AMMONIA
U.S. Gulf/Tampa: There was no new business reported on the NOLA barge market or at Tampa last week. However, sources said a new trade into the Mississippi River is sure to eventually impact those sales. PCS Sales was reported to have sold a half cargo for second half January to CF at $488/mt DEL.
Players were equating the $488/mt DEL Mississippi River to $480/mt DEL to Tampa. However, they said Tampa buyers would be lucky to get such a number in the next round of business. They cited much higher Yuzhnyy and Arab Gulf prices as reasons to expect a much bigger jump the next time a Tampa cargo is booked.
Eastern Cornbelt: Anhydrous ammonia continued to firm, with confirmed business at the $650/st FOB level in Illinois for January shipments. One supplier was referencing spring prepay at the $660/st FOB mark in Illinois at midweek. Reference prices remained as high as $670-$680/st FOB in Indiana and Ohio.
Western Cornbelt: Sources quoted the anhydrous ammonia market last week at $620-$640/st FOB terminals to the dealer, with the upper end quoted for spring prepay offers. One Iowa source said his fall ammonia volumes were good, but only slightly higher than normal due to tight supply and logistics issues. He said everything was applied “that the system allowed us to do” in his territory.
Northern Plains: Sources reported no spot demand for ammonia in the region last week, but spring prepay ammonia was reportedly being offered in the $640-$655/st range FOB regional terminals. The ammonia market was quoted last week at $695-$700/st on a delivered basis in North Dakota, although no tons were available.
Agrium’s anhydrous ammonia postings firmed on Dec. 21 to $640/st FOB Mankato, Minn. Agrium’s ammonia postings in the Leal, Velva, Grand Forks, and Beulah sales area in North Dakota firmed on that date to $680/st FOB and $700/st DEL, up $25/st from the company’s Dec. 7 list prices.
Dakota Gasification experienced an unplanned outage at its ammonia and gasification facility in Beulah, N.D., on Dec. 20. The plant remained down last week with tentative plans for a restart in late January, but that was not certain. Until then, the company is offering no ammonia tons for sale and has no published price for delivered ammonia in the region.
Dry conditions in western North Dakota during the fall limited ammonia applications, but heavy fall movement was reported in eastern North Dakota. Several Minnesota sources also talked of brisk fall ammonia movement, with one Minnesota source describing fall volumes in his trade area as “huge.” A North Dakota source said spring movement should be very heavy in the western and central portions of the state.
Great Lakes: Ammonia pricing had reportedly firmed to $660-$685/st FOB terminals to the dealer for spot or prepay, with the low quoted by Wisconsin sources and the upper end by Michigan sources for published pricing with no discounts. Those numbers were $100/st higher than regional pricing as of early December.
California: Agrium raised its anhydrous ammonia postings on Jan. 11 to $585/st truck-DEL in central California and $590/st truck-DEL in northern California. Those levels reflect an $85/st increase from the company’s Dec. 21 postings in those locations. Calamco’s ammonia prices moved up on Jan. 11 to $585-$590/st truck-DEL and $600/st rail-DEL in California.
Black Sea: Global demand is moving the price up and buyers are reeling from the increases. The last reported sale out of Yuzhnyy was pegged at $420/mt FOB, with reports that $430/mt FOB is likely soon. Sources say producers are now asking $450/mt FOB.
The line up for January is reportedly fully booked. Industry observers say only February material is being discussed at this point.
Price increases in Tampa and the rest of the U.S. Gulf confirm higher prices are taking hold. Asian sources are looking to April to see if the traditional dip in prices occurs. Even if there is a short decline in prices, said one trader, the current levels are so high that seasonal record prices will most likely hold.
By the end of last week sources pegged the base of the market at $420/mt FOB. Observers disagree on the high end, but many say $430/mt FOB.
Middle East: Mitsui bought a cargo from Qafco for a reported $450/mt FOB for an Indian buyer. Sources say this purchase – on the heels of Mitsubishi’s purchase at the same price the first week of the month – appears to have moved the local market into record territory.
In mid-December the price was hovering about $335/mt FOB. Now, just one month later, the price jumped more than $100/mt.
Buyers are dumbstruck by the movement.
One Asian trader noted that all buyers can do at this point is to just swallow hard and accept the new prices.
Observers note that the $450/mt FOB puts the price at levels way out of whack with delivered prices around the globe. One source noted that at this level the price into the United States would be about $550/mt CFR, and no one in the U.S. Gulf has agreed to anything that expensive.
