AMMONIA
U.S. Gulf/Tampa: Sellers into Tampa were reported to be eyeing a $10-$15/mt DEL increase for first half February business, citing higher freight rates from Yuzhnyy. There was no word of anything new actually being achieved, with the last done being $350/mt DEL for second half January. In the meantime, new business to other Gulf ports was reported to be a little higher. Transammonia sold a 23,000 mt cargo to PCS for $367/mt DEL for Geismar, while Nitrochem was reported to have sold a Russian cargo into Savannah for PCS at $360/mt DEL.
In the meantime, a 15 percent gas curtailment in Trinidad has reportedly not had much impact on ammonia production – at least yet. Sources reported that a problem with a BP gas platform was negated by an LNG facility being offline for repairs. However, sources said Jan. 25 that the LNG facility was due up any minute.
What a difference an extra plant makes. Recent barge sales out of Mosaic’s Donaldsonville, La., plant have gone at $310-$315/st FOB, off quite a bit from the last done. The Mosaic facility was idled last year due to an explosion and recently returned to production. Other sellers suggest that this was product that had to move, thus the lower price. They doubted that such could be easily repeated, especially for a larger quantity. One noted that it is in Mosaic’s overall interest to have lower ammonia prices, rather than higher, due to its position of buying ammonia at Tampa.
Eastern Cornbelt: Sources tagged the ammonia market at $395-$405/st FOB regional terminals last week, with most prepay offers firmly at the upper end of that range. Reference prices were as high as $415/st FOB in Ohio and Indiana. One regional supplier was offering forward contract ammonia for February at $405-$415/st FOB in the region.
Dealers and distributors were out in force at the Illinois Fertilizer and Chemical Association’s 2007 Convention in Peoria on Jan. 22-24. Those in attendance said conversations centered on the bullish markets and the expected 10-15 percent increase in corn acreage. “The frustration is getting farmers to understand the pricing, logistics, and supply variables that are now at play,” said one conference attendee. With much of the Eastern Cornbelt experiencing fall usage reductions because of wet conditions, he said the likelihood of brisk spring demand and a big increase in corn acreage will “severely overtax” the fertilizer distribution system.
Western Cornbelt: Ammonia was quoted at $390-$405/st FOB in the region, with the upper end reflecting the new prepay level after a $10/st increase from the prior week. The low end was still available for cash tons out of some Iowa terminals from the co-op system last week, but tonnage was limited.
Northern Plains: Ammonia was quoted at $390-$400/st FOB in the region for cash or prepay. Forward contract offers for February ranged from $400-$410/st FOB regional terminals, with the low in Minnesota and the higher numbers out of North Dakota locations.
Delivered ammonia continued to be referenced at $445/st in North Dakota for spot cash tons from Dakota Gasification, with no prepay offers available. The company’s Beulah, N.D., ammonia plant remained down for a scheduled maintenance turnaround until mid-February.
Great Lakes: The anhydrous ammonia market was quoted at $400-$415/st FOB for cash or prepay, with the upper end quoted by Michigan sources for prepay or forward contract offers FOB Lima, Ohio, or Huntington, Ind. The low end was available to resellers FOB Courtright, Ont. Wisconsin sources tagged the common prepay figure last week at $405/st FOB. That level was reportedly up from the prior week’s $395/st FOB, with some suppliers and locations no longer taking spring prepay orders last week.
Black Sea: Sources in Asia say demand may be picking up again and that the price out of Yuzhnyy is softening. One trader noted anyone talking about $280/mt FOB last week was someone stuck with a high-priced cargo. At the same time, he said, anyone saying business was done below $270/mt FOB is just trying to talk the market down. Other Asian sources back up these claims.
The order books out of Yuzhnyy are full through the first half of February. How the second half of the month and March go largely depends on the severity of the rest of winter, say sources. Expectations now are that the price will soften as the winter wanes.
The unusually mild early winter in the United States kept natural gas prices from running up, thus making ammonia production more attractive. Now, say sources, with a colder than expected February looming, natural gas prices are once again rising. Just how much the price increases will affect ammonia production – and thereby import demand – is still up in the air. Sources say $270-$275/mt FOB is a realistic price range for Yuzhnyy material.
Middle East: Producers are fully booked into March, say sources.
The driving forces in this area are the Indian DAP buyers and the shutdowns that occurred late last year and earlier this month. Sources say the price has been steadily moving up. Asian observers say the $300/mt FOB barrier was broken early in the week. By week’s end a deal at $325/mt FOB from PIC to Transammonia circulated and was later confirmed. The tons are set for a mid-to-late February loading.
