AMMONIA
U.S. Gulf/Tampa: The NOLA and Tampa ammonia markets were quiet last week, with Southwestern Conference attendees focusing more on other products.
Eastern Cornbelt: Spot pricing changed little from last report. Anhydrous ammonia was quoted at $325-$340/st FOB regional terminals, with the lower numbers reported in Illinois.
Western Cornbelt: Anhydrous ammonia pricing was steady at $315-$330/st FOB regional terminals, with the low in Nebraska. In Iowa, most dealer quotes fell in the $320-$325/st FOB range, while rail-delivered tons in Missouri were quoted at the $340/st mark.
California: Record heat, power outages, wildfires…California was experiencing them all in late July. Understandably, fertilizer was not the most pressing thing on sources’ minds last week, and few changes in spot pricing were reported. Anhydrous ammonia remained at $425/st truck-DEL to dealers in the state.
Pacific Northwest: Delivered ammonia remained at $345-$350/st in Washington, with Montana pricing quoted in roughly the same range. One supplier was offering forward contract ammonia for September through October at $350/st FOB Washington terminals.
Western Canada: Anhydrous ammonia was quoted at $444-$479/mt DEL, down significantly from the spring season.
UREA
U.S. Gulf: By most counts, there was a lot of talk at the Southwestern Conference, but not a lot of trades. One player said he is now convinced that much of the run up in prices has been trader-to-trader business, with just a little demand for Oklahoma thrown in for good measure. Sources said demand from wheat country could pick up “big time” if the region would just get a little rain, thereby justifying higher urea barge numbers. Regardless, sources did report that business was concluded in the $222-$223/st FOB range.
Eastern Cornbelt: Granular urea was tagged at $240-$255/st FOB in the region, with the low at Cincinnati, Ohio. Agrium’s July 17 postings included $265/st FOB Garrett, Ind., and $270/st FOB Saginaw, Mich., with rail-delivered urea postings at $270/st in Illinois, Indiana, and Ohio, and $275/st in Michigan.
Western Cornbelt: Granular urea was quoted at $245-$255/st FOB in the region.
California: Granular urea was steady at $310-$320/st FOB and $320-$330/st DEL in the state.
Pacific Northwest: Washington sources pegged the urea market at the $265/st DEL mark, give or take, while pricing in Montana was quoted at $240-$245/st DEL. One supplier was offering forward contract urea for September at $285-$290/st DEL in Montana, $295/st DEL in Oregon, Washington, Idaho, and Utah, and $305/st DEL in Wyoming.
Effective July 17, Agrium’s postings for granular urea moved to $270/st FOB Washington warehouses at Glade, Kennewick, Warden, and Wilson, and $275/st FOB West Woodburn, Ore., and Alberta plant locations at Red Water and Carseland. Delivered postings from the company moved on that date to $247-$252/st in Montana and Wyoming, depending on location; $277/st in northern Utah; $280/st in Central Utah; and $285/st in southern Utah.
Western Canada: Granular urea pricing was tagged at $325-$345/mt DEL, down considerably from last report.
Black Sea: And the price keeps sliding. Sources report that despite an official base price (KIP) of $200/mt FOB, deals are being concluded that show a level at least $5/mt lower. Asian sources point to a number of short sales “by people who really know what is going on” that have pushed the de-facto market to $195-$197/mt FOB.
Reportedly, the KIP will not be lowered despite all market information to the contrary until the government feels comfortable – meaning politically secure – enough to do so. Seems the president is under the gun to name a new prime minister. At the same time, the majority party in the parliament has yet to put its plans together to form a workable government. The elections back in March led to a growing confrontation when voters elected a parliament from a different party than the president.
It now appears the urea producers are unwilling to offer either side the opportunity to use the industry as a whipping boy. The producers fear two types of attacks, said one source. The first is that if exports are encouraged by lowering the KIP, then Ukrainian farmers might not have enough urea for their needs. The second type of attack could come from accusations that by lowering the price the country is not getting its “proper” compensation for its urea.
Regardless of the politics, say observers, the price is down, and there is very little coming on the horizon to provide any serious support.
Sources report the business done into Brazil for August shipment reflects an even softer price. One observer said the netback is closer to $190/mt FOB than $195/mt FOB.