Others note that much of the material coming out of the Middle East is done under contracts or other long-term deals that reflect lower prices than the Mitsubishi and Mitsui deals.
In previous years Indian buyers conducted several public tenders that allowed more transparency to market pricing. In the current buying season, sources say many of these buyers have cut quiet deals that keep the real price under wraps. Only a small number of tenders or spot purchases now come forward to reveal pricing ideas of buyers and sellers.
The India/FACT tender that closed late last week is one of those glimpses into the market.
Industry sources expected to see $500/mt CFR broken. If producers were able to hold at the $450/mt FOB level, the price into India would have been $510-$520/mt FOB. As it turned out, the likely winner will be Transammonia at $440/mt CFR.
Still, Qafco offered at $490/mt CFR and Sabic at $500/mt CFR. The estimated netback is $410-$430/mt FOB
Adding to the woes of buyers looking for material from the region are reports that the IPCC #3 facility will not be ready to ship material until some time in the early part of the second quarter. Previously the industry had hoped shipments would start during the fourth quarter of 2007. As production delays grew, the shipping dates kept getting pushed back.
On the plus side, Qafco signed a letter of intent with GE Oil and Gas to upgrade its #5 facility. The work is expected to conclude in 2010, at which time the total ammonia production will increase from 2 million mt/y to 3.1 million mt/y.
India: The FACT tender closed Jan. 10 for 7,500 mt. Sources say the call for only one cargo showed that the buyer was nervous about the market and are hopeful prices will come off in the next month or so.
Offers came from Transammonia at $440/mt CFR Qafco at $490/mt CFR, and Sabic at $500/mt CFR.
Usually FACT tenders call for two cargoes of 7,500 mt each. Since the last tender in November 2007, the price of ammonia has skyrocketed. Sources say FACT may be holding off on buying the second half of its usual round of purchases in the hopes that March-April prices will soften.
Asia: Buyers continue to complain about ever-higher prices, but are not pushing back as much as many in the industry expected. Big buyers such as companies in Taiwan and South Korea seem to be able to pass on the higher cost of buying ammonia to their downstream customers, who then pass on the higher costs to their customers. At present, said one Asian trader, the price companies are getting along the whole chain of production seems to be high enough that no one is seriously fighting back against high prices.
UREA
U.S. Gulf: Urea prices continued to weaken last week, with most players saying a large onslaught of imports in recent months is taking its toll. Others are optimistic that once parts of the Southern Plains start drying out, product will start moving again soon. One source said everyone is still expecting another banner year, that there is simply a minor backlog of product at NOLA right now, which should eventually be worked through as the season nears.
Granular barges were reported at $420-$428/st FOB last week, with most players calling the market toward the lower end of the range toward the end of the week. The latest prilled business was called $395-$407/st FOB.
Eastern Cornbelt: Granular urea continued to be quoted at $475-$490/st FOB in the region, with the lower numbers out of river terminals in Illinois. One Ohio source quoted a $485/st FOB level to the dealer last week.
Western Cornbelt: Granular urea was pegged at $465-$485/st FOB to the dealer, with the upper end reported in Iowa. The urea market FOB Catoosa and Enid, Okla., was quoted at $450-$455/st FOB on the low end last week, while Missouri sources tagged the dealer price at the $470/st FOB mark out of Missouri River terminals
Northern Plains: Sources said spring prepay urea was still available for $475-$485/st FOB the Twin Cities for orders placed in January, depending on supplier. There were reports of spot tons there available for as low as $465/st FOB last week, but that level was not confirmed. One regional supplier was reportedly referencing urea at $485/st for January, $490/st for February, $495/st for March and April, $485/st for May, and $460/st FOB for June shipments.
Delivered urea in the Dakotas was quoted at $515-$525/st last week. Agrium’s granular urea postings firmed on Dec. 21 to $510/st FOB Shakopee, Minn., and North Dakota terminals at Alton, Carrington, Colfax, Marion, and Scranton; and $515/st rail-DEL in Minnesota, Wisconsin, and the Dakotas. Those levels were up $20/st from the company’s Nov. 23 urea reference prices in the region.
Great Lakes: Granular urea was pegged in a broad range at $485-$505/st FOB regional terminals, with the low in Wisconsin and the upper end to dealers out of Michigan terminals. On a delivered basis, urea was quoted at $495-$515/st in the region, depending on location, quantity, and time of delivery. Agrium’s granular urea postings firmed on Dec. 21 to $515/st rail-DEL in Wisconsin.
