Market Watch

UREA

U.S. Gulf: While several players saw little change in the NOLA granular market last week, others disagreed, saying any barges on the water and ready to go north would garner a premium as they would be able to meet upriver closings. While some called trades working their way up from $335/st FOB to $340/st FOB by week’s end, others said well-positioned barges garnered as high as $343/st FOB or higher. Prills continued to be reported at a premium, called $348/st FOB.

Eastern Cornbelt: Granular urea remained in the $365-$370/st FOB range to dealers.

Western Cornbelt: The granular urea market was steady at $365-$375/st FOB in the region, with the low reported FOB St. Louis, Mo.

Southern Plains: Granular urea was pegged at $360-$362/st FOB Inola and Enid, Okla., with several sources saying the market had never quite fully reached the $365/st FOB posted level. One supplier was referencing forward contract urea for October at the $378/st level FOB Inola.

South Central: Granular urea was quoted at $358-$365/st FOB regional terminals to the dealer. The dealer market FOB Vicksburg, Miss., was tagged at the $360/st mark.

Southeast: The urea market was trending upward, with sources tagging the dealer price last week at $370/st FOB Savannah, Ga., and $375/st FOB Wilmington, N.C., and Norfolk, Va. Reference pricing out of the Baltimore, Md., and Philadelphia, Pa., markets was pegged at the $385/st FOB level.

Black Sea: Prices have stabilized even as demand increases. While some players argued early last week the price was below $300/mt FOB and others said the price was closer to $320/mt FOB, the consensus by the end of the week put the market at $310-$315/mt FOB.

One trader reported a deal done late last week at $303/mt FOB, but whether that indicates a new trend or was a one-off deal is still up in the air. Some in the industry contend the price needs to come off if Yuzhnyy cargo is to be competitive in the Indian and Latin American markets.

The current price level makes it difficult to secure deals with Indian buyers, who are looking at $335/mt CFR and smaller cargoes to allow for delivery to different ports.

The one thing that might help producers sell their product is the need by traders to replace cargoes that were originally booked out of China.

It seems the Chinese ports remain jammed with product, and getting vessels in and out after Oct. 1 is becoming more difficult to arrange. At the same time, reports are surfacing that some producers are backing off their deals with international traders.

Sources say the backlog at the ports is preventing the shipment of urea from the plant to the port. Producers are reportedly yelling for guarantees that vessels will be in the ports right away to lift the tons. Buyers are countering that no shipments are taking place until after Oct. 1, and so no guarantees can be given as to when the tons will be lifted.

The port congestion, combined with the apparent renegotiations on deals in China, could force some traders to look to the Black Sea for material. The price, however, remains the real obstacle to nailing down deals.

One trader noted that the producers will have to come down in their prices in order to meet the top price Indian buyers are willing to pay, or the Indians will have to adjust their ceiling.

So far, said one observer, neither side appears ready to budge.

Middle East: Following a series of pre-tender deals with Indian buyer IPL, sources peg the area market at $310-$315/mt FOB. The lower price fits in with the estimated ceiling Indian buyers have reportedly placed on their purchases. The higher price could work with a great freight rate, or with some flexibility on the buyers’ side.

No matter what happens, say sources, the producers are firm in their pricing position. Attempts to bid at $315/mt FOB and below are being rebuffed. Reportedly, one producer quoted $320/mt FOB to one trader as a non-negotiable price.

At $320/mt FOB, the Indians would have to alter their price ceiling drastically. At $315/mt FOB, they might be able to work around the cost if they also secure cheaper tons to help average out the total cost.

India: International traders around the globe were juggling two major issues as the week closed, and they both involved selling product to India.

On one hand, as of press time late last week IPL had not called a tender. Many in the industry figured it would be called just as the TFI World gathering closed in Boston. One observer noted it would have been more dramatic if the tender was called just as participants in the conference were boarding their planes for home.

The bottom line, say traders, is that IPL has to call a tender soon. India needs the tons, and IPL needs a tender to ratify the $335/mt CFR price it negotiated with a handful of traders earlier in the month.

