applications in the area his company services were 97-98 percent complete.

Prices for most NOLA DAP barge transactions were collecting near the top of the previous week’s range, and there were rumors that some sales had gone well beyond that for barges in place. However, no actual trades above the previous week’s range were found, so that could not be verified. If that was the case, they were probably sold on the Ohio River, where prices have been higher. During the previous few weeks, a NOLA DAP barge upriver could bring a premium of $15/st FOB.

What was a little surprising were the prices being commanded for future sales in June through August, which were essentially the same as for prompt barges.

One source said the NOLA phosphate barge market was being pushed not so much by market fundamentals for the river system, but rather by export prices, which have risen by $50/mt or more during the past month. Projections were that the export market will continue to rise for another month or two.

Still, dealers do not want to have anything close to a large supply at the end of the spring season. There are expectations, however, that the fall season will come early this year, just as the spring season did, and that factor may be what is pushing the sale of NOLA phosphate barges for the summer by trading companies.

Most sources said they did not think there were a lot of phosphate barges available on the river, but there were no really good estimations of how many there actually are. Another interesting twist has been the elimination of the differential between DAP and MAP. Early in the season, MAP was bringing as much as $35/st FOB more than DAP. By last week, however, the difference in price had disappeared.

Meanwhile, terminal prices for DAP were escalating to adjust for the higher barge cost. By late last week, most terminal prices were running in the $515-$525/st FOB range, up

Potash

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

U.S. Gulf: Players continued to put recent barge trades in the $480-$490/st FOB range, with others calling them flat-to-weaker.

Eastern Cornbelt: Potash remained at $525-$530/st FOB regional warehouses, with one source quoting rail-delivered white granular potash at the $528/st mark in northern Illinois.

Western Cornbelt: Potash was quoted at $515-$535/st FOB in the Western Cornbelt, with most sources quoting red granular potash at the $525/st FOB mark in late April.

Southern Plains: Potash pricing in the Southern Plains market was reported consistently at the $525/st level FOB regional warehouses last week, with one Kansas source also quoting rail-delivered tons at that mark. The potash market FOB Carlsbad, N.M., was quoted at a nominal $525-$530/st.

South Central: The potash market was flat at $520-$530/st FOB in the South Central region. One source noted that potash usage in his trade area so far this spring is significantly behind average volumes.

Southeast: Potash pricing had reportedly slipped to $545-$555/st rail-DEL in the Southeast, with the upper end quoted for white granular potash in the Carolinas. Out of regional warehouses, red granular potash was also reported at the $545/st FOB level, down $15/st from last report.

Sulfur

Market Watch, Sulfur, Tampa

Tampa: Phosphate producers and their sulfur suppliers reached an agreement last week on new prices for the second quarter for molten sulfur delivered to Tampa. The new price was up $8/lt higher than for the first quarter, moving from $172/lt to $180/lt. The new price will be retroactive to April 1.

Devco International received a $78.5 million contract to install a sulfur purification system in northern Iraq. The company said it will be able to process 500,000 mt/y, and that could be expanded to 1 million mt/y.

Refinery capacity operating rates increased 0.1 percent last week, from 84.6 percent the previous week to 84.7 percent, according to the U.S. DOE.

No new issues were found last week with either transportation or supply, as supply and demand remained in balance.

The ADNOC sulfur price was posted at $200/mt FOB for the month of April.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 88.30 85.79 92.33
CF Industries CF 192.99 185.80 140.34
CVR Partners UAN 27.17 27.84 18.85
Intrepid Potash IPI 24.76 23.37 34.31
Mosaic MOS 52.64 50.84 76.72
PotashCorp* POT 42.87 43.41 58.23
Rentech Nitrogen RNF 28.25 28.10 N/A
Terra Nitrogen TNH 277.70 248.92 101.33
Distribution/Retail
Andersons Inc. ANDE 51.01 49.41 49.09
Deere & Co. DE 82.30 80.39 94.90
Scotts SMG 52.10 52.20 57.66
* represents three-for-one stock split

Plant offline another 60 days

Breaking Industry News

LSB Industries Inc. said April 25, 2012, that its Pryor, Okla., UAN plant will be offline at least for another 60 days for repairs. The company said the repair period is being extended because it has determined that the damaged portion of the urea reactor, which is the reactor’s stainless steel liner, is non-repairable and the liner has to be replaced. The company will announce when UAN production resumes.

The Pryor facility shut down March 15 for unplanned maintenance at the ammonia plant. The ammonia plant resumed production March 22 and has produced approximately 600 st/d, which is being sold directly into the fertilizer market. The repair undertaken at the urea plant began Feb. 27. The urea plant is needed to produce UAN and uses ammonia as a feedstock. As a result, the Pryor facility has not produced UAN since Feb. 27, 2012.

For the month of March, LSB estimates that the downtime resulting from the attempted repair of the urea reactor will result in approximately $4 million less operating income than otherwise would have been expected. In addition, in March, the company accrued $3 million for probable losses for UAN tons that were pre-sold at firm sales prices, subject to make-whole terms, but not delivered due to the extended urea plant downtime.

Subsequent to March and until the urea plant is back in production, the company estimates the downtime will result in approximately $900,000 per week less operating income than if the urea plant was in production. The company has made a claim with its insurance carriers for repair costs and lost profits, less applicable deductible.

CVR board reaches agreement with Icahn, removes poison pill, still advises against tender

Featured, News

The CVR Energy Inc. board of directors agreed last week with investor Carl Icahn to remove its poison pill and allow Icahn to proceed with his attempt to buy up majority interest in CVR for $30 per share with a contingency cash payment (CCP). While the board is still not recommending that shareholders tender into Icahn’s offer, it is allowing them to do so, and for Icahn to take majority control should he acquire an additional 36 percent on top of his existing 15 percent. Icahn will be extending his offer by 10 business days as a result.

