AMMONIA
U.S. Gulf/Tampa: Negotiations are underway for the May Tampa business. Buyers are pounding the market for new business, citing the potential for additional ammonia from Trinidad from the new plant coming up. Price ideas are certainly sub-$300/mt DEL.
Eastern Cornbelt: Although preplant ammonia was moving to the field in some parts of the Midwest, activity remained spotty at best in the Eastern Cornbelt due to wet fields. Spot pricing was under some pressure, with sources quoting the dealer market out of Illinois River terminals at $410-$420/st FOB last week. Illinois sources also talked of dealers bartering long prepay tons for as low as $400/st FOB. The upper end of the regional range was quoted at $440-$450/st FOB in Indiana and Ohio.
Western Cornbelt: With preplant ammonia moving at a fairly brisk pace, sources quoted the spot ammonia market last week at $375-$405/st FOB regional terminals. One Iowa source reported a $390/st FOB terminal price at midweek, but said dealer-to-dealer trades of excess prepay were taking place at the $375/st FOB level.
Northern Plains: Sources reported a little preplant ammonia movement in northwestern North Dakota and parts of Minnesota last week, but demand was still very light. Dakota Gasification’s Beulah, N.D., ammonia plant remained down until the spring season begins in earnest. Cash market ammonia was reported in the low-$400s/st FOB Minnesota terminals, while delivered ammonia was reported in the $535-$585/st range in the Dakotas, with the low in eastern North Dakota.
Great Lakes: The anhydrous ammonia market was pegged at $400-$450/st FOB in the region, down from last report, with the low reported by southern Wisconsin sources and the high by Michigan dealers FOB Courtright, Ont. One Wisconsin source also reported dealer-to-dealer trades of excess prepay taking place at the $400/st FOB level in late April.
Black Sea: The absence of American buyers is keeping the Black Sea price down. Asian sources say most of the plants in the area remain shut down. Observers talk about prices below $240/mt FOB, but were unable to point to specific business to back up this talk. The problem, said one source, is there has been so little business in the area that it is hard to nail down any price.
A consensus seems to exist that the area prices are indeed in the $240s/mt FOB.
Producers are facing a difficult time. A number of plants are closed because the current market is below the estimated production cost of $320/mt. With demand from Europe and the U.S. off, sources say there are few incentives for a price increase and thus the re-opening of the facilities.
Middle East: While the Black Sea producers suffer through a soft market, producers in the Arab Gulf are finding ready buyers in India and Asia.
Indian demand for ammonia remains strong for its phosphate plants. The latest set of shipments to India under negotiated contracted tons now puts the netback just under $280/mt FOB.
Producers still have their eyes on $300/mt FOB and are doing all they can to justify that price. Buyers, however, also have their eyes set on slowing price increases.
For now, the Middle East remains the main source of ammonia for the Indian DAP producers. What threatens the steady rise in the ammonia price is the possibility that in the third quarter India may opt to import more DAP instead of making its own.
Sources say the Indian buyers will continue to argue for much lower phos acid prices. Acid suppliers are said to be reluctant to drop the price further.
If the two sides cannot come to an agreement on acid pricing, sources say India may decide to start buying more DAP on the international market. Reportedly, some Chinese producers have already been approached for June shipments.
Also helping hold up the price – for the time being – are purchases in Asia. Industrial buyers continue to seem anxious to keep their ammonia tanks full. While many of the tons do come from Asian sources such as Indonesia and Malaysia, there are times when Middle East tons are needed to fill in gaps or to supply extra material as needed.
Asia: Production in Indonesia at KPI and KPA remains strong. Sources say production is running at full capacity.
Mitco in Malaysia is also doing well. Reportedly, the company worked out a swap deal with Sabic to ensure a customer is covered on time. Middle East sources say Sabic and Mitco regularly engage in swap arrangements.
The main source of buying is coming from the industrial sector. Sources say most fertilizer companies in the area are buying just the ammonia they need and no more. The industrial buyers, however, are anxious to guarantee that their storage tanks do not run low.