Northeast: Granular urea pricing was up from last report in the region. Sources tagged the market at $485/st FOB Baltimore, with dealer reference pricing reported as high as $497/st FOB Philadelphia and E. Liverpool, Ohio. Delivered urea pricing covered a wide range, with the low at $489/st and the high reported in the low-$500s/st, depending on location.
Black Sea: After taking a short break for the end-of-year festivities, buyers have returned to the market.
Well, not all the buyers. Sources say a number of Latin American buyers have sufficient stockpiles on hand that they can sit back for a while to plan their next move.
Some buying interest moved the market from its pre-Christmas low in the $370s/mt FOB back near $400/mt FOB.
Rumors circulated last week that $400/mt FOB was indeed hit. Many traders, however, were holding to the view that the week ended just shy of that level.
The steady rise since the beginning of the year is clear, say sources. The lowest amount reported last week was $393/mt FOB.
One trader noted that if the price slides again, buyers will most likely swoop in quickly to avoid being left behind in a rising market.
When the sales price slipped just below $380/mt FOB last month, sources say one or two big trading houses moved in to grab cargoes at that level. The move prompted other buyers to step in and get what they could, and the price moved up to current levels.
Middle East: Producers hold onto the idea that the base price is $410/mt FOB. Buyers and traders from Asia and Europe are unable to point to any firm business at that level. There is a consensus in the market that as things stand this month, $410/mt FOB is not sustainable.
One trader said buyers and sellers are playing a game of chicken to see who bites the bullet first. If the buyers have sufficient stockpiles to hold them over a couple of months, the conventional wisdom says the producers will have to bite first and lower their prices.
The problem with that scenario is that global demand remains high. For some countries – such as India – the issue is as much actual need as it is perceived need for political reasons.
For others – such as Pakistan – the demand for product is real.
Industry watchers are looking to see what will become of Pakistan’s request for more tons under the arrangement worked out between Islamabad and the Saudi government.
They are also looking to see how soon Indian buyers return to the market. Some say a new tender will be called early February, while others say mid-March.
Lastly, potential customers from the Middle East are also looking at China and how its domestic market plays out. If that market is soft, more Chinese tons could compete against Middle East tons. If the Chinese have strong domestic demand, the Middle East producers will be able to hold onto their higher prices.
Until new spot deals or a tender come forward, sources say the market in the area remains $400-$410/mt FOB.
China: The export duty for Chinese urea has been set at higher levels for the last three quarters of the year. The duty for the first quarter will remain at 30 percent. The duty for second and third quarter exports will rise to 35 percent. The last quarter will be pegged at 25 percent.
Last year Beijing set the first three quarters at 30 percent and the last quarter at 15 percent. The purpose for the higher rate through September was to discourage urea exports during a time of traditionally strong domestic demand. The lower rate at the end of the year was set to encourage exports, and thus keep the factories running.
The massive run-up in global pricing has thrown the old formulation out the window. Even with the higher rates for the middle of the year, sources say Chinese urea may remain highly competitive against the Middle East and Black Sea material. The key issue will be the domestic demand.
For now, there appears to be little interest in lining up new domestic and international deals. Sources say anticipation of the Feb. 7 Lunar New Year celebrations is keeping new deals at bay.
Prices are reportedly hovering around $365/mt FOB bagged. One trader said a firm bid of $360/mt FOB could secure a deal, but few are willing to take the chance that the material may not be loaded in a timely manner.
India: When – not if – India returns to the market is the burning question. Sources are divided about when the next tender will be called. Some are saying the tender could be called as early as the first week of February. Others say the first week of March is more likely.
Both months are complicated for Indian buying agents.
During February various government agencies look at the urea on hand and in the pipeline and compare it to actual demand. In March that information is handed over to the economists who are preparing the next fiscal year’s budget. Any large purchase during that time could throw off the calculations.
The Indian government is also walking a narrow line. With national elections coming up later in the year, the government must not only ensure sufficient quantities of urea for the country – it must also ensure the appearance of sufficient quantities.
Any shortage, anywhere in the country, no matter how fleeting, is being seized upon by the opposition to damage the government’s standing.
South Korea: Namhae closed a tender for 100,000 mt of granular product. Sources say eight trading houses will supply the material at prices ranging from $414/mt CFR to $425/mt CFR. Material is all expected to come from China.
NITROGEN SOLUTIONS
U.S. Gulf: UAN barges remained within the $340-$350/st FOB range. Sources said international prices have been on the decline with less interest shown in recent tenders.