One trader noted the earlier business involved producer-to-producer sales at $310/mt FOB. The transactions were done to put a monetary value to swap deals that were required on the heels of all the plant closings. While no one doubted that was the price the producers placed on the deals, the Trammo deal showed that even outside forces had to come to grips with a dramatically higher price.
Still, one source said that nailing down an exact price in the market for this month is difficult because the only other business done besides the swaps are contract sales. Producers are adamant that any new deals will have to start in the low $310s/mt FOB. It’s just that right now, few are looking to book spot tons.
Sources say output from the region is looking up. The plants that were down are now all up and running, say Asian sources. Even the apparently jinxed SAFCO 4 facility is slowing coming up. Sources say the company is taking the plant up slowly in order to better nail down any problems. The plant has been up and down the past 12 months. Sources say the difficulties have been simple “teething” problems.
The difficulties in getting SAFCO 4 up, however, led the company to look for swap deals with other producers to cover the contracts signed with the expectation the plant would be fully operation the middle of last year.
Reportedly, operational demand from Asia is running unabated. Korean and Taiwanese buyers continue to take all they can from Southeast Asia as well as the Middle East. Sources say ammonia-hungry plants that were in turnaround last month are now coming back online. With the return to production, sources say demand is expected to remain strong.
Despite the claims by producers, the market has moved to about $310/mt FOB; sources say because these are producer-to-producer deals, little credence is given to the deals. What is clear, however, is that the price has moved up. The best guess on pricing now is $295-325/mt FOB.
UREA
U.S. Gulf: The granular urea barge market was relatively quiet last week, with some price strength. New prompt barges sales were reported in the $318-$322/st FOB range. Prills were still sub-$300/st FOB.
Eastern Cornbelt: Granular urea was $345-$355/st FOB in the region, with the low out of river locations in Illinois and the higher numbers reported in Ohio to the dealer.
Western Cornbelt: Granular urea was reported in the $345-$355/st FOB range in the region, also up from last report, with new sales confirmed at the upper end of that range.
Northern Plains: Urea from Canadian sources remained in very tight supply, with some suppliers reportedly sold out into April. Granular urea was tagged at $345-$350/st FOB the Twin Cities, with delivered urea in North Dakota and northern Minnesota quoted at $365-$375/st. One supplier was offering forward contract urea for February at $360/st FOB in Minnesota and $375/st DEL in North Dakota.
Great Lakes: Granular urea was quoted in a broad range at $350-$375/st FOB in the region, with the low in Wisconsin and the upper number reported as the dealer reference price out of Michigan terminals. One source said Michigan reference pricing from some suppliers would likely climb to the $385/st FOB level before the week was out.
Several sources said they were “maneuvering” tons last week, with some speculating that the memory of last year was giving dealers pause about taking forward positions with prices as high as they are. One source, however, said he had booked 75-80 percent of his spring nitrogen needs, and figured he had fully 80-90 percent of his spring phosphate and potash inventories already under roof.
The cautious buying approach carried some risks of its own, as several sources pointed to anticipated corn acreage increases of 10-15 percent and almost universal expectations for higher fertilizer applications rates. One Michigan source said dealers will likely be scrambling for product if spring usage is up 20 percent from last year, when the region saw across-the-board cutbacks in rates.
Northeast: Granular urea was tagged at $350-$355/st FOB Baltimore, Md., and Philadelphia, Pa., with dealer reference pricing quoted at the $357/st level FOB Philadelphia and E. Liverpool, Ohio. Reference pricing out of Savannah, Ga., was reported at the $350/st FOB mark last week.
Pakistan: Rumors are circulating that TCP will soon enter the market. Asian sources note the company is in a tough situation. They will need to buy tons, and the current market is at near-record highs. At the same time, if they delay too long, they will enter the market the same time Indian buyers also start looking for large quantities. Either way, said one source, TCP will end up paying more than if it had made purchases late last year.
India: Sources are still convinced IPL and MMTC will not come in for major buying until March. Even then, they say, purchases may be designed to be spread out over the year instead of a couple large purchases.
Even if the purchases are spread out, sources point out that Indian buyers will need to take about 450,000 mt each month. While the amount seems large, sources say the Indians are now willing to take prills or granular. As a result, all of the Middle East tons will compete against the Black Sea and Chinese producers. With that kind of competition in mind, sources say half a million tons a month is just enough to provide stability to the market, but not enough to make it tight.
Indian buyers have been shopping around the Arab Gulf to nail down tons for NPK producers. Their initial purchases led many in the industry to think the much-anticipated “big buy” was coming. Representatives of MMTC and IPL were quick to step forward to squelch that thinking.