The board said that while it believes it is still the best alternative for shareholders, based on Icahn’s success in winning over shareholders in the April 2 tender offer, it realizes that many shareholders may prefer to realize value in the near-term, rather than long-term.

Icahn says if he does not get 51 percent, he will drop his proxy fight and move on. However, if he does win majority control, he will close on the offer and shareholders will receive their money. Seven of CVR’s nine directors would also be replaced from Icahn’s nominees. He would then allow remaining shareholders the opportunity to tender by extending the offer another 10 days. If Icahn achieves up to 90 percent ownership, he will effectuate a short-term merger, in which all remaining shareholders will receive the $30 per share and CCP.

After consummation of the offer, Icahn says he will cause CVR to engage one or more independent, nationally-recognized investment banking firms to conduct a 60-day sales process to encourage acquisition proposals from third parties. He said he would support any bona fide, all-cash offer received within this 60-day marketing period that results in all stockholders receiving a net amount of at least $35 per share. He said he may vote for lower bids, but will not be obligated to do so.

Icahn said he agrees with the current board that CVR’s long-term value exceeds $30 per share. However, he also said he believes that if the company cannot be sold in the next two months there are major risks to earnings in the short and intermediate-term, as he believes refinery crack spreads will continue to narrow.

The CVR board said that during Icahn’s tender offer period, it will be permitted to seek alternative acquisition proposals, but will not be permitted to terminate the agreement with Icahn. The board said the deal with Icahn includes several protections for shareholders that were not in place beforehand, with fewer conditions and more assurances for shareholders who do not initially tender into the offer.

In the meantime, CVR, which in addition to the refinery business is the 70 percent stakeholder in nitrogen producer CVR Partners LP, released preliminary results for the first quarter ending March 31, 2012. Preliminary estimated sales for the quarter were $1.8-$2.1 billion, compared to $1.167 billion for the year-ago quarter. Preliminary estimated operating income was between $140-$150 million, compared to the year-ago $109.6 million. CVR said results for the quarter were impacted by several factors, including increases in crack spreads and beneficially wider crude oil differentials, a shorter-than-planned turnaround at the Coffeyville refinery, and strong operating results from the Wynnewood refinery for the first full quarter of operations as part of CVR Energy.

CF reports additional plant outage, more nitrogen allocations

Featured, Midwest Cornbelt - Retail, News, UAN, Western Canada

In what has become a common theme for the spring 2012 planting season, plant outages and heavy demand continued to drain nitrogen inventories at many regional terminals in mid-April.

CF Industries Holdings Inc. announced on April 16 that its Woodward, Okla., nitrogen complex was temporarily out of service after losing its power supply due to tornadoes that passed through the area early on April 15. No direct damage was reported at the complex.

“Our immediate concern is the safety and welfare of our employees and neighbors who were affected by the tornadoes and the devastation they caused,” said Tony Will, CF senior vice president of manufacturing and distribution. “Fortunately none of our employees were injured, although several did experience damage to their homes. Our thoughts are with those in the community who were impacted by the storms.”

A CF spokesperson told Green Markets on April 19 that power had been restored to the Woodward facility, and the company was in the process of bringing the plant back into production. Earlier in the week, CF noted that it appreciated the efforts of Oklahoma Gas & Electric crews to restore power as soon as possible.

The company also said it intended to make a contribution to the American Red Cross to help fund recovery efforts in the Woodward community, and that individuals and employees wishing to do the same could visit www.redcross.org.

CF also alerted customers on April 16 that UAN was on allocation at its Courtright, Ont., facility due to “an interruption in supply availability.” CF said the interruption would be in effect until further notice, and asked customers to avoid scheduling any loading at Courtright during the allocation.

Also on April 16, CF notified customers that it would start allocating urea at its Medicine Hat, Alberta, plant, effective immediately, due to an interruption in supply availability. The notice asked customers to avoid scheduling any loading at the facility until the allocation notification had been sent out.

The nitrogen fertilizer complex at Medicine Hat is Canada’s largest, with annual production capacity of 800,000 mt of urea and approximately 1.1 million mt of ammonia, some of which is upgraded into urea. CF has a 66 percent interest in Canadian Fertilizer Ltd., which owns the Medicine Hat complex. Combined annual fertilizer capacity from the facility’s two ammonia plants and one urea plant is approximately 1.5 million tons, which is shipped by rail and truck to the northern U.S. Cornbelt and to Western Canada. Viterra Inc. owns the minority stake in the plant.

Additional nitrogen supply curtailments were announced by CF on April 17. CF notified customers on Tuesday that it was unable to load urea at its Inola, Okla., warehouse due to an interruption in supply availability. CF said the interruption was effective immediately and would last until further notice.

CF also alerted customers on April 17 that the company’s Verdigris, Okla., plant would not be loading anhydrous ammonia trucks until further notice, again citing an "interruption in supply." CF said the Verdigris ammonia interruption would commence at 6 p.m. on April 17.

CF’s Verdigris plant has two ammonia plants with a total combined production of more than 3,200 tons per day, with some 2,400 tons of that upgraded to UAN under optimal production rates. The Verdigris plant is the largest UAN production facility in North America, with the capacity to produce more than 5,600 tons per day of UAN-32.
Industry sources also confirmed late last week that water levels on the lower Mississippi River had caused the primary towboat company operating on the Arkansas River to temporarily suspend operations.

JanTran Inc., a towing business owned by Bruce Oakley Inc., notified customers on April 18 that due to conditions at t