Eastern Cornbelt: UAN was pegged at $11.50-$12.00/unit FOB terminals for spot or prepay tons, with the low reported in Illinois.
Western Cornbelt: UAN-32 was quoted at $360-$380/st ($11.25-$11.88 unit) FOB, with the upper end reported by Iowa sources for spring prepay offers.
Northern Plains: UAN-32 was pegged at $11.75-$11.90/unit FOB Minnesota, with the upper end quoted by Minnesota sources for recent spring prepay offers. In North Dakota, UAN-28 was quoted at $350/st ($12.50/unit) DEL for prompt and $365/st ($13.04/unit) DEL for prepay.
Great Lakes: UAN prepay was reported at $12.12-$12.61/unit FOB regional terminals, with the low in Wisconsin and the upper end in Michigan. UAN-28 was quoted at $353/st ($12.61/unit) Muskegon, Mich., and $349/st ($12.46/unit) FOB Schoolcraft, Mich., for February/March delivery. Sources reported no current pricing for prompt tons in the region.
Northeast: The UAN-30 market was pegged firmly at the $325-$327/st ($10.83-$10.90/unit) FOB Baltimore, Md., for actual sales, with reference levels listed as high as $333-$335/st ($11.10-$11.17/unit) FOB Baltimore and Philadelphia, Pa., to the dealer. On a delivered basis, a Pennsylvania dealer reported current pricing as high as $355-$359/st ($11.83-$11.97/unit).
Out of terminals in upstate New York, the dealer reference for UAN-32 had reportedly firmed to the $390/st ($12.19/unit) FOB level, while rail-delivered UAN-32 in New York was said to be available at $375/st ($11.72/unit) for immediate take and just under $400/st for spring prepay. Sources quoted the vessel market in the high-$360s/mt C&F for the tail end of some incoming tons that are already committed, with indications of pricing in the upper-$370s/mt for the next round of business.
AMMONIUM NITRATE
U.S. Gulf: Barges continued to be called within the $355-$365/st FOB range.
Western Cornbelt: Ammonium nitrate was tagged at $385-$390/st FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate remained firm at $265-$275/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate remained at $260-$275/st FOB in the region. An Iowa source quoted rail-delivered ammonium sulfate at the $265/st level in January for limited quantities, with no firm numbers out yet for
February allocations or price.
Northern Plains: Granular ammonium sulfate was quoted at $260-$275/st FOB in the region, with the low end for spot tons and the upper end for spring prepay. As a result of its plant outage, Dakota Gasification was not taking new ammonium sulfate orders in early January. Agrium’s ammonium sulfate posting for North Dakota and Minnesota firmed on Jan. 1 to $282/st DEL.
Great Lakes: Granular ammonium sulfate was quoted at $265-$285/st FOB, with the upper end to dealers FOB Essexville, Mich. Agrium’s ammonium sulfate posting for Wisconsin firmed on Jan. 1 to $282/st DEL. One Wisconsin source tagged the mid-grade sulfate market last week at $255/st FOB in Indiana with $10-$15/st freight to his location.
Northeast: Granular ammonium sulfate was tagged at $260/st FOB Philadelphia, and up to $281/st DEL in the region.
Western U.S.: Simplot raised its ammonium sulfate postings on Jan. 8 to $300/st DEL in Idaho, and $385/st FOB Lathrop, Calif.
PHOSPHATES
Central Florida: Welcome to the New Year and the biggest one-week jump in prices ever for phosphates in Central Florida – $80-$95/st FOB. That new price was based on a sale of a couple of railcars by Mosaic, which pushed prices into the stratosphere.
“The market is absolutely exploding,” a source said. “This is the biggest one-week increase we’ve ever had, and I think it’s going to go higher.” That source was not the only one with a bullish attitude. In fact, there were no bears in the woods last week. Predictions for the top of the range by the first of April were ranging from $700-$800/st FOB.
Dr. John Douglas told Green Markets last week that never in his 60 years in the fertilizer industry has he seen prices go up so much. “They are higher than ever before.” And he wasn’t referring to just phosphates, but to everything across the board.
If higher phosphate prices continue, some say to watch for farmers to switch more acreage from corn to wheat and soybeans to conserve money and the use of DAP. The expectation was about 5 million acres would be pulled from corn to other crops, but watch for that number to increase.
However, while Mosaic was able to sell MAP at $611/st FOB, which equals a DAP price of $615/st FOB, another trader of Central Florida phosphates said he has been offering DAP at $600/st FOB and has not had any takers.