UREA
U.S.Gulf: Barges were generally put between $265-$272/st FOB. Sellers were seeking $270-$272/st FOB, with buyers at $260-$265/st FOB.
Eastern Cornbelt: Granular urea was pegged at $315-$340/st FOB in the region, reflecting another drop from last report. The low was reported in Illinois out of spot river locations, with the upper numbers in Ohio to the dealer.
Western Cornbelt: The granular urea market was reported at $310-$330/st FOB in the region, reflecting another slight drop from last report. In the Southern Plains market, sources said Oklahoma terminal pricing had dropped to $305/st FOB and was trending down to the $300/st mark.
Northern Plains: Granular urea was pegged at $335-$340/st FOB the Twin Cities, with delivered urea in North Dakota pegged at $390-$400/st last week. Both ranges reflected a drop from last report.
Great Lakes: Sources pegged the granular urea market in a broad range at $320-$375/st FOB, with the upper end out of Michigan terminals to the dealer and the low reported by southern Wisconsin sources out of river locations. One Wisconsin dealer pegged delivered urea at the $340/st mark to his location last week. Those levels reflect a decrease from last report.
Northeast: Granular urea was pegged at $340-$350/st FOB in the region. Delivered urea was quoted at $345-$358/st, with the upper end in southern Pennsylvania.
Pakistan: TCP closed a tender last week for 25,000 mt. The award went to Transfert to deliver 30,000 mt at $282/mt CFR. The award was issued within 36 hours of the closing of the tender. Sources said this indicated that TCP needed the tons right away.
Eight companies participated in the tender. Sources said the Transfert offer was aggressive, but within the ballpark of current market conditions.
Tender results follow.
| Offering Company | Quantity (mt) | Origin | US$/mt CFR |
| Transfert | 25,000 – 30,000 | Open (S/O) | 282.00 |
| Template Sea | 25,000 – 30,000 | 286.00 | |
| Transammonia | 25,000 | Open (S/O) | 288.71 |
| Keytrade | 25,000 – 30,000 | 296.49 | |
| Helm | 25,000 – 30,000 | 296.75 | |
| MultiCommerce | 25,000 – 30,000 | CIS/Russia (B/O) | 299.50 |
| 295.50 | |||
| Mid Link General | 25,000 | Ukraine/CIS | 307.50 |
| Swiss Singapore | 25,000 – 30,000 | 326.00 |
Sources expect Transfert to gets its urea from the Middle East. The trading house has had a long relationship with Fertil, said one source.
If the tender is satisfied from the Middle East, the estimated netback is in the $260s/mt FOB.
TCP still has a tender outstanding for 260,000 mt that closes May 9.
Conventional wisdom says that the Middle East producers will be aggressive in that tender. The idea is to grab a large order – such as most of the 260,000 mt in the tender – at a low price to rapidly draw down stockpiles. Any subsequent bidders would face higher prices and limited quantities.
Some Asian sources point out that the upcoming tender may be in danger. Sources are reporting there may be some financial restraints on the purchases.
For most in the urea industry, however, the TCP tender is the major focus. Some are looking to India, but most say nothing will happen from that buyer until late May or early June.
India: People are waiting to see what India will do. In general, industry observers say Indian buyers will need to enter the market by June. For producers, however, that will only mean softer prices. For traders, it means another month of speculation and fear of taking a position with product, only to find the market shift the wrong way.
Voting in the national elections is scheduled to end this week. Once the ballots are counted, sources say the government agencies can get to work figuring out how much money will be available for imports.
Industry sources are speculating that agents of the buying houses will fan out in early May. By the time of the IFA conference in Shanghai at the end of the month, the buyers will have a good idea of how many tons are available. Discussions with suppliers and traders will most likely take place in Shanghai, and soon after the conference closes a tender will be called.
Sources speculate that the Indians will not be looking to nail down pre-tender deals with specific prices as they have in the past. One trader said the majority of buyers would most likely look to make general promises of quantities for purchase.
One trader described a scenario where buyers would give producers and traders a sense of how many tons are needed in a given time. Then, as the tender approaches, the buyers will look at the trend in the market. If the price is moving up, the tender documents may include a small window for loading and delivery. If the market is stable or softening, the window for shipping may be relaxed.