Sources say spreading out the annual demand purchases would make the most sense for the Indians. One trader noted that as of late last week more than $25 million is owed in demurrage costs because urea vessels cannot get unloaded. If the purchases were spread out, say sources, the ports will be able to handle the influx of ships and the inland transportation infrastructure will be able to better deal with the material once it hit the dockside warehouses.
Another benefit to spreading out the purchases, said one source, might be the ability to load cargoes on smaller vessels. While the freight rate would be marginally higher, the benefit of being able to avoid the larger ports could mean faster unloading closer to the end user.
Just what MMTC and IPL will do this year is up in the air. Local media reports indicate the ruling party is facing fierce condemnation from its opponents because of the delays in moving the urea from vessel to field. One observer noted that the MMTC purchases may have to be big numbers as a political sop to quell the opposition drumbeats.
Local sources report that the bullish undertone of the market has put buying in the back seat. The market is being closely monitored by government officials – a drop in international numbers will induce fresh buying, say sources. Meanwhile, IPL has finalized two lots of 25,000 mt prilled urea for Coromandel Fertilizers, essentially to be used for NPK production. One lot was bought from Sabic at US$285.00/mt FOB sight, and a second lot was sourced from Helm at US$308.00/mt CFR Vizag sight.
During 2006-07, India is expected to import almost 5 million mt of urea, which will include about 1.6 million mt of granular from the Omifco project. Local sources say the severe congestion faced at various Indian ports has now eased with faster turnarounds. With no major increases in production and demand expected to remain strong, India is expected to import another 3-5.0 million mt of urea during 2007-08.
Black Sea: Reportedly, India bought a cargo from Yuzhnyy. The netback was reported at $275-$280/mt FOB. Industry observers now peg the market at that level.
Adding to the furor that prices are on the way up is a consensus in Asia that delivered prices are firmly in the $300s/mt CFR. With buyers now paying $310-$330/mt CFR, the upper $270s/mt FOB are firmly pegged as the current price.
The line up in Yuzhnyy is said to be comfortable through February, with orders for Latin America, Europe, and Asia.
Middle East: Producers are now asking $295/mt FOB for prills and granular. While traders and buyers all agree this is what is being asked, no one has been able to point to any business at that level.
The last public deal was a couple of weeks ago when the Indian NPK producers got a prill cargo at $285/mt FOB.
Deals going back to the last round of Indian tenders and current American purchases are what is making the local market tight. While the Indian business is well documented, the U.S. cargoes are cloaked in standard contract secrecy.
Industry observers note that a smart move by the producers will be to be just aggressive enough in the upcoming Indian tenders to secure the business. If the producers get greedy, said one trader, they could lose out to Yuzhnyy offers.
By nailing down the Indian business – assuming MMTC and IPL do indeed move to a rationalized system of monthly purchases – the Middle East suppliers could fill their order books for the whole year and not have to face the danger of growing reserves.
For now, sources still peg the prilled market slightly ahead of the granular market because of the demand from India for the NPK producers. Prills are put at $280-$285/mt FOB. Granular is at $275-$280/mt FOB.
Once Pakistan and India come in, however, the two prices are expected to reach parity again at a higher level.
Bangladesh: The government crisis – as in the country is still being ruled by an interim government and elections have once again been delayed – is adding to the urea shortage. Local media report incidents of urea smuggling are on the increase. At the same time, many of the companies that won tender awards from BCIC are forfeiting their bid and performance bonds because they cannot supply the material at the agreed-to price.
One trader blames the problem on the slowness of BCIC to accept and award contracts to regular urea suppliers. Many of the awards issued last year went to non-traditional companies, which did not have backing from producers and whose offers were far below market levels. Add to the problem the ever-rising urea market.
Even traditional traders have had problems. One trader noted the problem was created by BCIC by not awarding in time. Price guarantees often expired before BCIC awarded, he said. Returning to the producer for another quote often meant adding as much as $10/mt to the original offer.
BCIC refused to pay the higher price.
The latest tender will be held March 5. Sources in the area wonder why BCIC is calling a tender then. Traders note that India and Pakistan will be back in the market at that time, causing the price to rise. If BCIC does issue an award, sources say delivery will not be until the rainy season gets serious.
Once the rains start, one trader noted, arriving ships often have a very long wait to be unloaded. Any offers made in the March 5 tender will most likely include a large margin to cover the demurrage charges that are bound to happen.
Sri Lanka: Reportedly, a number of Chinese tons were offered to the two tenders that closed last week. Sources say the prices came in around $330/mt CFR.