Just before the TFI event started, IPL had booked about 175,000 mt from perhaps four trading houses. Most of the tons were expected to come from China or Bangladesh.

Reportedly, some traders are having difficulty with their Chinese sources because of crowded port facilities and difficulty lining up vessels for loading. How that will play out with sales to India is still up in the air.

One trader said he was getting indications from his Chinese representatives that producers with whom he had deals may pull back from their arrangements. The producers are angry that the tons cannot be railed to the ports because the ports are full. The ports are full because no one has shipped anything since August. No shipments are expected until after Oct. 1, when the export duty is halved.

Ship owners are not anxious to allow their vessels to enter a Chinese port for urea unless they know it can be loaded and back at sea in a short period of time. Port operators cannot give that guarantee.

As the Chinese urea situation becomes muddled, traders are looking for other sources to supply tons to India.

With IPL already committed to $335/mt CFR, sources say the current Middle East market might allow for this price if the producers offer at the low end of the market, and if favorable shipping rates are nailed down.

Selling Yuzhnyy material at $335/mt CFR is not in the cards, say sources.

That takes everyone back to China and the problems of the ports.

One trader noted that once IPL calls the tender, that $335/mt CFR price might not be sustainable. New estimates of where the price might go are as high as $345/mt FOB.

India remains the main game in the international urea market. Sources say the tender results confirm price movements that normally meander just under the radar. With so many other sales done by long-term contract or by indexed deals, most in the industry look forward to the touchstone the Indian tenders offer.

China: The delay in shipping until after Oct. 1 is causing no end of grief for traders. Sources report that producers are unable to move their product to the ports because the seaside warehouses are full. The warehouses are full because the material sitting there is committed for October shipment to take advantage of the halving of the export duty from 30 percent to 15 percent.

Ship owners are reportedly leery of sending their vessels into Chinese ports for early October loadings because of expected loading delays.

With the backlog in product now reaching back to the inland factories, sources say some producers are walking away from their contracts with international traders.

One trader said he was told by a producer that unless the tons were sent to the port and shipped immediately, the producer would sell his product elsewhere. The trader explained that he, like his counterparts around the globe, do not want to ship until after Oct. 1 – per the contract – and that it is difficult right now to secure transportation.

Eventually the tons will move out, with most cargoes expected to head to India. However, say sources, it may take a while to shake out the logjam in the ports.

The shipping window is small, said one trader. By Jan. 1, the export tariff will go back up to 30 percent. So far, the reason so many tons are lined up for export is that buyers are expecting to pay only the 15 percent.

Even though producers argue they can get more for their tons if they signed new deals, sources say the price remains in the low $280s/mt FOB bagged at the port.

Bangladesh: BCIC has issued a tender to import 50,000 mt of granular urea in bags in a maximum of four lots on a CFR Chittagong or Mongla basis. The minimum offer is 12,500. Offers shall be received up to Oct. 31 and will be valid up to Dec. 2.

Pakistan: The Ministry of Agriculture is expecting a shortfall of about 100,000 mt of urea during rabi season, with the quantity expected to be imported in December. TCP will be the buying agent; however, it is not yet decided whether the private sector will play any role. In the last rabi season Pakistan consumed about 2.153 million mt of urea, which was 12.3 percent less than the prior year’s season.

NITROGEN SOLUTIONS

U.S. Gulf: Price ideas for barges continue to move up, with sources saying it is hard to find anything on the prompt market. In the meantime, imports to the East Coast are called $290-$300/mt DEL.

Eastern Cornbelt: UAN-32 was steady at $300-$310/st ($9.38-$9.69/unit) FOB regional terminals, with the lower numbers again out of spot river locations. One Illinois source quoted most of the dealer pricing in his location at the $9.50/unit FOB level or higher last week for new sales, although there were few to test the market. Forward contract tons for October through January were still available from one supplier last week at $9.56-$9.86/unit FOB in the region.