At the same time, Pakistan and India do not appear to be ready to offer relief to the Black Sea producers. Reportedly, Pakistan is doing all it can to slow down the delivery of material it has already ordered because the warehouses are full and the domestic price is falling. At best, said one source, TCP/Pakistan will be issuing a tender the end of August or early September for shipment to begin mid-October.
India is said to be sniffing around and some buyers are even said to have made some quiet deals, but major purchases by a major Indian buyer are not likely. And so, once again, the Black Sea producers are stymied in their efforts to move the price up.
The one ray of hope to slowing the slide in prices appears to be the shutdowns in the Baltic region. Seems with those plants down, the price drop out of the Black Sea slowed down – but did not stop.
The slide is seen by many as something that will continue into the fourth quarter. Even if India and Pakistan come in for large quantities – still an uncertainty – looming just over the horizon are the Chinese producers straining at the bit to export.
So for now, last week ended with prices quoted at $195-$197/mt FOB, but with the official line saying prices are no lower than $200/mt FOB. At the same time, there appears to be little business large enough coming to turn this market around.
Middle East: Producers claim they are comfortable. Traders accept that line for the prilled guys, but are not so sure the granular guys are telling the whole truth.
With granular production increasing – the latest addition from SAFCO itself – this indicates for many that production is outstripping demand.
Evidence of a lower price coming was shown in the sale from PIC to Argentina earlier this month. The official line is that the netback was about $210/mt FOB. Sources around the globe, however, have pointed to other indicators that the real price was closer to $205-$208/mt FOB. One trader noted that many of the Middle East producers use their shipping clout to achieve good freight rates, but even with that influence, he said, the numbers in Argentina and generally accepted freight rates show a much softer market than producers are willing to admit.
One source noted that if – and he stressed the “if” – a deal could be done for the United States at the current best barge price, the netback to the Middle East would be closer to $195/mt FOB. But, he quickly noted, there are no deals to be done.
Prill producers are in better shape, however. Sources say the dwindling number of prilled urea producers in the region is able to hold their own. Prices are pegged at $220-$225/mt FOB.
The main point seems to be everyone is waiting for China to enter the market. Buyers appear to be unwilling to commit to cargoes when the possibility of cheaper urea from China might be possible. With China being able to offer granular and prilled urea in quantities and prices at better rates, especially to Asian buyers, the Middle East producers are facing serious competition for business come Oct. 1.
China: After weeks of saying it definitely won’t happen, sources are now looking at the possibility that the export duty may be reduced from 30 percent to 15 percent a month early. Seems the domestic market had cratered, demand is nil, and production has remained unimpeded by supply and demand pressures. Now producers are calling on the government to reduce the export tax sooner than the expected Oct. 1 time.
A look back at the July BCIC/Bangladesh tender shows that traders were counting on both a slow award and plenty of Chinese tons for export. Sources say they expect to see Chinese urea once again dominate the upcoming BCIC tender Aug. 3.
For now, buyers around Asia appear to be waiting for the Chinese tons to become available. As a result of this waiting game, producers in the Middle East are growing concerned about being able to hold up their prices.
Bangladesh: Reportedly, BCIC has awarded a contract on the July tender. Sources say, however, that the letter of credit has yet to be arranged. Reportedly, buyer and seller are delaying so that shipment does not begin until sometime after Oct. 1. The delay could be shortened if Beijing lowers the export tax sooner, said one source.
The next tender, which closes Aug. 3, is expected to follow the same pattern. Sources do not expect BCIC to issue awards for at least 2-3 weeks and then ask for a delay in the shipment of the tons.
And Chinese material is expected to dominate.
Pakistan: Reportedly, the drop in the domestic market has raised political concerns as well as economic pressure to reduce imports.
Sources are reporting that imported material is facing unusually strict customs inspections, and with some of the results being motivated more by a desire to keep tons out than actual violations of import laws. The end result is that tons that were ordered under private and public deals are being questioned in ways rarely seen.
The problems at the ports, say sources, are partly because local warehouses are full and domestic producers are not anxious to have any competition from imported material.
The temporary glut of urea in Pakistan is leading many in the industry to speculate that a call for a tender will be delayed several weeks. Sources had earlier predicted a mid-August timeline for the calling of a tender for October and November tons – they now say the most likely time for the call will be late August or more likely early September. Shipment will be delayed until late October, with the last of the tons to be slated for a December loading.
For observers, that means the Pakistanis will be buying just when a flood of additional urea will be available from China.