China: Despite the 30 percent export duty, Chinese tons are still competitive in some Asian markets. Reportedly, the Sri Lankan tenders were dominated by Chinese material. Asian traders note that while the material might be competitive in Sri Lanka, no one expects to see large quantities of Chinese urea offered to bigger buyers such as the Philippines or Vietnam. Chinese media report plentiful and cheap urea supplies for the upcoming application season. Observers note this is exactly what the Beijing government wanted when it imposed the high export duty.
NITROGEN SOLUTIONS
U.S. Gulf: Sources last week said that prompt UAN barges were hard to find. They called the last done business within the $195-$200/st FOB range ($6.09-$6.25).
Eastern Cornbelt: UAN was quoted at $7.00-$7.21/unit FOB last week, with the upper end reported by Ohio and Indiana sources for recent prepay offers. The Indiana source noted as well that he was given just 24 hours to book or the price was subject to change.
An Illinois source said the common UAN price on the river system last week was $7.10/unit FOB to dealers for cash or prepay. Reference prices for UAN-28 were reported as high as $212/st ($7.57/unit) FOB inland terminals, but no actual sales were confirmed at that level. One supplier was offering forward contract UAN for February in the $7.16-$7.31/unit FOB range in the region.
Western Cornbelt: UAN pricing was on the rise, with the market quoted at $6.85-$7.20/unit FOB regional terminals. The low end was reported by an Iowa source as a spot river price early in the week, but he was not sure if that level was still doable by midweek. Another source said prepay UAN was offered to him at the $7.00/unit FOB mark last week, while others quoted prepay solutions tons to dealers firmly at the $7.10-$7.20/unit FOB level by Wednesday. Reference prices for spot tons were as high as $7.35/unit FOB in Iowa from some suppliers as the week advanced.
Northern Plains: UAN was up significantly from last report, with the Minnesota market quoted at $7.10-$7.25/unit FOB for prepay. No other spot quotes were available in the region last week.
Great Lakes: UAN was quoted at $7.10-$7.21/unit FOB in the region, with the upper end in Michigan and the low reported for prepay solutions tons in Wisconsin. One Wisconsin source said UAN was sold out at many locations, however. On a delivered basis, sources quoted prices ranging from $7.47-$7.60/unit in the region, with the low reported for rail-DEL tons in central Wisconsin. One supplier was offering forward contract UAN-28 for February at the $208.60/st ($7.45/unit) FOB level in Michigan.
Northeast: UAN-30 was quoted at $205-$210/st ($6.83-$7.00/unit) FOB Baltimore and Philadelphia, up dramatically from last report, with dealer reference prices tagged at $209-$212/st ($6.96-$7.07/unit) FOB at those locations. Sources said those numbers still had more headroom, since vessel tons on the East Coast “have been sold and are selling” in the high-$220/mt C&F. Illustrating the rapid increase in pricing, a Delaware source reported prepaying UAN-32 earlier in January at the $201.60/st ($6.30/unit) FOB level.
Solutions pricing out of terminals in upstate New York was also on the rise. Sources quoted the market last week at $7.25-$7.50/unit FOB, with the upper end reflecting new reference levels.
AMMONIUM NITRATE
U.S. Gulf: The last done barges were reported to have sold at $240-$245/st FOB, with sellers now quoting $248-$250/st FOB.
Western Cornbelt: Ammonium nitrate was up in the region, with the market tagged at $275-$280/st FOB. The upper end was quoted as a new reference price from some suppliers.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was tagged at $170-$177/st FOB in the region, with the upper end reflecting the dealer price FOB E. Liverpool, Ohio. The co-op system was reportedly referenced at the $180/st FOB level in the region.
Western Cornbelt: Sources reported firming prices for granular ammonium sulfate, with the market quoted at $175-$180/st FOB in the region. One supplier raised its dealer reference to the $185/st FOB level in the region last week, with confirmed sales at the $180/st mark. Agrium’s rail-DEL ammonium sulfate postings firmed on Jan. 25 to $185/st in Nebraska.
Northern Plains: Granular ammonium sulfate was reported in a broad range at $185-$205/st DEL in the region, depending on supplier and location. Agrium’s rail-DEL ammonium sulfate postings firmed on Jan. 25 to $185/st in North Dakota, South Dakota, and Minnesota. Dakota Gasification was referenced at $200/st DEL in North Dakota and northern Minnesota, and $205/st DEL in South Dakota and southern Minnesota.