Another argument for waiting until after the IFA gathering to call the tender, said one source, is that beginning July 1 Chinese urea will be available with only a 10 percent export duty instead of the current 110 percent duty.
Sources say the buyers are looking at $260-$270/mt CFR for their purchases. Others argue the target is closer to $225/mt CFR. Either way, the price will have to fall significantly to achieve either price.
Middle East: Sources in the industry assume Transfert will be getting material to cover its award from the Arab Gulf. Freight from AG producers to Pakistan is pegged at $20/mt at the high end and $15/mt at the low end. Sources say the lower price is the one most likely to be paid to settle the Transfert-TCP deal.
The Transfert offer was at $282/mt CFR. With $15/mt for freight and incidentals, sources say the netback lands in the upper $260s/mt FOB.
Sources say the upper $260s/mt FOB will look good to the producers by the time TCP closes its tender May 9.
Granular producers are currently living off their long-term contracts, say sources. By next semester, the new Oman plant will come on line and pump an additional 40-60,000 mt into the spot market.
The prilled market is moribund. The main buyers are India and Pakistan. Sources say Middle East producers will be aggressive in their pricing in the upcoming TCP tender.
Aggressive pricing in the past has led to dramatic drops in prices – $10-$20/mt – just so the producers can clear out their reserves. Such a wholesale commitment of their tonnage will also allow the producers to raise their prices to any subsequent buyers.
Chinese urea is expected to be offered in the TCP tender. Depending on how desperate the Chinese producers are to sell off shore, the Middle East producers could face a serious challenge to their offers.
Black Sea: Producers continue to say they will not accept any bids under $240/mt FOB. Unfortunately, sources report $238/mt FOB was done last week. In addition, rumors circulated at the end of the week that $235/mt FOB was done.
Traders are convinced the price will be at $230/mt FOB by the end of the month.
Buying is way off. Sources say the usual orders from Latin America are not coming in.
The next big tender from India will most likely include offers from Chinese and Middle East producers anxious to sell.
Pirates around the Horn of Africa are increasing the cost of shipping east of Suez, and the only major markets left for the producers are east of Suez.
All in all, say sources, there is little reason for joy amongst the producers.
Prices from the area are now pegged at $235-$240/mt FOB.
China: Urea producers are already talking to traders about having material ready for the May 9 TCP/Pakistan tender and any possible upcoming Indian tenders.
Right now, say sources, producers are looking at $250/mt FOB before export taxes. Sources say this price is too high to do business as the current market stands, but that some accommodations might be worked out. One trader said that translates into: “The producers will have to lower their prices if they want to be competitive.”
The export duty on urea drops from the current 110 percent to 10 percent July 1. Industry observers fully expect to see Chinese material appear as part of the TCP and Indian tenders.
With TCP, the deal will have to include loadings after July 1. If the price is right, said one trader, TCP might be willing to wait.
Indian buyers are not expected back into the market until after the IFA conference the end of next month. If those expectations are realized, the tender could easily include Chinese tons.
Indonesia: PIM is gearing up for another selling tender. Sources report as much as 30,000 mt might be offered for sale by the middle of May. Whether PIM issues a tender is largely dependent on the government. If the appropriate ministries are convinced the local markets are fully stocked, the ministries will issue a permit to offer the tons.
The government is also concerned that PIM achieve top dollar in the sale. Traders say the recent $284/mt FOB paid to PIM for 53,000 mt may not be repeatable.
The slide in the global market is expected to affect bids in any PIM tender.
Sources say the Indonesian government and producers are willing to walk away from the tender if the bids are not to their liking.
NITROGEN SOLUTIONS
Eastern Cornbelt: UAN pricing remained in a broad range at $7.15-$8.00/unit FOB in the region, with the low reported in Illinois and the upper numbers out of inland tanks in Indiana and Ohio.
Western Cornbelt: UAN pricing remained in a broad range at $7.00-$7.80/unit FOB regional terminals, with most dealer quotes reported in the $7.15-$7.80/unit FOB range, depending on location.
