An early spring and very tight supplies of a few products caused a good bit of market volatility during the week. Sources cited an early ammonia run, particularly in the Southern Plains and parts of the Cornbelt, including Missouri, Nebraska, and southern Illinois.
Ammonia was reportedly running hard in preplant applications in the Southern Plains. Product was in very tight supply due to plant outages and supply allocations. Agrium Inc.’s ammonia plant at Borger, Texas, remained down for maintenance and final tie-ins on the urea expansion, but the company said a restart was planned for later in the week. As of Feb. 10, Agrium told analysts that its Wholesale ammonia business was 100 percent committed for the first quarter and 70 percent for the second quarter. Urea commitments were 100 percent and 25-35 percent, respectively.
Koch’s ammonia plant at Enid, Okla., was also down early in the week, but sources said a restart was underway at midweek. Rumors were also circulating of an outage at Dodge City, Kan., while no new orders were reportedly being taken at Pryor, Okla., and Coffeyville, Kan.
Sources reported long truck lines at terminals in Missouri and Nebraska as demand for ammonia picked up rapidly in parts of the Midwest and Southern Plains during the prior week (GM Feb. 17, p. 2), and predicted heavier demand for this week. “This was expected if we had an early run,” said one source.
In the meantime, the Iowa Fertilizer Co. plant in Wever, Iowa, hopes to reach production in the first quarter. As of Dec. 26, 2016, the company said the plant was 98 percent complete (GM Jan. 6, p. 1). In preparation for eventual production, the company held a meeting Feb. 16 at the Wever Fire Department to update local residents on the plant and to hand out shelter-in-place kits.
Mark Pytosh, CEO of CVR Partners LP, an Iowa Fertilizer competitor, said while Iowa Fertilizer had sold into the second quarter, “they’re not active in the spring application, the immediate short-term. I don’t think they have any real scalable production at this stage,” he said, speaking to analysts Feb. 16. “April is a big month up at East Dubuque, so I don’t see them participating in any significant degree there. They might catch the tail end of it, but they’d have to pretty much run at a full production data to produce enough volume to sell it there.”
Pytosh said a lot of customers were betting on the Wever plant being up in time for the spring season, but that not much is likely to be available.
CVR bought its East Dubuque, Ill., nitrogen plant from Rentech Inc. in 2016. He added that the plant was expecting a big spring as the immediate area had a weak fall ammonia season due to warm and wet temperatures.
In the meantime, some new ammonia plants were up to meet the demand, most recently CF Industries Holdings Inc.’s Port Neal, Iowa, expansion (GM Feb. 17, p. 1), with the company putting ammonia capacity at 110 percent on Feb. 16. Two other plants, CF at Donaldsonville, La., and the Incitec Pivot Ltd./Dyno Nobel plant in Waggaman, La., came up in 2016.
As for MAP, as with last week, prices continued to be strong, with sources saying players were caught short on product, and NOLA continuing to post firm prices.
While ammonia and MAP prices have been going up, urea at NOLA was shaky, falling to as low as $219/st FOB for prompt granular barges before rebounding somewhat. This is despite a 1.1 million st fall-off in imports fertilizer year-to-date. Some argued that a big ammonia run would mean less demand for urea and UAN later in the season. While UAN prices appear to have topped out at some major price points, they have not shown the weakness evidenced by urea in recent weeks.
Sources last week were also noting a tepid international urea market, with stalled buying in India and Brazil.