Great Lakes: Granular ammonium sulfate was $170- $180/st FOB in the region, with the low in Wisconsin and the high in Michigan to the dealer. One Wisconsin source reported mid-grade sulfate at the $160/st FOB level last week, also up significantly from last report. Agrium’s rail-DEL ammonium sulfate postings firmed on Jan. 25 to $185/st in Wisconsin.
Northeast: Granular ammonium sulfate was quoted at $160-$170/st FOB, with the upper end to dealers FOB Philadelphia. Delivered granular sulfate was pegged at $175-$185/st in the region.
Southern Plains: Effective Feb. 1, granular ammonium sulfate postings from American Plant Food Corp. will firm to $170/st FOB Freeport, Texas, $180/st FOB Galena Park, Texas, $190/st FOB Mermentau, La., and $200/st FOB Littlefield, Texas. Coarse sulfate postings from the company will move on that date to $160/st FOB Freeport, $170/st FOB Galena Park, and $190/st FOB Littlefield, and standard grade sulfate will move to $150/st FOB Freeport and $180/st FOB Littlefield.
Western U.S.: Agrium’s ammonium sulfate postings in the Pacific Northwest firmed on Jan. 25 to $180/st FOB and $185/st DEL.
PHOSPHATES
Central Florida: And another record bites the dust. The record high price of $240/st FOB in Green Markets’ Central Florida price range, established two weeks ago in the last issue, gave way to a high price of $245/st FOB last week. Odds are, the new record will fall again this week, if any new sales are made. That’s the big question – where will producers find enough extra phosphate, DAP, or MAP, to sell in order to get the spot price up? Inventories were about 600,000 st lower than a year ago at that time last week and were struggling to keep up with demand, which appeared impossible. Not only has the domestic market taken off, so has the export business, so supplies will continue to be strained. The most recent Central Florida price of $245/st FOB was equal to the export high price last week of $279/mt FOB, although the export market and Central Florida were still lagging behind prices on the river, which hit $265/st FOB last week. Only a few weeks ago, the NOLA DAP barge price was about the same as Central Florida.
Meanwhile, producers were restricted only by the lack of railcars available to carry product to buyers, and were struggling to keep up with shipping schedules on orders they took earlier. PotashCorp was sold out of MAP through the end of February and DAP through the middle of next month. CF was said to be sold out of everything well into February, and Mosaic has virtually nothing available until April. Producers did appear last week to be trying to make some available for spot rail sales just to be able to push the spot market up, but large quantities for prompt loading were not available. With supplies running low on the river system, some Midwest buyers were considering looking toward Florida to meet their needs, but a lack of supply and higher rates planned by CSX Transportation were cutting into those plans – or hopes.
In general, markets slowed just a little last week, as rain, ice and snow covered most of the country from California to the East Coast. The Southeast, which has fared somewhat better on the weather front, was the most active area for rail and truck markets last week. However, the ice from the storms that struck Oklahoma and surrounding areas two weeks ago was finally beginning to melt in some areas, and farmers may hit the fields to do fertilizer applications as early as this week, if the weather remains dry. That will cause another spurt of buying.
Last week, there were no factors that would put the brakes on the quickly escalating phosphate market. Predictions that farmers will plant as much as 86 million acres of corn were driving the market. Prices for corn were over $4/bushel, and prices for soybeans, wheat and other crops were also high. Farmers are good businesspersons and do not appear to care what the price of phosphate and other fertilizers are, as long as it pays off in the form of higher yields.
Railcar sales of DAP and MAP were made at $245/st FOB. PotashCorp’s Central Florida reference price was $260/st FOB as of the beginning of last week. Previously, the company’s reference price was $250/st FOB. In Texas, Agrifos’ truck prices for DAP or MAP were up sharply to $275-$280/st FOB, up from to $250/st FOB. That company also matches the rail prices of other producers, but rail supplies were sold out through March.
U.S. Gulf: Terminal operators on the river system were taking a hard look at their existing inventories and their warehouse price and comparing those to the cost of replacement. Most quickly determined it doesn’t add up, and were moving quickly to push their prices up. In order to make a profit, a warehouse price of close to $300/st FOB will be necessary. For areas of the country that were just waking up and getting into the market, that meant sticker shock – but it will get worse.
While the highest price for DAP sales in Green Markets’ index was broken last week at $255, a new high was established last week – $10/st FOB higher, and there were no signs the price will decline in the near future. Supplies continued to be extremely tight and one trader said it was necessary to bid for prompt barges, which was driving up the price. That was especially true for nearby barges. Another pointed out that many recent DAP barge sales were made by traders turning them for a quick profit, rather than putting the material into their warehouses. A month ago the high DAP barge price was $231/st FOB, so buyers picking those up last week could reap a sizable profit.
