The China Nitrogen Fertilizer Industry Association (CNFIA) on Oct. 10 called on urea producers to refuse to back the current offers in the MMTC/India urea tender for the next three months. The association said the lowest offered prices are below domestic costs and could bring about international sanctions.

The association does not have the power to block producers from backing traders who receive awards from MMTC. In its statement, however, the CNFIA called on producers to keep an eye on each other to make sure no one violates the recommendation. The statement further said that any company not adhering to the recommendation could be "severely punished in accordance with the relevant provisions…relating to nitrogenous fertilizer self-regulation."

The netback on the MMTC tender is pegged at $245-$249/mt FOB. International traders speculate that the average break-even price for production is still at least another $20/mt lower. Some older production plants will not be able to meet the India price, sources said, but the newer, more efficient facilities should be able to do so. Sources say the break-even price keeps falling because input prices are also falling, with international traders pointing to the continuing drop in coal and petroleum prices.

This latest call by the CNFIA recalls a similar action in June 2014 when Chinese producers withheld their product after holding the line at $260/mt FOB, causing chaos in the international urea community. Some traders accepted the $10-$12/mt loss at that time, while others backed out of the deal, putting them on a blacklist by the Indian government.

A settlement has been reached in the first trial involving the 2013 West Fertilizer Co. explosion. A notice posted on the website for McClennan County, Texas, stated only that potential jurors were "excused," and that a "settlement has been reached covering the portion of the cases you were summoned for." The terms of the settlement were not disclosed.

Plaintiffs in the opening case included the families of three first-responders killed in the April 17, 2013, blast: Kevin Sanders, 33; William "Buck" Uptmor Jr., 45; and Kenneth Luckey Harris Jr., 52. Defendants include West Fertilizer owner Adair Grain Inc. and several fertilizer companies that either manufactured or sold ammonium nitrate to West Fertilizer in the months prior to the explosion, including CF Industries Holdings Inc. and related CF companies, International Chemical Co. (Inter-Chem), and LSB Industries Inc. and its subsidiaries El Dorado Chemical Co. and Thermaclime Inc.

Judge Jim Meyer of Waco’s 170th State District Court had earlier summoned 400 prospective jurors to come to court on Oct. 9 to fill out questionnaires, with jury selection slated to begin on Oct. 12. The potential jurors were notified on Oct. 11, however, that the case had been resolved and they no longer needed to report for jury duty.

Meyer has divided the multi-party lawsuits into three trial groups. The lawsuits involve about 200 plaintiffs who are seeking damages, including the families of those killed and injured, the City of West, and a nursing home and apartment complex that were heavily damaged. Meyer said a trial date for the second group of plaintiffs is scheduled for early winter 2016.

The deadline for the MMTC urea tender was pushed back to Oct. 9. Sources say the move came to accommodate the week-long holiday just concluding in China. The tender was slated to close Oct. 7, just as China would be ending its Golden Week of celebrations related to the founding of the People’s Republic of China. At best, during the week industry and government offices would have skeleton crews on hand, said one source.
 
Before the holiday began, international traders said securing backing for offers into the MMTC tender might depend on talks at the highest levels of the producing facilities, because most of the sales staff would be on vacation. The extension of the tender deadline allows time for everyone to get back to work.

The Chinese nitrogen producers’ association remains adamant that producers refuse to support offers that reflect a lower price than the previous Indian tender. Sources say, however, the association is not trying to force the producers into artificially raising the price of their product.  Last week, traders were predicting a $2-5/mt drop in offered prices.

Potash Corp. of Saskatchewan Inc. has announced that it has withdrawn its proposal to negotiate a transaction with K+S Aktiengesellschaft.
 
PotashCorp said the private proposal of €41 per share on May 31, 2015 sought to bring together complementary assets that would have enhanced financial resources and allowed the combined company and its stakeholders to benefit from greater diversification across geographies and products. It reflected a 59 percent premium to the volume weighted average of K+S share price during the prior 12 months and included comprehensive, credible commitments to K+S employees, unions and communities, according to PotashCorp.