Another source said his customers “thought they were getting ripped off (a month or more ago), but can’t believe what a good deal they got now.” On the flip side, a producer said he thought he was doing really well when he sold in the $400-$500/st FOB range but, “now I look like a fool.”
Also last week, phosphate producers came to an agreement on their new sulfur contract prices for the first quarter, with most – but not all – of their producers at $140/lt higher than the fourth quarter of last year. That, too, was a record. A quick settlement was an indication phosphate producers do not expect sulfur prices to come down anytime soon, but instead continue to rise.
That hefty hike in sulfur prices, along with the $100/mt increase in ammonia prices and the $200/mt FOB price for rock supplies, meant some phosphate producers, such as Mississippi Phosphates, will see their profits diminish, but will still be profitable.
In Texas, Agrifos delayed a planned turnaround at its plant in order to continue to reap the benefits of the booming market.
The Central Florida DAP price range rose from $520-$535/st FOB the previous week to $615/st FOB last week. Mosaic has returned to posting an asking price for phosphates, $615/st FOB for DAP, and $611/st FOB for MAP. PotashCorp’s Central Florida reference price was $600/st FOB, and CF’s asking price was $615/st FOB for DAP and $612/st FOB for MAP. MAP supplies were said to be scarce. In Texas, Agrifos’ truck price was $635/st FOB, while its rail price was $630/st FOB for DAP last week.
U.S. Gulf: Early last week, a trader caught another “asleep at the wheel,” and bought two NOLA DAP barges at $532/st FOB, which would have been $1/st FOB below the low for the previous week. By the end of the week, asking prices had climbed to $600/st FOB and above.
As has been the case with the phosphate markets in Central Florida and export, prices on the Gulf’s river system were rising so fast a state trooper with a speed gun would have a hard time keeping up.
As each day progressed, phosphate prices rose and each successive sale brought a new record price.
Until very recently, traders were buying from each other at terminals when supplies ran low, but that appears to be coming to an end. “We were just cannibalizing each other,” one said. In the past, sales out of warehouses were based on the price the owner paid for the product, plus a slight margin. However, with new prices reaching ever higher, terminals can no longer afford to be nice guys. In order to survive and be able to purchase fresh product, they must charge something closer to the latest barge prices. The only exceptions were those who were long and could help their dealers and farmers with somewhat lower prices, but even those were coming close to ending that practice. Late last week, virtually all terminals were selling at $600/st FOB or higher, and CF’s price at St. Louis was posted at $659/st FOB. Considering the latest round of barge price hikes last week, warehouse prices will go up even more this week.
Last week, forward sales for February were made at $605/st FOB and were moving to $610-$615/st FOB, but will likely be raised this week.
The NOLA DAP barge price range last week changed from $533-$550/st FOB to $532-$590/st FOB. While that may sound a bit weird – which it was – it was reflective of the increases in the market that took place last week. Mosaic’s barge price last week was set at $635/st FOB, and CF was at $640/st FOB.
Eastern Cornbelt: The huge upswing in phosphate pricing at the U.S. Gulf and Central Florida left the warehouse market in transition last week. While $575-$585/st FOB the warehouse was still doable early in the week, sources were talking of a $605-$625/st FOB market as the week advanced. Still much higher numbers were on tap based on the new barge and railcar markets, with some Illinois sources talking of new warehouse levels crowding the $660-$680/st FOB range late in the week.
10-34-0 was basically unavailable in the region, either on a spot or prepay basis.
Western Cornbelt: Phosphate prices covered a very wide range out of regional warehouses, depending on the time of the week. Sources reported DAP and MAP spot sales out of river terminals at the $575-$585/st FOB level on Monday, but the market ratcheted up from there following big hikes in the barge and railcar markets at the U.S. Gulf and Central Florida. One Iowa source reported MAP out of the warehouse at the $625/st level at midweek, and a Missouri source said he expected dealer pricing at the $625/st FOB level for DAP and $635/st FOB for MAP by Thursday, with additional increases likely by Jan. 14.
Higher postings were already circulating in some areas as the week advanced, with sources reporting new reference levels as high as $650-$659/st FOB in the region. The upper end of that range reportedly reflected CF’s posted price at St. Louis by the end of the week.
10-34-0 was extremely tight, with an even broader range of pricing reported. Sources quoted the regional market at $460-$535/st FOB last week, with the low for very limited tons in Nebraska and the upper level reflecting new spot quotes to the dealer in eastern Iowa. Sources said the low-end material was likely short-lived. A Missouri source pegged the market at midweek at the $510/st FOB level to the dealer, but said a near-term increase was imminent.