Nearby barges brought the highest prices last week and exceeded the price some were paying for future deliveries. Early in the week DAP barges for late February and March were available for as low as $264/st FOB, but climbed late in the week to $268-$270/st FOB. The nasty weather that blanketed much of the country in the past two weeks in the form of rain, ice, and snow slowed activity last week, but sales continued to be impressive. One source noted that some people worried the big run was over when activity trailed a week earlier. “Since October, there has been activity every day. Now, there’s bad weather for a couple of days and people worry. There is so much more demand for grain this year and farmers won’t get less yield to save money on fertilizer, they won’t take that chance. And gas prices are low, compared to the last few years. There’s not a problem.”
If DAP was hard to find last week, it was plentiful compared to MAP, which was virtually nonexistent. Traders have said for the past several weeks that MAP was scarce. All phosphates were in short supply last week, and will remain so until at least April. CF was said to be sold out of everything through March, and Mosaic had nothing to offer last week. Contract barges from Miss Phos and resales of barges obtained from earlier sales by Mosaic appeared to be the only ready supply. Despite the reopening to full capacity of Mosaic’s Donaldsonville processing facility, the company cannot keep up with demand.
A vessel of TSP that will arrive in late February or early March for Mosaic will be priced at $220/st FOB. Some areas have complained of shortages, which the new delivery should help to ease.
The new record price range for DAP established last week was $262-$265/st FOB, compared to the old record of $252-$255/st FOB the previous week. Expect prices to be higher this week.
While Green Markets is seeing record high phosphate prices for its 30-year tenure, PotashCorp Chairman and CEO Bill Doyle said last week that some 32 years ago, while with IMC, he sold Tampa export DAP at $410/mt FOB. He estimated that Tampa export prices rose as high as $430/mt that year. Doyle said the mid-1970s time period was a heyday for the fertilizer industry due to the 1973 oil crisis and huge spikes in grain prices. Thereafter, said Doyle, the markets went into a slump until reviving in 1980.
Another industry veteran told Green Markets last week that there are fears among some that the current euphoria in the fertilizer market will also see an eventual crash. He said that unlike the mid-1970s, the boom this time is driven by an actual increase in demand – ethanol, and a significant one at that – not a temporary period of bad crops.
Eastern Cornbelt: Sources reported only spotty spreading activity in parts of Illinois and Indiana in late January. One Indiana source reported a dusting of snow in his location, but he said an incoming cold front might firm up fields enough to permit some spreading activity during the morning hours.
As evidence of the firming phosphate market, one source said he booked MAP fill tons in early January at the $260/st DEL level. Last week, most sources pegged the DAP and MAP markets at $285-$289/st FOB regional warehouses, with one Illinois source quoting the rail-DEL price in the $285-$295/st range. Reference prices out of river warehouses had firmed to the $290s/st as well in some cases; one Ohio source reported reference pricing at the $294/st FOB level out of inland warehouses.
TSP pricing was also on the rise, with one source commenting that it was on a “sympathy” track with other phosphates. TSP was reportedly referenced at $260/st FOB on the river system, where available. 10-34-0 remained at $275-$280/st FOB, with prepay quotes reported in a range of $280-$290/st FOB in the region.
Western Cornbelt: DAP and MAP were quoted firmly at $280-$285/st FOB regional warehouses last week, up again from the prior week’s range. Dealer reference pricing was confirmed at the $290/st FOB mark from some suppliers, but no actual sales were confirmed at that level. Forward pricing for phosphates ranged from $289-$309/st FOB in the region, depending on month, location, and supplier.
TSP, where available, was reported at $255-$260/st FOB river warehouses, also up significantly from last report. 10-34-0 was $270-$275/st FOB in the region, with reports of at least one supplier referenced now at the $300/st FOB mark to dealers.
Northern Plains: DAP and MAP were quoted at $285-$291/st FOB in the region, with the low reflecting the Twin Cities market to the dealer. 10-34-0 was up as well, with the regional market tagged at $282-$290/st FOB last week.
Great Lakes: Phosphate pricing was up dramatically in the region. The DAP market was quoted at $285-$288/st FOB for prompt ship, with one Michigan source speculating that warehouse pricing could increase $7/st to $291/st FOB Webberville by the end of the week. Wisconsin sources quoted rail-DEL DAP in the $285-$295/st range last week. MAP was reported at $281-$288/st FOB regional warehouses, and as low as $280/st truck-DEL in Wisconsin.