Western Cornbelt: UAN-32 was steady at $295-$310/st ($9.22-$9.69/unit) FOB regional terminals, with the upper end reflecting dealer reference pricing out of some locations

Southern Plains: UAN-32 remained at $275-$290/st ($8.59-$9.06/unit) FOB regional terminals, with the low at production points in Oklahoma and the upper numbers FOB Kansas terminals to dealers. Sources quoted reference prices as high as $300-$305/st ($9.38-$9.53/unit) FOB in Kansas last week.

South Central: UAN-32 was pegged in a broad range at $280-$295/st ($8.75-$9.22/unit) FOB in zthe region, depending on location, with the higher numbers farther up the river system.

Southeast: The UAN market was described as thinly traded last week. UAN-30 was quoted at $253-$255/st ($8.43-$8.50/unit) FOB port terminals to the dealer, up slightly from last report, with some talk of sellers eyeing reference prices in the $8.59-$8.75/unit FOB range if the terminal price catches up to replacement vessel costs. The UAN-32 vessel market was reportedly being indicated in the mid-$290s/mt C&F range.

AMMONIUM NITRATE

Western Cornbelt: Ammonium nitrate remained at $320-$325/st FOB in the region, where available.

Southern Plains: Ammonium nitrate was steady at $315-$320/st FOB the Tulsa market.

South Central: Ammonium nitrate was unchanged at $315-$320/st FOB most terminals to the dealer, where available, with the low quoted at $305/st FOB Yazoo City, Miss.

Southeast: Ammonium nitrate was quoted at a firm $325/st FOB Tampa, Fla. On a delivered basis, a North Carolina source reported significantly higher pricing from last report, at $395/st for bulk and $430/st for bagged product.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was unchanged at $220-$240/st FOB.

Western Cornbelt: Granular ammonium sulfate remained at $220-$230/st FOB in the region, with reports that supplies have loosened up somewhat.

Southern Plains: Granular ammonium sulfate remained at $200-$230/st FOB in Texas, with the low FOB Freeport and the upper end to dealers FOB Plainview. Sources talked of a near-term increase, but nothing was confirmed last week.

South Central: Granular ammonium sulfate pricing was down slightly from last report at $230-$235/st FOB, with reports that inventories have loosened up a bit.

Southeast: Granular ammonium sulfate remained at $205-$210/st FOB, with the low FOB Hopewell, Va., and the upper end FOB Augusta, Ga. Ammonium sulfate postings from DSM Chemicals include $235/st rail-DEL in Florida for granular and $172/st rail-DEL for standard, with standard grade sulfate also referenced at the $155/st mark FOB Augusta for all customers outside of Florida.

PHOSPHATES

Central Florida: The Central Florida DAP market was busy last week, with sales made on both a prompt and future basis by both producers and traders. At the same time, inventories continued to shrink, with heavy delivery schedules for both the domestic and export markets. All of that was coming at a time when sulfur supplies continued to tighten. As a result of the sulfur shortage, Mosaic moved up the timetable for the turnaround at its Bartow processing plant from October to September. While production will not be affected in the long run, it will be in the short term.

As demand for phosphates continued to grow, Mosaic announced it has increased the price for its products in Central Florida. The Gulf’s river market will not be affected. The increase of $5/st FOB will bring the price of DAP to $390/st FOB and MAP would become $386/st FOB, although no new prompt sales had been made at that price as of late last week. CF’s price remained at $385/st FOB last week.

Last week, traders were looking forward to the beginning of the wheat season, which could start next week in areas served by rail from Central Florida. Once dealers empty their bins to meet farmers’ demands, reordering will begin. That could begin as soon as this week.

The Central Florida DAP price range remained a flat $385/st FOB. Mosaic’s posted price moved up to $390/st FOB for DAP and $386/st FOB for MAP. CF’s prices remained at $385/st FOB, and PotashCorp’s Central Florida reference price was still $385/st FOB. In Texas, Agrifos’ truck price was $430/st FOB and $410/st FOB for railcars, but was sold out through the end of September for rail-delivered phosphates.