India: Sources say there have been a number of quiet talks going on between Indian buyers and a multitude of suppliers. Reportedly, the Indians are trying to quietly nail down deals for the last quarter without spooking the market.
One trader noted that once Pakistan and other buyers begin making their intentions known, the market might show a slight rally. At that point, India is expected to step in with either handshake deals or actual contracts in hand and snap up the tons at lower prices.
Even if India were to re-enter the market next month, sources say the surplus of tons from the Black Sea to China would mitigate any price jump to a modest bump.
Vietnam: Even though the Phu My plant is back up and running, sources say there is still a need for urea in the country. There are reports circulating that the Phu My operators have been looking to buy another Black Sea cargo while at the same time offering stored Black Sea material for re-export. Asian sources at first were scratching their heads over this move, but finally decided there might be some logical reason for this action.
NITROGEN SOLUTIONS
U.S. Gulf: UAN barges were reported to be getting more looks last week at the Southwestern Conference. Prices were reported to be moving up, with barges called $146-$150/st FOB ($4.56-$4.68 unit), and most folks honing in on the higher end of the range by the end of the week. Others said that vessels for the East Coast were attracting more attention than NOLA barges, with players last week getting vessels lined up for later in the fall, and prices reported to be significantly moving up toward the $190/mt DEL mark. New deals were reportedly done at $186-$189/mt DEL, with new postings out for the retail market expected soon.
Eastern Cornbelt: UAN remained at $5.40-$5.78/unit FOB most regional terminals, with the lower numbers reported out of spot Illinois River locations.
Western Cornbelt: UAN was unchanged at $5.25-$5.55/unit FOB regional terminals. UAN production appears to be sold out through October, but carryover at dealer locations and terminals remains high, prompting many to see a continued flat market for that product.
California: UAN-32 was unchanged at $200-$210/st ($6.25-$6.56/unit) FOB in the state, with delivered tons ranging broadly from $191-$225/st ($5.97-$7.03/unit), depending on location.
Pacific Northwest: UAN-32 remained at $199-$215/st ($6.22-$6.72/unit) in the region, with the low end for railed tons and the upper end quoted by Washington sources for trucked material.
Western Canada: UAN-28 was $207-$220/mt ($7.39-$7.86/unit) DEL in the region, a drop of roughly $2/unit from last report.
AMMONIUM NITRATE
U.S. Gulf: Nothing new was reported in the barge market, though there was some speculation that the next trades on imports could be in the low $190s/st FOB. In the meantime, domestic product is quoted at $240/st FOB truck at Yazoo City.
Western Cornbelt: Ammonium nitrate pricing was steady at $255-$260/st FOB.
California: No market was reported for ammonium nitrate in the state. CAN-17 was unchanged at $210/st FOB and $230/st DEL.
Pacific Northwest: CAN-17 remained at $215-$222/st FOB or DEL. No market was reported for ammonium nitrate in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $150-$155/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate remained at $150-$155/st FOB and $155/st DEL in the region.
California: Ammonium sulfate was quoted at $175-$185/st rail-DEL in the state.
Pacific Northwest: Granular ammonium sulfate was down from last report, with the market quoted by Washington sources at $175/st DEL, give or take. Effective July 13, Agrium reposted granular ammonium sulfate at $175/st FOB and $180/st DEL in the Pacific Northwest region.
Western Canada: Granular ammonium sulfate pricing was down to roughly $270/mt DEL in the region.
PHOSPHATE
Central Florida: While the mood at last week’s Southwestern Conference was generally upbeat about the fall season, no new sales of DAP were reported in Central Florida last week. However, that was said to have resulted in very little new business being done at the San Antonio meeting. The optimism at the conference was apparently based on improved crop prices, which means farmers will have more money to spend on fertilizer. In addition, expectations were that as much as 85 million acres of corn will be planted this year, which would be good for phosphates. Some bad news at the conference dealt with transportation issues. For Central Florida, railroads warned at the conference that rates may go up 10 percent or more in the near future.
With no new sales last week, the Central Florida DAP range was unchanged at $223-$227/st FOB. Mosaic’s posted price remained at $235/st FOB, and CF’s posted price was $227/st FOB. Prices do not include discounts; however, some large buyers can obtain a lower price without a discount from some producers. CF was said to be selling DAP as low as $223/st FOB. Mosaic discounts MAP $4/st from the price of DAP, while CF has no price difference. PotashCorp’s Central Florida reference price remained at $245/st FOB. In Texas, Agrifos’ prices were unchanged at $255/st FOB for DAP and $261/st FOB for MAP.