"Our proposal reflected full and fair value, and was predicated on a collaborative process with access to customary due diligence," said Jochen Tilk, PotashCorp president and CEO. "Since that time, challenging macroeconomic conditions have contributed to a significant decline of global commodity and equity markets, with potash peer stocks down almost 40 percent. In light of these market conditions and a lack of engagement by K+S management, we have concluded that continued pursuit of a combination is no longer in the best interests of our shareholders."

PotashCorp said it will continue to focus on its disciplined growth strategy. With a strong balance sheet, top-tier assets and a track record of operational excellence, PotashCorp believes it is well positioned to capture future opportunities.

Pinnacle Agriculture Holdings LLC announced on Oct. 5 that it has acquired the Missouri-based agronomy business of MRM Agricultural Service LLC and its affiliates. The location in East Prairie, Mo., will operate under Pinnacle’s Sanders® brand as a full-service agricultural retailer providing fertilizer, seed, and crop protection chemicals, as well as custom application, precision agriculture, and scouting services.

"We are excited to expand further into the Missouri Bootheel through a great team of people at our new East Prairie location," said Andrew Duff, regional business director for Sanders. "Sanders’ core focus is making sure our customers are successful. The MRM business was built on similar principles and has a long tradition of providing farmers the highest level of service and the best inputs for their farm. Sanders will build upon this tradition and make the transition as seamless as possible."

MRM was founded in 1964 by Rex Mainord, and currently serves more than 600 customers in four states. The family operation is now led by Milas R. Mainord, and offers custom blending and application of liquid and dry fertilizer, anhydrous ammonia, agricultural lime, variable rate application, grid soil sampling, and a broad selection of seed varieties and crop protection chemicals. The existing management team, including Mainord, will continue to lead the operation, with Kevin Mainord serving as location manager and Fielden Laplant as operations manager.

"We are truly excited to be a part of Sanders," said Milas Mainord. "Our customers, employees, and suppliers are very important to us, so we naturally wanted to ensure that they continue to experience the same level of service and integrity upon which MRM was built. Sanders is a perfect fit, and this partnership will enhance the selection and availability of products and innovative solutions that we bring to our customers for successful crop production.

MRM marks Pinnacle’s twelfth acquisition in 2015. The company operates through its Sanders, Performance Agriculture™, Providence Agriculture™, AgOne Application Services™, OptiGro®, Innvictis™, Meridian™, and Altitude™ brands, serving growers across 28 states. Sanders now operates 117 agricultural retail locations across nine states.

Mosaic Fertilizer, LLC, a subsidiary of The Mosaic Co., today announced that it has reached settlements with federal and state environmental agencies to resolve claims about how the company has managed certain onsite waste materials at its fertilizer manufacturing facilities in Florida and Louisiana. The settlements are subject to court approval. Federal authorities estimated Mosaic would eventually pay up to $2 billion to fund the settlement initiatives.

"We are pleased to be bringing this matter to a close," said Joc O’Rourke, Mosaic president and CEO. “Mosaic is committed to meaningful environmental stewardship at all of our facilities, and we take our responsibility to be good corporate citizens–now and for the decades ahead–very seriously. The commitments we are making through these settlements further those stewardship efforts."

When the settlements become effective, the company will invest at least $170 million at its fertilizer manufacturing facilities to modify certain onsite waste management practices and implement innovative procedures to recover and beneficially use resources. The company also will place $630 million of cash into trust as financial assurance to support the closure and long-term care of its phosphogypsum stack systems. As part of the agreements with the government, Mosaic will pay a penalty of $8 million and will conduct two environmental projects valued at $2.2 million in Florida and Louisiana. The company does not expect the settlements or resulting operational changes to adversely impact production rates or volumes. Mosaic has previously discussed the potential of capital investment and financial assurance parameters of the settlements in its SEC filings.