U.S. Gulf: Normally, the winter wheat crop would already be underway in Oklahoma by this time of year, but will be delayed. That’s for a couple of reasons. First, many farmers were still in the process of harvesting their corn crops, but more importantly, it’s a weather thing. Last year, when wheat was planted about now, a freeze swept in and seriously damaged the crop. Not wanting to see a repeat, farmers plan to wait, so that when a freeze does come, the wheat will not be as high and will be less likely to sustain damage. When the planting will begin was uncertain. That means that terminals at Inola and Catoosa will continue to be long on DAP supplies, but once the planting begins DAP and potash will move quickly; still, the market for urea may be less than normal.

The Army Corps of Engineers had still not released any information on the status of its dredging project north of Lock 17 at Muskogee, but barge traffic was continuing to move through a narrow passage. Because terminals at Inola and Catoosa were still full, fewer barges were on the river and no backups had developed.

Miss Phos announced more problems at its recently repaired sulfuric acid plant, which originally went down in July and returned to service in August. The company was hopeful that the plant could return to service by Oct. 1, but it could take as long as two months if the repairs are more extensive. That will limit its production of phosphates to between 1,300 and 1,500 tpd, but the company said it would be able to meet all of its commitments to customers and suppliers during the outage.

The DAP market on the river system was extremely quiet last week. That could continue until the end of the month, and then activity should be brisk until around the first of November. However, the upriver area above St. Louis will likely close about Oct. 15. Due to the lack of activity the past several weeks, phosphate prices remained soft.

The NOLA DAP barge price range last week was unchanged at $397-$400/st FOB. Prices will likely firm to the $400/st FOB range within the next couple of weeks, when bins begin to empty.

Eastern Cornbelt: DAP remained at $430-$438/st FOB in the region; one Ohio dealer quoted the market last week at a flat $435/st FOB river terminals. Forward contract DAP for October through January was being offered from one supplier at $435/st FOB Peoria, Ill., and $438/st FOB Cincinnati, Ohio.

MAP was unchanged at $430-$435/st FOB in the region. 10-34-0 was pegged at $350-$360/st FOB.

Western Cornbelt: DAP and MAP were steady at $430-$435/st range FOB regional warehouses to the dealer. One Missouri River source pegged the market last week at $435/st FOB for DAP and $432/st FOB for MAP. 10-34-0 pricing was firm at $350-$365/st FOB in the region.

Southern Plains: DAP was quoted at $430-$433/st FOB Catoosa, Okla., with reference prices tagged at the $435/st mark there and as high as $440/st FOB in Kansas. MAP was quoted at $427-$430/st FOB the port. Some sources talked of the possibility of phosphate cutbacks on wheat acres as growers react to high input costs.

10-34-0 was pegged at $325-$350/st FOB and in very tight supply in the region.

Agrium’s phosphoric acid prices in Colorado, Kansas, Oklahoma, Texas, and New Mexico included $690/st railDEL for merchant grade acid (MGA) and $700/st rail-DEL for super phosphoric acid (SPA). Postings for both products will increase by $15/st in October, followed by another $10/st increase in November and again in December.

South Central: DAP and MAP were steady at $420-$430/st FOB regional warehouses, with the low FOB Vicksburg. TSP remained at $395-$405/st FOB to the dealer.

U.S. Export: No new export sales were made last week, but it wasn’t for a lack of demand. India issued three separate tenders, seeking additional phosphate supplies, but PhosChem was unable to make an offer because of a lack of inventory. Business has just been too good. However, part of the problem is the ongoing sulfur shortage. Mosaic will move up the turnaround at its Bartow processing plant from October to September as a result of the lack of sulfur.

At The TFI World Conference in Boston last week, the announcement that CF Industries had agreed to purchase 50 percent of Keytrade for $25 million generated the most interest. However, as a result of that business move, CF notified PhosChem that it would be withdrawing within 90 days, which will be just before the end of the year. PhosChem already has long-term export commitments, which must still be met by its remaining two members, Mosaic and PotashCorp. CF will begin selling through Keytrade. Another beneficiary will be Miss Phos and Transammonia, which sells Miss Phos export production. Overall, inventories of phosphates will continue to be lower than normal, and that will keep the price firm or force it up somewhat into next year.

The price range for export DAP remained unchanged last week at $430-$433/st FOB.