U.S. Gulf: Most who attended the Southwestern Conference last week came away feeling more optimistic than they have in recent months. Dealers were said to have made smaller profits in the spring than normal, but traders were said to have taken losses – in some cases, large losses. Still, because it appears farmers will do well this season with better crop prices, they will be planting more corn – because of ethanol – and spending more on fertilizer. Many dealers and traders have allowed their bins to run empty, but probably won’t begin buying until demand begins, which should be some time in August, depending on location. That could start soon, if very dry parts of Texas and Oklahoma get some relief from their drought. The lack of moisture there has hurt the wheat crop. Most reported an increase in interest from buyers last week, but little in the way of new sales.
Projections were that prices will see a slight uptick during the next few months, primarily because of increased export activity, but how much was unclear. Most buyers said they planned to wait, regardless, because the cost of borrowing money has gone up and they believed that would offset any increase in the price of phosphate products.
Fleeting costs were set to rise from $250-$300/st to between $400 and $500/st, which will have a negative impact on early buying. In the short term, NOLA DAP barge prices on the river continued to be weak last week. Barges that traders purchased from Miss Phos were said to be available for as low as $225/st FOB, according to several sources, but no buys at that price could be confirmed. Sales at that price would mean a loss to the seller. The only sale found last week was within the previous week’s price range of $228-$233/st FOB, which did not change.
Eastern Cornbelt: DAP was tagged at $262-$275/st FOB and MAP at $260-$272/st FOB regional warehouses, with the lower numbers out of spot river locations and the high inland. TSP remained at a nominal $233-$240/st FOB, and 10-34-0 was $265-$275/st FOB in the region.
Western Cornbelt: DAP and MAP were generally quoted at $265-$275/st FOB river warehouses, with most locations in the lower half of that range. TSP, where available, was reported in the $233-$240/st FOB range. 10-34-0 was unchanged at $265-$275/st FOB.
California: MAP was steady at $315-$320/st FOB warehouse or DEL, with the low for railcars and the high for trucked tons. DAP was $5/st higher than MAP. 10-34-0 remained at $246-$251/st FOB, and 16-20-0 was $235-$240/st FOB in the state.
Phosphoric acid prices were up slightly on the strength of higher postings. Ortho-phosphoric acid was quoted at $5.35-$5.45/unit DEL, with super-phosphoric acid at $5.45-$5.55/unit DEL. Simplot’s pricing for phos acid delivered in California, Arizona, and Utah will firm a dime/unit in August to $5.75/unit for super-phosphoric acid and $5.65/unit for merchant grade acid. Agrium’s phos acid postings will increase $5/st in August to $535/st for merchant grade and $545/st for super-phosphoric acid rail-DEL in Arizona, California, and Nevada.
Pacific Northwest: MAP and DAP were steady at $300-$310/st FOB or DEL in the region, with the lower numbers in Montana and Idaho. 16-20-0 remained at $235-$240/st DEL, and 10-34-0 was $245-$265/st FOB or DEL.
Under Agrium’s summer fill program for MAP and APS (16-20-0), effective July 12, MAP is offered at $310/st FOB warehouses in Washington, northern Idaho, and Oregon (except for Malheur County), while 16-20-0 is $240/st. The two are delivered into that area at $315/st and $245/st, respectively. In other areas of the region, MAP was offered at $310/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County, and $305/st DEL in Montana and Wyoming, while 16-20-0 was posted at $240/st DEL in those areas.
Super-phosphoric acid was up slightly to $5.45-$5.55/unit DEL, and ortho-phosphoric was $5.35-$5.45/unit DEL in the region. Simplot’s postings for product delivered in Washington, Oregon, Idaho, Montana, and Wyoming will move in August to $5.75/unit for super-phosphoric acid (SPA) and $5.65/unit for merchant grade acid (MGA), a dime/unit increase from July postings. Agrium’s phos acid postings will move in August to $535/st for merchant grade and $545/st for super-phosphoric acid for product rail-delivered to points in Idaho, Montana, Oregon, Utah, Washington, and Wyoming.
Western Canada: MAP was pegged at $390-$415/mt DEL, down only slightly from last report.