Northern Plains: UAN pricing was also down from last report. Sources tagged the market at $7.60-$8.20/unit FOB Minnesota terminals, with the upper level reflecting dealer reference pricing from some suppliers. Delivered UAN-28 in central North Dakota continued to be quoted as high as $275-$280/st ($9.82-$10.00/unit), but sources reported no new business at that level.
Great Lakes: UAN pricing continued to cover a wide range in the region. Southern Wisconsin sources pegged the market as low as $7.15/unit FOB river terminals for spot tons to the dealer, while dealer postings out of terminals in central Wisconsin were quoted at the $8.20/unit FOB level. In Michigan, dealer reference prices for UAN-28 were pegged as high $255-$260/st ($9.11-$9.29/unit) FOB. Sources reported few new orders taking place and a fair amount of prepay orders to ship.
Northeast: Sources reported some spot market weakness due to fieldwork delays and inactivity. The UAN-30 market was reported at $215-$222/st ($7.17-$7.40/unit) FOB, with the low at Baltimore from at least one supplier and the upper end to the dealer FOB Philadelphia. A Pennsylvania dealer quoted delivered UAN-30 at the $234/st ($7.80/unit) level to his location.
The UAN-32 market was pegged at $250-$256/st ($7.81-$8.00/unit) FOB elsewhere in the region, with the upper end reflecting dealer pricing out of terminals in upstate New York.
AMMONIUM NITRATE
Western Cornbelt: Ammonium nitrate was steady at $270-$275/st FOB in the region.
Great Lakes: No market was reported for ammonium nitrate in the region, but Michigan sources pegged the CAN-27 market at $350/st FOB to the dealer.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was steady at $235-$245/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate remained at $225-$245/st FOB in the region.
Northern Plains: The granular ammonium sulfate market was quoted at $255/st DEL in the region and in tight supply. Sources said one regional supplier quit taking orders as the week advanced due to limited inventory and difficulty keeping up with demand. Dakota Gasification’s posted price to Manitoba and Saskatchewan was $264/st DEL.
Great Lakes: Granular ammonium sulfate pricing was up from last report at $245-$275/st FOB regional terminals, with the upper end in Michigan and the low in Wisconsin. Product was described as tight. One Wisconsin source also reported mid-grade ammonium sulfate pricing last week at $235/st FOB and $250/st DEL to his location.
Northeast: Delivered ammonium sulfate was pegged at $253-$265/st in the region, depending on location, with the low reported in Pennsylvania and the upper end in New England. No current FOB prices were reported in the region.
PHOSPHATES
Central Florida: Prompt railcar sales out of Central Florida were absent last week, as CF dropped its price – at least until the end of last week. High rail rates were said to be a part of the problem. However, truck sales into Georgia were doing well by late last week, and traders made many of the deals.
Late last week, Mosaic was able to reach an agreement with one of its primary sulfur suppliers for first quarter prices at $5/lt up from the previous quarter. A source said the sulfur industry recognized phosphate producers were facing a very difficult period with a depressed export market and a nonexistent domestic spring season, and were likely to curtail production relatively soon.
The spring season will be over in a matter of weeks, and that means there will not be enough time for new railcar shipments to reach the Corn Belt to help fill empty spots. Most dealers have indicated they plan to let their bins go bare and wait until sometime near the fall season starts before they refill. The problem was much of the country was still too wet for farmers to get into their fields to prepare the land for planting, and time was running out.
The Central Florida DAP price range dropped last week from the previous week’s $310-$320/st FOB to $300-$315/st FOB. PCS Sales had no published price. Mosaic’s price was $315/st FOB for DAP and $325/st FOB for MAP. CF was at $300/st FOB for DAP and MAP was $10/st higher. The price from Agrifos remained at $350/st FOB for trucks and $340/st FOB for rail shipments.
U.S. Gulf: After a short spate of desperation sales the previous week took a big bite out of NOLA DAP barge prices, the coming end of the spring season was having the opposite effect last week. Far too few phosphate barges were in position to help fill any empty bins that will probably result when farmers start hitting their fields and the local dealers during the next few couple of weeks. Some areas were beginning to dry out after snow and rain well above normal levels during the past few months, and farmers were beginning to make moves in those regions. The Corn Belt was the big question, but the situation there should become clearer this week – hopefully. Those with NOLA DAP barges in position will have the option of re-supplying their own warehouses or getting a somewhat better price than the current market for reselling their barges.