TSP, where available, was reported at $260/st FOB river and $265/st FOB inland warehouses. The 10-34-0 market was up as well, at $280-$285/st FOB in the region. A Wisconsin source pegged prepay 10-34-0 firmly at the $282/st FOB level last week.
Northeast: DAP and MAP pricing were up significantly from last report. The market was pegged at $288-$294/st FOB Philadelphia and E. Liverpool, with the upper end reflecting reference pricing to the dealer. 10-34-0 was quoted at $268-$270/st FOB terminals in upstate New York.
Western U.S.: Agrium’s ammonium phosphate postings also moved up on that date, with MAP referenced at $330/st DEL in Montana and Wyoming; $335/st DEL in southern Idaho, Utah, Nevada and Oregon’s Malheur County; $335/st FOB and $340/st DEL in Washington, Northern Idaho, and Oregon excluding Malheur County; and $345/st FOB or rail-DEL in California and Arizona.
Agrium’s 16-20-0 postings moved on Jan. 25 to $250/st DEL in Montana and Wyoming; $255/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; $250/st FOB and $255/st DEL in Washington, Northern Idaho, and Oregon excluding Malheur County; and $255/st FOB or DEL in California and Arizona.
U.S. Export: Not to be left out of the records game, the export market last week surged to a new Green Markets all-time high price of $279/mt FOB, out distancing the record price of $272/mt FOB, which was set on May 15, 2006, and ran through June 19 of last year. The price jump was even more dramatic than the increase posted for the Gulf market last week, which went up $10/st FOB.
“It’s amazing how fast the market is going up – it’s just a straight line up,” an export source said. “People are more worried about getting product than the price. Farmers in the world are making so much money they can’t afford not to buy. The farmers make more money and we make more money. The world market is going up very fast.”
The previous week, the high end of the export price range was $267/mt FOB. The first sale last week by PhosChem, to Central America of 10,000 mt of DAP, was made at $269/mt FOB; the second sale of 9,000 mt of DAP was done at $275/mt FOB to the same area; and the third of 4,000 mt of DAP and MAP was completed for $279/mt FOB to another customer in Central America.
As has been the case in North America for the past month, supplies have become scarce around the world, and prices were on the upward trend from all phosphate sources, including North Africa and the Baltics. India issued a tender last week, seeking two panamax vessels of phosphate for delivery in March. As of last week, few possible bidders had that much available, but the request will put additional pressure on the supply situation and prices. Pakistan will not begin buying again for another few months, but Central and South America were competing with the U.S. domestic market for a share of product.
The export price range last week leapt from $263-$267/mt FOB the previous week to $269-$279/mt FOB last week, and prices will go up again this week.
POTASH
Eastern Cornbelt: Potash was quoted at $208-$215/st FOB in the region, depending on location, with the lower numbers reported out of river warehouses in Illinois. An Indiana source reported booking potash fill at $210/st DEL with 15-day terms, but said that price was good only for product shipped in January. A northern Illinois source quoted rail-DEL potash last week at the $216/st mark.
Western Cornbelt: Potash remained at $208-$214/st FOB in the region, depending on grade and warehouse location. The low end was generally reported for imported Russian tons, with the upper numbers for Canadian product. Agrium’s Jan. 11 postings for 60 percent muriate of potash included $214/st FOB Dubuque, Iowa, and Kansas City, Mo., and $224/st rail-DEL in Iowa, Missouri, and Nebraska.
Northern Plains: Potash pricing FOB Saskatchewan mines was $185-$188/st for standard, $191/st for coarse, $193/st for soluble, and $193-$198/st for granular. Agrium’s 60 percent potash postings moved on Jan. 11 to $213/st FOB Shakopee, Minn. Agrium’s rail-DEL postings for 60 percent “red premium” potash firmed to $222/st in southern Minnesota and Wisconsin, and $220/st in northern Minnesota.
Great Lakes: Potash was quoted at $210-$220/st FOB, depending on grade and location, with the upper end reported by Michigan sources for white granular potash. Delivered potash in central Wisconsin was tagged in the $216-$220/st range. Agrium’s 60 percent muriate of potash postings, effective Jan. 11, included $217/st FOB Saginaw, Mich., and Toledo, Ohio. The company’s delivered postings for 60 percent red premium potash moved on that date to $222/st in Michigan and Wisconsin.
Northeast: Potash was quoted at $215-$222/st FOB, depending on grade and location, with the upper end reflecting the reference price for red granular potash FOB E. Liverpool. Delivered potash was quoted in a very broad range at $230-$259/st, with the upper end for delivered soluble potash. Agrium’s rail-DEL postings for 60 percent “red premium” potash firmed on Jan. 11 to $230/st in W. Virginia, Delaware, Maryland, New Jersey, New York, and Pennsylvania, and $233/st in Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont.