Northern Plains: Phosphate pricing was up dramatically from last report. Sources reported postings for DAP and MAP as high as $615/st FOB the Twin Cities, although limited spot tons were still reportedly available there last week for as low as $580-$585/st FOB. Several sources said material at the lower numbers would not last long, however. North Dakota sources pegged the MAP market at $610/st FOB Alton and also reported some delivered MAP at the $625/st level last week, but tons were limited.
Phosphoric acid postings from Agrium for January include superphosphoric acid (SPA) at $805/st rail-DEL and merchant grade acid (MGA) at $795/st rail-DEL in Minnesota and the Dakotas. A $10/st increase is scheduled in February for both products, followed by $10/st per month increases in March, April, and May.
The only 10-34-0 price quoted last week was a $550/st DEL number out of Canada to a limited geography in northern North Dakota. Elsewhere, sources said current 10-34-0 pricing was unavailable due to extremely tight inventories. One source speculated that any available tons would be priced at the $525/st FOB level or higher, but that was a guess.
Great Lakes: DAP and MAP were both up dramatically from last report. Sources pegged the warehouse market at $600-$625/st FOB for the last business, but higher warehouse numbers were imminent based on the much higher prices at the Gulf and in Central Florida. One Wisconsin dealer reported pulling a few loads in late December and early January at $605-$615/st FOB truck terminals, but was not sure what the new market would be after the latest price hikes. Another Wisconsin source quoted a truck-delivered price of $605/st on Jan. 4, but said $670-$680/st DEL would likely be the new range based on updated Central Florida reference pricing.
No current market was reported for TSP or 10-34-0 in the region last week, with 10-34-0 supplies reportedly tapped out or spoken for both on a spot and forward basis.
Northeast: Sources said DAP and MAP reference pricing had firmed last week to the $597/st level FOB Philadelphia and E. Liverpool, with some claiming that spot tons could still be had out of the warehouse system at the $585/st level or slightly lower. One compared those prices with DAP levels back in mid-December at the $508/st FOB level at those locations.
10-34-0, where available, was quoted at $390/st FOB and $407/st DEL in the region last week, with the lower number out of terminals in upstate New York.
Western U.S.: Simplot raised its dry phosphate postings on Jan 8. The Western Montana market moved to $640/st DEL for MAP, $655/st DEL for DAP, $490/st DEL for TSP, and $405/st DEL for 16-20-0. Eastern Montana prices included MAP at $655/st DEL and DAP at $670/st DEL. The Idaho market moved on Jan. 8 to $645/st DEL for MAP, $660/st DEL for DAP, $490/st DEL for TSP, and $405/st DEL for 16-20-0. In the rest of the Pacific Northwest region, pricing moved to $650/st DEL for MAP, $665/st DEL for DAP, $490/st DEL for TSP, and $410/st DEL for 16-20-0.
Simplot’s California postings moved up on Jan. 8 to $655/st DEL or FOB warehouse for MAP, and $670/st DEL or FOB for DAP. The company’s TSP postings moved on that date to $535/st FOB French Camp, Calif., and 16-20-0 moved up to $408/st FOB Lathrop.
The company is also contemplating another near-term increase in its super phosphoric acid and merchant grade acid postings to stay in synch with the higher dry phosphate prices. This increase would be in addition to the $0.70/unit price hike that took effect Jan. 1 and the dime/unit increases slated for each month from February through May.
Agrium announced that it was raising its MAP postings on Jan. 10 to $650/st DEL in Montana and Wyoming; $655/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; $655/st FOB and $660/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County; and $665/st FOB or rail-DEL in California and Arizona.
U.S. Export: Higher and higher it goes, and where it stops, nobody knows. Five export sales were done last week, and the cheapest was $65/mt FOB higher than the previous week’s high in the range.
PhosChem made three sales of 6,000 mt each, a total of 18,000 mt, at $675/mt FOB to Mexico, Central America, and South America. In addition, another firm sold between 6,000 mt and 8,000 mt into Central America at the same price. After that spurt, PhosChem made another sale of 6,000 mt at $685/mt FOB into Mexico. Asking prices for future sales will be at $700/mt FOB and higher.
Although phosphate producers in Florida agreed to a bump of $140/lt DEL for sulfur supplies for the first quarter, which took their price to around $250/lt DEL, other phosphate producers in the world were paying roughly twice that amount for sulfur on an FOB basis, and between $180-$200/mt FOB for their rock. That makes U. S. producers far more competitive and profitable than those in other countries.