U.S. Export: The export phosphate market was by far the most active of the major markets last week. According to sources, PhosChem made a sale of three or four panamax-sized DAP vessels, about 180,000-240,000 mt, for delivery to India last week at prices of between $262/mt FOB and $263/mt FOB. In addition, it sold Pakistan two DAP handymax vessels, which carry 30,000-35,000 mt, in the same range. South American buyers took between 6,000 and 8,000 mt at $263/st FOB. Both of those countries were said to still be in the market, and Brazil was said to be poised to purchase MAP in substantial quantities. Projections were that both prices and sales of export phosphate would be going up during the next few months, as demand increases. That would likely result in higher domestic prices at some point.
With the recent sales to India and Pakistan, the export DAP price range increased last week to $262-$263/mt FOB from the previous week’s range of $260-$261, as a result of higher delivered prices.
POTASH
China: After about seven months of negotiations, China and major potash producers agreed last week to a new $25/mt price increase. Initially struck by Belarus, other producers quickly followed suit as the week progressed. Other major buyers are expected to now follow. (See PotashCorp earnings, p. 1.)
The Vancouver Port Authority says potash exports via the port were off 60.7 percent for the first six months of 2006 from the year-ago period – to 1.3 million mt from 3.33 million mt.
The rush to supply China and others with potash may cause logistics problems and could ultimately result in higher freight rates, which might offset any gains that China received in seven months of negotiations, noted PotashCorp President and CEO Bill Doyle last week in the company’s quarterly conference call. He suggested that might be one reason why China has revealed the price increase, but not the specific tons it will be taking for the remainder of the year. One thing for sure, said Doyle, is that more will be shipped in the second half of 2006 than was done in second half 2005. Doyle assured investors that regardless of how many tons China takes, Canpotex will continue to supply its 25 percent market share to China.
Eastern Cornbelt: Potash was steady at $195-$205/st FOB regional warehouses, depending on grade and location.
Western Cornbelt: Granular potash was $193-$205/st FOB in the region, with the low at St. Louis and the higher numbers reported by Iowa sources out of warehouse locations.
Agrium’s fuel surcharge increased on July 25 to 23 percent in Iowa, Nebraska, Missouri, the Dakotas, Minnesota, Wisconsin, Kansas, and Oklahoma.
California: Potash remained at $227-$233/st FOB regional warehouses. Potassium nitrate pricing was steady as well at $485/st FOB for bulk and $540/st FOB for 50-pound bags. Sulfate of potash (SOP) was also unchanged at $343-$348/st FOB for granular and $331-$336/st FOB on standard/soluble.
Agrium’s fuel surcharge moved on July 18 to 24 percent in California and Nevada.
Pacific Northwest: Potash remained at $215-$229/st DEL, depending on grade and location.
Agrium’s fuel surcharge increased on July 25 to 23.5 percent in the Pacific Northwest region.
Western Canada: Potash FOB Saskatchewan mines remained at $245-$250/mt FOB, depending on grade. Coarse potash FOB plant sites or regional warehouses ranged from $242-$257/mt in the region.
SULFUR
Tampa: With August just around the corner, first Mosaic and then PotashCorp agreed with their sulfur suppliers to a rollback in prices of $3/lt last week. Although a rollback was expected, it was not as great as phosphate producers had been seeking. Earlier, it was said PotashCorp was seeking a decrease in third quarter prices of $7.50/lt.
Some transportation congestion of sulfur railcars was reported in North Florida, and some of that was reported to be causing minor congestion problems in Central Florida.
West Coast: Not all of the priller contracts had been settled as of last week, but those that were were down $7-$8/lt. The balance could be signed by the end of this week.
MARKET NOTES
India: The Indian Farmers’ Fertiliser Cooperative Ltd (IFFCO) has completed conversion of its naphtha-based ammonia-urea complex at Phulpur in Uttar Pradesh into a gas-based unit. This will lead to an annual savings of around $222 million, according to the company. The Phulpur unit was commissioned in 1981 and expanded in 1997 to produce 1.42 million mt of urea annually.
Pakistan: The government has approved a reduction of Rs 275 in DAP prices, and simultaneously an increase of Rs 85 in urea rates for the next season. DAP prices for the growers will come down from Rs 1100 to Rs 825 per bag, but urea prices would go up from Rs 525 to Rs 600 a bag. The adjustment in prices is meant to discourage unnecessary use of nitrogen and to encourage proper use of potash and phosphate, local media reported.