SULFUR
Tampa: Although sulfur negotiations for first quarter contract prices have been contentious and prolonged, there were signs that may be coming to a close – possibly this week. As of last week, Mosaic had settled at $5/lt down from the previous quarter with three of its eight suppliers. Then, late last week, PotashCorp came to the same agreement with one of its suppliers.
Contrary to last week’s report, Mosaic Co. said that none of its sellers have agreed to a $5/lt drop and then backed away. Other sources had told Green Markets last week that one seller had initially verbally agreed to the $5/lt drop and then changed their mind. Mosaic says this is not the case; that its deals have all been done deals.
Some sellers still hold out the possibility that continued negotiations may bring about a better deal for them. They argue that since negotiations began, the sulfur market has been returning to a more normal balance on the Gulf Coast and in the world market. As a result, they feel a price decrease of $5/lt is no longer justified.
In Canada, bad weather has created a sulfur shortage for export out of Vancouver, and supplies that would have been destined for the phosphate industry in the U.S. were being diverted for that purpose, which further reduced the surplus in the Gulf Coast and Tampa.
MARKET NOTES
India: Coromandel Fertilizers will buy out Indian Farmers Fertilizer Co-Operative Ltd’s (IFFCO) stake in Godavari Fertilizers for Rs 1.2bn, the company told the stock exchanges on Jan. 23. Coromandel, part of the Murugappa group, has a 45.07 percent stake in Godavari. IFFCO has another 25 percent – 8mn shares. It has now been agreed that Coromandel will buy the shares from IFFCO at a price of Rs 150 a share. Coromandel will have to make the mandatory open offer to the public to pick up 20% percent more of Godavari.
Murugappa buying out IFFCO in Godavari was a move waiting to happen, said sources, especially after IFFCO took over Oswal Chemicals and Fertilizers in September 2005. The group had always said that it was willing to buy out IFFCO, if it was willing to sell. IFFCO has a tolling arrangement with Godavari – it could supply phosphoric acid and get phosphatic fertilizers in return. After it took over Oswal, its need for Godavari diminished because it could produce any phosphate at Oswal. Besides, with the shortage of phosphoric acid, no tolling was actually happening. It was, therefore, a question of how much IFFCO would get for its stake.
With the Murugappa group holding over 90 percent in Godavari – assuming that it would acquire 20 per cent through the open offer – it would make sense for the group to merge the two companies and realize the synergies of consolidated operations.
Rashtriya Chemicals & Fertilizers (RCF) and Rajasthan State Mines & Minerals will sign an agreement on Jan. 20 to set up a joint venture in Rajasthan, in the northwestern part of the country. According to RCF, the two companies had earlier signed a memorandum of understanding (MoU) to jointly carry out a detailed feasibility study for setting up a DAP plant of 850 MTPD capacity at an estimated project cost of approximately Rs 4bn, at Kapasan, Rajasthan.
Ali Moselhi, Egypt’s minister of social security, recently visited India and encouraged the country to look at Egypt for future fertilizer investment. “Indian fertilizer companies can consider investing in Egypt where raw materials are available,” he said. “The cost of production in Egypt is lower due to easy availability of the important feedstock – natural gas. IFFCO has planned a venture. Other Indian fertilizer companies should follow suit. A suitable buyback arrangement can be easily worked out so that Indian farmers get fertilizers at cheaper prices.” Moselhi was in India to participate in the recent inter-ministerial summit of Afro-Asian Rural Development Organization (AARDO) in Delhi.
Kribhco has floated an idea to India’s Department of Fertilizers, wooing Iran to set up an urea plant in that country. “Iran has abundant natural gas reserves,” said a Kribhco official. “Natural gas is likely to be available at very competitive price at about US$ 1.0/mmBtu on a long-term basis. National Petrochemical Co. (NPC), a government company and its various subsidiaries, are working on the various urea project proposals. Some of the fertilizer projects are under various stages of implementation. Further, Iran has set up Special Economic Zones offering various incentives and tax holidays. The project cost and cost of production are expected to be lower in Iran as compared to other Middle East countries due to availability of infrastructure and offsite facilities such as jetties, desalinated water, power, potable water, etc., at reasonable prices and exemptions of taxes and duties for import of project material.” Keeping in view the above, it is suggested that DOF may initiate a dialogue with the Iranian government indicating interest in participating in joint venture projects through some Indian fertilizer company, with off-take of urea by the government of India.