Based on sales last week, the export price range was $675-$685/st FOB, compared to $597-$610/mt FOB the previous week. Sources predicted prices this coming week would break the $700/mt FOB barrier.
China: The price of exports from China keeps rising. Sources report Vietnam paid $730/mt CFR earlier this month for a cargo of Chinese material. The estimated netback is $700/mt FOB.
Current offers from Chinese suppliers are pegged at $730/mt FOB.
China is becoming more of a major supplier to areas now deemed to far removed for U.S. sellers. One Asian source noted that India is about as far as U.S. material can go. Vietnam and other Asian buyers have turned to China for their phosphate needs.
India: A raw material shortage has hit NPK and DAP production in IFFCO’s Kandla and Paradeep units, according to production figures just in for November 2007. Much of the blame goes to phos rock and phos acid shortages. In fact, production is down sharply. Against an original target of 245,000 mt of NPK and DAP, output was only 144,000 mt during the month in Kandla. In Paradeep, too, output was down to 83,000 mt of NPK and DAP, against the original target of 133,000 mt, due to raw material shortages. Similarly, the cumulative NPK and DAP target for the April-November 2007 period is down in Aonla from 1,860,000 mt to 1,293,000 mt, while in Paradeep the cumulative actual production is down from the target of 982,000 mt to only 611,000 mt.
POTASH
Eastern Cornbelt: Potash was quoted at $425-$450/st FOB regional warehouses for spot loads, up again from last report. Supplies remained very tight, prompting one source to refer to it as the “scariest” in terms of potential pricing and supply issues for spring. Many sources reported having tons booked for February-May delivery, all to be priced at time of shipment.
Agrium’s red premium potash postings for March 1 forward include $417/st rail-DEL in Illinois, Indiana, and Ohio. Warehouse postings for that shipping period include $422/st FOB Danville, Ill., Rock Island, Ill., Garrett, Ind., Seymour, Ind., and Toledo, Ohio.
Western Cornbelt: Sources pegged the regional warehouse market for potash at $415-$445/st FOB last week for brokered cash tons, but supplies were very tight. Reference prices were now quoted as high as $460/st FOB in the region, but sources confirmed no sales at that level yet. Producers continued to ship potash fill ordered earlier at the $335-$340/st FOB level.
Agrium’s red premium potash postings for March 1 forward include $416/st rail-DEL in Iowa, Missouri, and Nebraska. Warehouse postings for that shipping period include $421/st FOB Dubuque, Iowa, and Kansas City, Mo.
Northern Plains: Potash was also extremely tight. One Minnesota source pegged the low end of the spot market at $430/st FOB for limited brokered tons, with no prepay being offered. A North Dakota source quoted delivered potash at close to the same price.
January potash prices FOB Saskatchewan include standard at $302/st, granular at $307/st, and soluble and white granular at $312/st. PCS Sales is raising its FOB mine prices by $80/st FOB for all grades of potash for U.S. buyers, effective March 1.
Agrium’s potash postings for March 1 shipments forward include red premium potash at $385/st and standard at $380/st FOB Vade, Saskatchewan. Out of regional warehouses, red premium potash postings for that shipping period include $418/st FOB Shakopee, with rail-delivered postings at $411/st in northern Minnesota and $413/st in southern Minnesota.
Great Lakes: Potash was also in very tight supply, with spot values continuing to climb. The regional market was quoted firmly at $440-$450/st FOB warehouses for limited spot tons to top off bins, with one Wisconsin source reporting a $440/st truck-DEL price for some recent business.
Agrium’s red premium potash postings for March 1 forward include $413/st rail-DEL in Wisconsin and $417/st rail-DEL in Michigan. Warehouse postings for that shipping period include $422/st FOB Saginaw, Mich.
Northeast: Potash pricing continued to climb as well, but suppliers were not taking prepay orders and sources said they were unable to lock in a price for March deliveries. Several sources reported taking delivery on fill tons ordered back in early December at the $346-$360/st DEL level, depending on grade and location, but current spot levels were up dramatically from those number.
One dealer said he sourced a few loads of 60 percent potash at the $407/st DEL level in early January, while another said the market was firm at $427/st DEL – if you could find any. Another quoted soluble potash firmly at the $423/st DEL level for the last done business, but speculated that higher pricing would be in place now if tons were available.
Agrium’s red premium potash postings for March 1 forward include $442/st FOB Lewistown, Pa., and $437/st rail-DEL in the Northeast, Southeast, and South Central regions.