India: The Ministry of Finance has announced an antidumping duty on phosphoric acid due to dumping from China. The government introduced these anti-dumping duties due to China exporting phos acid to India below the product’s normal value, which in turn has led to a negative impact on the domestic phos acid industry. The anti-dumping duty placed by MOF is reported to be US$242.63/mt.

POTASH

Eastern Cornbelt: Potash was quoted at $265-$270/st FOB regional warehouses, depending on grade and location, with inventories described as very tight. PCS Sales announced last week that pricing for all potash grades would increase $30/st on Dec. 1. One regional source said some suppliers had pulled offers for spot tons off the table in the wake of the PCS announcement.

Western Cornbelt: Sources tagged the potash market last week in the $265-$275/st FOB range, depending on grade and location.

Southern Plains: Sources quoted the potash market at $217-$222/st FOB Carlsbad, N.M., depending on grade. Out of regional warehouses, the market was pegged at a firm $250-$260/st FOB, with talk of another $20/st increase Oct. 1 at the mine and warehouse locations.

South Central: Potash remained firm at $255-$265/st FOB regional warehouses to the dealer, with some sources talking of a move to $270-$280/st FOB in the near term.

Southeast: Sources tagged the potash market in the mid$260s/st rail-DEL in the region last week, with warehouse levels in roughly the same range. Product remained in very tight supply.

SULFUR

Tampa: The sulfur shortage has taken a toll. Mosaic will move up the turnaround of its Bartow, Fla., processing plant from October to September to help ease the problem. Whether other turnarounds will be moved up has not been decided.

At the TFI World Conference at Boston last week, neither sulfur producers nor phosphate companies had any discussions about fourth quarter sulfur prices. A source said the industries were watching the world situation and hoping for a clearer picture before beginning talks.

Hurricane Humberto caused major problems at three refineries along the Gulf Coast the previous week. The plants were out of service for most of the week, and late last week were just beginning to return to production. That situation will not help the ongoing sulfur shortage.

Meanwhile, a disturbance that formed over Florida last week was moving west into the Gulf of Mexico, and forecasters said it could form into a tropical storm, which could threaten the Gulf Coast oil industry. One sulfur vessel bound for Tampa was unable to enter the port due to heavy seas caused by the storm.

Vancouver: Negotiations for new semester contract prices for Brazil and quarterly prices for China were expected to get serious this week, as sulfur industry representatives were scheduled to visit those countries. The general belief was that contact prices for both countries will take a sharp jump up.

Bangladesh: BCIC has issued a tender to import 15,000 mt of sulfur on a C&F Chittagong basis. Offers shall be received up to Oct. 29 and should be valid up to Nov. 29.

MARKET NOTES

India: There are concerns that food security is in jeopardy if the country is unable to buy close to 1 million mt of fertilizer for the coming rabi season. The biggest crisis is expected in DAP, where India has become highly dependent on imports. A worried government is now planning to itself import an extra 600,000 mt urea and 100,000 mt DAP, and give the highest priority to ships carrying fertilizers at all important ports until November, when the critical sowing period starts. Six crops – rice, wheat, cotton, sugarcane, rapeseed and mustard – use more than two-thirds of the total fertilizer supply in the country.

DAP supplies are reported to be so short the government is eyeing other phosphates such as MAP and TSP. IPL has already bought 165,000 mt MAP overseas and is ready to contract more once it gets the go-ahead from the government.

Government estimates say that in addition to the imports already contracted by private companies and IPL, India will need to source at least 112,000 mt DAP/MAP to maintain adequate supply of phosphate. However, shifting to MAP would not be easy.

In the case of urea, India needs to import 3.217 million mt for the rabi reason. This does not include imports from Oman India Fertiliser Co. (Omfico). The steering committee of secretaries has already permitted imports of 2.0 million mt. Since the actual demand estimate for urea is still not final and the country has a buffer stock of 625,000 mt, the DOF believes further imports of 600,000 mt may be sufficient for the season.

MOP demand is put at over 1.6 million for the season, with the need to import 1.5 million mt over the winter.