Late last week, the price of corn was still over $4/bushel for December 2009, and that should be enough to prod growers into action. That is, if they have enough time to fertilize and plant. Most likely there will be a reduction in application rates, but phosphates will still be applied.
The most optimistic in the industry said the lackluster fall season last year and the horrible spring season this year means fall has to be good – really good. The rosy projections were based on empty bins, but reordering may be delayed as buyers wait to see if prices will deteriorate. A price depression will probably happen until the logjam breaks and supplies cannot keep up with demand.
Late the previous week, sales of NOLA DAP barges were made at $290/st FOB, and many traders balked at making sales at that lower price. Late last week, the opposite happened – Mosaic made a DAP barge sale at a surprisingly higher price, $300/st FOB. The barge was near the customer’s destination, but the reported price was determined after freight cost was removed.
Last week CF lowered its Central Florida prices to $300/st FOB for DAP and $310/st FOB for MAP, but it issued no new current price for NOLA DAP barges. In part, the lack of a new river price was because the company has low inventories there. However, it posted a price of $300/st FOB for May.
The NOLA DAP barge price range last week moved up from a flat $290/st FOB the previous week to another plateau of $300/st FOB. Mosaic has a $10/st FOB additional charge for MAP, while CF’s MAP was also $10/st FOB higher than its DAP price.
Eastern Cornbelt: DAP was quoted at $340-$360/st FOB regional warehouses to the dealer, down slightly from last report, with MAP $10/st higher. One supplier was referencing DAP at midweek at $345/st FOB Peoria, Ill., and Cincinnati, Ohio, for a limited order and shipping period.
10-34-0 remained in a broad range at $625-$725/st FOB in the region, with the low in Illinois and the upper end in Ohio.
Western Cornbelt: The DAP market was reported at $340-$355/st FOB regional warehouses to the dealer, with MAP roughly $10/st higher. One supplier was referencing DAP at midweek at $340/st FOB St. Louis and Inola, Okla., with MAP at $350/st FOB Inola. 10-34-0 remained at $575-$675/st FOB in the region.
Northern Plains: DAP was tagged at $345-$360/st FOB regional warehouses, with MAP $10/st higher. The Pine Bend DAP market was quoted at the low end of the range at midweek for orders placed and shipped April 22-24, with MAP posted at $355/st FOB for that period. One Dakota dealer reported delivered MAP at $415-$440/st, subject to the availability of trucks.
The 10-34-0 market was pegged at $650/st FOB in Minnesota, and $600-$625/st DEL in North Dakota.
Great Lakes: DAP was pegged in a broad range at $345-$415/st FOB regional warehouse, with the low again reported in southern Wisconsin and the high to dealers in Michigan. One Wisconsin source quoted delivered DAP at the $345/st level as well. MAP was $10/st higher than DAP.
10-34-0 pricing was down significantly from last report. The regional range was reported at $650-$725/st FOB, with the low in Wisconsin and the high in Michigan.
Northeast: The DAP market was reported at $375-$390/st FOB, with MAP $10/st higher. Delivered MAP to southern Pennsylvania was pegged at the $405/st level, down some $20/st from last report. 10-34-0 was pegged at $850-$875/st FOB in the region, reflecting a sizable drop from last report. One source pegged the delivered market as low as $800/st to his location last week, which he said was down some $200/st from the previous level.
U.S. Export: Phosphate exports continued to remain on the slow track last week, but a couple of deals were done. Keytrade was said to have made a sale of about 40,000 mt of DAP produced by CF into India at $367/mt delivered, which would work out to about $337/mt FOB Tampa. In addition, PhosChem sold 30,000 mt of phosphates, said to include 25,000 mt of DAP and 5,000 mt of MAP, at $339/mt FOB.