Pacific Northwest: Agrium announced new red premium potash postings for the March 1 forward shipping period. These include $431/st rail-DEL and $436/st FOB warehouse in southern Idaho, Utah, and Oregon’s Malheur County; $436/st rail-DEL and $441/st FOB warehouse in Washington, the Idaho panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $441/st rail-DEL and $446/st FOB warehouse in Oregon’s Willamette Valley.
Vancouver: Canpotex said last week that it will not be shipping any 2008 volumes to China until there is a new agreement with that country as to prices. Canadian producers had hoped that a new deal would have been struck by now. The delay raises the memory of 2006 when the Chinese drug out negotiations and shipments for several months.
Sulfate of Potash: Citing continued pressures from the potash market and production/transportation cost escalations, K+S North America advised that effective Jan. 21, it will raise SOP prices by $120/st on all grades.
India: The Indian Tea Association is warning about an acute shortage of potash in Assam. ITA said the plantations did not receive any MOP during the current Rabi season (Sept. 2007-March 2008). Requirements would have been 20,000 mt. “Now that the tea season has come to an end and tea estates are undertaking soil preparation and maintenance of bushes in preparation of the new season, the MOP requirement has assumed critical importance,” said the ITA. India Potash Ltd. said the Assam situation was due to the adverse global market, as well as transportation costs.
SULFUR
Tampa: With sulfur prices around the world soaring, Florida phosphate producers moved quickly to begin settling their first quarter contracts up $140/lt, but still had not gotten all of their suppliers to sign on the bottom line as of late last week. If that price holds – and if it doesn’t, it will go up – it would not only be the single biggest jump on record, but would also be about $30/lt more than twice the price in the fourth quarter of last year.
At the opening of the negotiations, a source said sulfur suppliers were seeking something above $200/lt, and some were said to be reluctant to settle for the record $140/st increase. By the end of next week, the price will likely have been finalized and Green Markets will be able to post the new range in the index.
According to a source, a suicide iguana eluded security to slip in and sabotage Valero’s refinery at Aruba last week, which killed power to the facility and shut the plant down, possibly for as long as a week. The reptiles, which will undoubtedly be placed on the government’s list of enemy combatants and no-fly list, are common in the Caribbean and have been invading South Florida in recent years. The upside is they taste like chicken, unlike other terrorists.
Meanwhile, Valero’s refineries along the Gulf Coast, which have suffered from a variety of problems in recent weeks, were running at almost full capacity last week.
West Coast: Contracts talks between refineries and prill operators on the West Coast were about to begin last week, and will probably conclude by the end of the month. The increase in contract prices for the quarter could be as much as $200/mt, which will put it at around $300/mt. Recently, a spot sale was done by a refinery to a priller at $350/mt.
Vancouver: Sulfur producers at Vancouver have settled many of their new contracts at $300/mt FOB, but some contracts with different terms had not been renewed and were enjoying prices as low as $170/mt FOB.
MARKET NOTES
India: RCF is investing Rs 40bn to increase the manufacturing capacity of urea and ammonia at its Thal unit in the Raigad district of Maharashtra. Over Rs 4.5bn will be invested to de-bottleneck its old urea plant. “The de-bottlenecking project will start within three months, with an 18-month completion time,” said an official with RCF. He said the brownfield ammonia-urea chemical complex project has received first stage clearance from the DOF and the Public Investment Board (PIB). “The project is now awaiting environmental clearance. We hope to finalize financial closure in a few months and set up the project by March 2010,” he said. The project will add another 1.0 million mt/y capacity. It will have power generation and other production handling facilities. He said over Rs 70bn would be required to revamp other fertilizer units at Durgapur in West Bengal and Talcher in Orissa, which were entrusted to RCF by the government for revival.
Meanwhile, the 50-0 joint venture between RCF and Rajasthan State Mines & Minerals (RSMML) – Rajasthan Rashtriya Chemicals and Fertilizers (RRCFL) – is setting up a plant at Kappasan near Jaipur to manufacture 850 mt/d of DAP, with the jv partners supplying the raw material. Recently, the company had entered into a joint venture with the Gas Authority of India (GAIL) for setting up a coal gasification project at Talcher in Orissa with an investment of Rs 32bn. RCF’s other urea plant at Trombay has not been functioning for the last five years due to nonavailability of gas. The company is awaiting gas from GAIL’s Uran-Dahej gas pipeline to revive the unit. Efforts were also on to revamp the Trombay plant, said sources.