The environmental agencies with whom Mosaic Fertilizer LLC is settling consist of the U.S. Environmental Protection Agency (EPA), the Florida Department of Environmental Protection (FDEP) and the Louisiana Department of Environmental Quality (LDEQ). The settlements will resolve all of the claims which the agencies have asserted relating to the federal Resource Conservation and Recovery Act (RCRA) and state hazardous waste law. EPA initially made those claims in 2005 and 2006 as part of an enforcement initiative involving the phosphate fertilizer manufacturing industry.

"In the years since EPA began this enforcement initiative, Mosaic has voluntarily made a number of major improvements to and significant capital investments in our facilities to enhance environmental performance, and the settlements will build upon that good work," said O’Rourke.

LSB Industries Inc. has announced that Richard Sanders, currently a director of the company’s board, has been named interim executive vice president, Chemical Manufacturing, effective Sept. 29, 2015. He will oversee all plant operations and will report to Daniel Greenwell, interim CEO.

With Sanders’ appointment, LSB has suspended its previously announced search for a president of the Chemical business.

"Richard is recognized as a leading expert on nitrogen manufacturing and an outstanding addition to our executive management team," said Greenwell. "He has a proven track record of success with world class nitrogen manufacturing operations, including the management of major facility expansion projects. We are confident that his extensive experience will prove instrumental in our efforts to improve the reliability and profitability of our chemical facilities. On behalf of the board, I would like to welcome Richard and look forward to his leadership as we position our Chemical business for growth."

Additionally, LSB announced the resignations of David Goss, executive vice president of operations, and Michael Tepper, senior vice president of LSB International Operations.

Sanders has been a director of the LSB board since 2014. He is a nitrogen fertilizer manufacturing consultant and previously served as vice president of manufacturing of Terra Industries Inc. from 2003 until the acquisition of Terra by CF Industries Holdings Inc. in 2010. On completion of the transaction, he worked on the integration of manufacturing operations, and as vice president, environmental health and safety, engineering and procurement. At Terra, Sanders was responsible for Terra’s six nitrogen manufacturing facilities’ overall operations including production operations, environmental health and safety, project engineering, and technical services. He was also responsible for Terra’s annual capital investment program, including major expansion projects. Sanders was plant manager of Terra’s Verdigris, Okla., nitrogen manufacturing complex for nine years prior to his role as vice president of manufacturing. Prior to Terra, he served as plant manager at the Beaumont Methanol Corp. 800,000 GPD methanol manufacturing facility and in management and engineering positions for Agrico Chemical Co. He received a Bachelor of Science in Chemical Engineering from Louisiana State University.

Indian trading company MMTC Ltd. called a urea tender to close Oct. 7. Sources say the buying house is expected to purchase at least 1 million mt, and is reportedly authorized to take up to 1.5 million mt. Industry observers speculate that prices could be $3-$4/mt lower than the IPL tender that closed Sept. 11.

The market remains in the doldrums as production continues to expand beyond demand. Reports out of China say the nitrogen producers association is telling its members not to provide support to the lowest offer in the tender. One source called the association statement out of line.

Details of the tender can be found on the MMTC website at http://mmtclimited.gov.in/tenders/view/1202. Shipment of the material must be done by Nov. 12. One trader speculated that another tender will be called by Nov. 15.

LSB Industries Inc. reported today that the Pryor, Okla. chemical facility has resumed production of ammonia on Sept. 23, 2015. On Sept. 3, 2015 the company announced that Pryor had been taken out of service for unplanned maintenance in early August as a result of mechanical issues that occurred during restart following the facility’s planned annual turnaround, which took place throughout much of July.

LSB estimates that the periods of downtime at Pryor in August and September will reduce third quarter 2015 sales volumes of UAN and ammonia by a total of approximately 35,000 to 40,000 st and 7,000 to 10,000 st, respectively, while lowering operating income by a total of approximately $9.5 million to $10.0 million, which includes lost profit, unabsorbed overhead expenses and costs of repair.