With world phosphate sales continuing a prolonged slump, production in the U.S. was likely to be curtailed in the near future, at least until sales begin to pick up. Expect prices to decline in the meantime, say sources.
Based on sales last week, the export DAP price range last week drifted south from $340/mt FOB to $337-$339/mt FOB.
India: Sources report Chinese agents have been talking to Indian companies about starting exports as soon as the export duty drops. The duty on DAP is currently at 110 percent. The rate drops to 10 percent July 1. Sources say the talks with China may be the reason talks with Russian suppliers have not started. The bottom line, said traders, is that India may be more anxious to import DAP in a declining market than to keep producing it.
POTASH
Eastern Cornbelt: Potash prices continued to crumble on the secondary market, even though producers were holding the line at higher postings. Sources quoted potash at $645-$675/st FOB warehouses on the low end, with the upper end of the market reported at the $700/st FOB level from brokers or resellers. Producer postings remained at $800/st FOB or higher in the region.
“The current market today is primarily being driven by the Russian imports and the folks that have bought those tons,” said PotashCorp CEO and President Bill Doyle at the company’s first quarter earnings conference call on April 23. “They have taken that market from $825 to probably $650-$700 on a terminal basis.” Doyle added that PotashCorp has opted not to participate at those lower levels.
Western Cornbelt: Potash was pegged at $630-$700/st FOB warehouses to the dealer, depending on grade and location. The low end of the range reflected another drop from brokers or resellers.
Northern Plains: Potash FOB Saskatchewan mines remained at reference levels of $767/st FOB for standard, $780/st FOB for soluble, $772/st FOB for granular, and $780/st FOB for white granular. Delivered potash in the region was steady at $800-$830/st, depending on location.
Great Lakes: Potash pricing covered a wide range in the region last week. Wisconsin dealers pegged the market at $650-$675/st FOB from brokers or resellers, while Michigan sources quoted red granular potash at the $815/st FOB mark based on producer replacement costs. One Michigan source noted some secondary suppliers as low as $765/st FOB to the dealer, however.
Northeast: Sources quoted a wide range of potash prices, depending on supplier. Dealer quotes from producers remained as high as $865/st DEL in the region, but sources said spot tons for coarse potash could be had from brokers, resellers or other dealers for as low as $750-$768/st DEL. Some said they anticipate still lower pricing as the season continues, particularly if usage and demand remain low.
Vancouver: PotashCorp said last week that Canpotex has concluded new business to Thailand and Taiwan at the $750/mt DEL equivalent.
Pakistan: The government is expected to approve Rs 1.5 billion (US$ 22.06 million) as a subsidy for the import of potash fertilizers (SOP and MOP) during 2009, according to market sources. The National Fertilizer Development Centre (NFDC) has estimated that Pakistan would require 30,480 mt of potash during 2008-09, with a growth rate of 13.2 percent against last year’s consumption of 26,924 mt.
SULFUR
Tampa: Last week, Mosaic reached a settlement agreement for second-quarter sulfur contract prices with one of its largest suppliers at $5/lt higher than the previous quarter. The increase would bump the Tampa sulfur price up to $5/lt, which is still considerably below the cost of delivery. However, it did spell some relief for sulfur producers. Other producers will likely sign similar agreements before the end of the month, or sooner.
Although sulfur has been moving at a rate much closer to demand recently, that has been based on higher production levels for phosphate producers, but is unlikely to continue. The export phosphate market has struggled to find a home for its product, and the domestic spring season never got started. With only a matter of a few weeks left to prepare fields and plant corn, the possibility of a season that would reduce inventories appeared highly improbable.
Sulfur prill operations were humming along last week, and plenty of material was still coming from refineries, which were working full steam to meet demand from China. However, supplies were building at Chinese ports, and new purchases will be reduced.
Mosaic will start melting tons from its sulfur blocked at Galveston sometime this week, and that will help reduce the demand for sulfur from refineries. The company has little choice, because some of its contracts require it to take product regardless of need, and room for storage must be created. In addition, Mosaic must also begin taking sulfur from blocks it contracted for in Canada last year, when the market was tight.
PotashCorp must also complete its contracts before the price changes in Green Markets Price Scan.